This past Friday, negotiations between the DC Government and the partnership of Marriott International and RLJ Development was finalized and the redevelopment of two lots across 9th St NW are soon going to be an 1150 room Marriott Hotel.
So why is this so significant? For the past several months the partnership has been negotiating with the city to determine whether or not the hotel was as cost effective an investment as the parties had initially determined years ago when the idea was first proposed. Now, with construction costs skyrocketing and the hotel boom nearly ending, the once overly profitable venture didnt seem as bright. At first, the proposed 1400 room hotel was budgeted at $540 million dollars for total construction, including nearly $140 million dollars in tax increment financing. Currently, however, with the increase in construction costs and land aquisition both parties had to renegotiate their respective interests to compensate. Their current budget only allows for the new room quantitiy.
As an aside, tax increment financing is a tool used by governments to loan money on the basis of future collections for current development. The anticipation is that the loaned money will increase the property values of the surrounding areas thereby increasing taxes which will pay for the allotment of the loan offerred.
Additionally, the new agreement will offer the Washington Convention Center Authority over just about 80% of the availble rooms, which the city fought for as a tool for revenue generation. Additionally, one of the two lot owners where the hotel will be built has agreed to a land exchange and will receive a portion of the former convention center site, also known as the HUGE parking lot in the middle of downtown.
Construction is set to begin in two years, 8 months of which will be just in rezoning the two lots to its necessary code.