By Martha Netherton – The Business Journal
Sep 7, 1997, 9:00pm MST Updated
The future of a long-awaited third convention hotel in downtown Phoenix is clouded by uncertainty as the clock ticks closer to a looming deadline.
Months ago, officials euphorically announced that a team comprised of The Rouse Co. -- developer of Arizona Center -- and Renaissance Hotels had been selected to build the city's much desired third downtown convention hotel.
Under a memorandum of understanding, Rouse-Renaissance agreed to enter into a definitive development agreement with the city by Sept. 19, or forfeit their right to develop. Rouse also stands to lose about half a million dollars in payments made to the city.
Since the announcement, however, Renaissance has been acquired by Marriott Inter-national Inc. This week, city officials said that they have been told by Rouse that Renaissance no longer is interested in pursuing the deal.
"The deal didn't happen with that operator," said Brian Kearney, central city administrator. "The memorandum of understanding allows for a substitute operator of comparable quality."
Marriott officials, however, claim a decision hasn't been made. "The two brands could and do co-exist in the same market," said Marriott's Jim Erlacher. "We're still evaluating the downtown market and looking at all opportunities out there for both brands. We have no definitive plans we are comfortable discussing."
The question looming as the deadline approaches is whether Rouse can find an operator -- be it Renaissance, Marriott, Doubletree or otherwise -- to develop a large convention hotel of more than 500 rooms. Under the Rouse-Renaissance plan, developers were to build a $93 million, 640-room luxury hotel with completion targeted for November 1999. As part of the deal, the city agreed to kick in $13.5 million in incentives.
"We're still optimistic Rouse will come up with someone for the site," said assistant city manager Sheryl Sculley. "Perhaps it will be different from what they originally proposed, but we've been in conversations with them at least weekly."
If not, there are other players apparently willing to step up to the plate. Among them, Barron Collier is said to be working with Woodbine-Westin to build a hotel on Collier's downtown parcel near Bank One Ballpark.
Casey Bolinger, senior vice president of Woodbine Southwest, said officials have been working to incorporate the hotel deal into the joint venture arrangement that's been struck between Barron Collier and Opus Southwest.
"We're still very interested," she said. "If Rouse were to move forward with the project that's contemplated...it would give us some reason to pause a little because of the financing environment," she said. "Depending on what happens on Sept. 19, we are very interested in pursuing a convention headquarters hotel on the Collier-Opus site."
Industry observers also suggest that other hotel players, perhaps Marriott, could be eyeing the Square One property in anticipation of another request for proposals by the city.
"We do have the authorization from council to issue another RFP, but we don't want to do anything at this point," Kearney said. "A lot of it depends on what happens Sept. 19 as to how we proceed with the next RFP."
Rouse officials said this week they do not intend to walk away from the deal."The Rouse Co. is committed to a downtown hotel as part of Arizona Center ," said vice president/general manager Tom Richardson. "We'll do everything in our power to get that done. The timing of it still is up in the air."
City officials couldn't say how they might react to a request for an extension. "We would have to address that as the situation comes about," said Kearney. "We really are waiting to see what happens."
Rouse stands to lose a considerable amount of money if an operator isn't found. Since being selected as developer, Rouse has been required to pay monthly installments to the city amounting to a total of $525,000. Rouse stands to lose that money if a deal isn't sealed by Sept. 19.
"We're working to complete the overall plan for Arizona Center," said Richardson, "and the hotel is part of that."