The first cost estimate released Friday for the Sheraton Tucson Convention Center Hotel is $167 million for a 25-story, 525-room building where the TCC grand lobby is now.
The hotel is part of a $239 million Garfield Traub Development project that will also expand the convention center for $39 million and include a 1,160-stall parking garage for $33 million, said Steve Moffett, president of Garfield Traub’s Hospitality Division.
“These are all preliminary numbers, not guaranteed prices,” Moffett said. “I think all three of those numbers are going to come down. We’re budgeting on something that we haven’t even designed yet. We’re very much expecting a guaranteed maximum price will be lower.”
The guaranteed maximum price will be delivered in December after schematic, design and construction documents are drawn, he said.
Moffett will make formal presentations of the hotel, TCC expansion and garage projects at 3 p.m. Monday to the Rio Nuevo Multipurpose Facilities Board at the TCC Greenlee Meeting Room, 260 S. Church Ave.; and at 2 p.m. Tuesday to a City Council study session at the Council Chambers, 255 W. Alameda St.
All Rio Nuevo priorities have shifted to these TCC projects. The Tucson Origins museum complex was pushed aside in February by the City Council with a favorable nod from the Legislature. State lawmakers are poised to change the composition of the Rio Nuevo board to have members appointed by the Legislature and governor rather than the city councils of Tucson and South Tucson.
The TCC hotel project has reached the end of its pre-development phase. The Garfield Traub team has come up with a concept design, a preliminary budget, a capital plan and a pro forma income statement.
Construction is expected to start in March 2010, with the hotel opening in June 2012, Moffett said.
The hotel was downscaled from 707 to 525 rooms after Garfield Traub submitted its first proposal in June 2007. Moffett said the smaller hotel resulted from the city cutting back the TCC expansion to just the first phase, adding 33,000 square feet of exhibition space and 30,000 feet of meeting space to the west end of the TCC.
The $167 million hotel price is based on the TCC expansion and the anticipated room rates and occupancy. The average daily room rate is forecast at $138 the first year and $180 the fifth year. Occupancy is projected at 58 percent in the first year and 72 percent in the fifth year, according to Garfield Traub’s predevelopment agreement report.
The city planned to pay for the hotel with a revenue bond separate from Rio Nuevo tax increment financing, but now that TCC projects are the predominant Rio Nuevo work, TIF bonds likely will come into play, said Jaret Barr, assistant to the city manager.
Moffett believes the bond market will improve substantially by the time the city goes bond shopping.
“If we were (ready to build the hotel) today, we might have a problem,” Moffett said. “We’re probably in a perfect place today because we’re not going to the bond market for eight, nine, 10 months.”
Moffett believes the TCC hotel is the key to downtown revitalization.
“I’ve been in the business a long time,” he said. “This kind of development can trigger explosive growth in the construction area. Dynamic growth happens naturally.”
Garfield Traub plans to open an unbranded 303-room hotel in Lubbock, Texas, in June and a 500-room Sheraton in San Juan, Puerto Rico, in November. The firm is at a similar design stage as in Tucson for a 600-room Westin in Portland, Ore.