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Convention Center May Proceed Without Hotel

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The riverfront site of Wilmington's planned convention center.

By Megan V. Williams

Wilmington, NC – There's a big blank on the plans for Wilmington's proposed convention center.

It's where the hotel used to be.

But city officials say they still expect to fill in that white space once construction is underway.

At an information session for city council members Wednesday, City Manager Sterling Cheatham said, despite much interest, no hotel developer has been willing to meet the city's standards for the project.

The last hotel developer, Armada-Hoffler, pulled out of the project in May and officials want to make sure that doesn't happen again by requiring the next developer make a down payment on the project, according to Cheatham.

"So that if they back out at some point, that we have some remedy, financially, and that's what we have not been able to obtain," Cheatham said after Wednesday's meeting.

Officials would not estimate the figure a developer will be asked to commit, although Cheatham described it as "something that would make you not want to walk away from the endeavor."

The City Council may vote at its meeting next month on whether to continue with the construction of the convention center without a hotel on board.

If the Council approves construction contracts at its first November meeting, the center would be on track to open in late 2009 or early 2001.

Center Operating Deficit Increases Without Hotel

The city's finance office has also recalculated its projections for the Center, estimating that without a hotel the operating deficit will increase significantly.

Figures from the presentation show the center running a gradually increasing annual deficit that ranged from $713,000 in 2014 to $1.83 million in 2038. Hotel room occupancy taxes, fees from the center's parking deck, and interest from its savings fund are intended to cover that cost.

Brent McAbee, who recently retired as finance director and now advises the city manager, says the department has restructured how it will handle the center's debt - paying only the interest on its loans for the first seven years - to give the city time to stockpile room occupancy tax funds to meet the increased operations deficit.

Smaller Hotel Possible

If the Center does eventually get a hotel, city officials are opening the door to a smaller operation than originally planned.

The city had insisted that any developer build a hotel with a full restaurant, which became the deal-breaker with developer Armada Hoffler. When it pulled out of the project, the company said in a released statement that a full service hotel wasn't financially feasible.

Wednesday, convention center project manager Steve Bridges said the door is now open to considering a smaller scale hotel down the line, although the city council would have to vote to approve the change.

"I continue to get calls on a weekly basis from hoteliers who are interested in the project," Bridges said.
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View the city's Convention Center Update presentation here.

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