Cleveland Convention Center Headquarters Hotel Project
City Council Presentation November 21, 2013
Where, What, Who, When, Why and How?
presented by Jeff Appelbaum
Site Plan
Where ?
LAKESIDE AVENUE
ONTARIO STREET
WEST MALL DRIVE
What?
HOTEL PROGRAM
665 Guestroom Bays-- 600 Guestrooms 30 Story Tower Structure with 4 Story Podium Public Space consisting of: Approximately 55,000 SF of Meeting Space which includes: 22,500 SF Grand Ballroom 13,500 SF Junior Ballroom Three Meal Restaurant with Access to West Mall Drive Lobby Bar and Lounge Additional Retail Opportunity Possible Green Roof on Podium Top of Building Event Space Below Grade Parking -- 280 spaces Total Area is Approximately: 691,000 SF
Plan Level 1 - Lobby
Plan Level 2 - Restaurant
Plan Level 3 Jr. Ballroom
Plan Level 5 - Ballroom
Plans - Tower
Parking level 2
Parking Level 1
1
Key Tower
900
2
Terminal Tower
770
3
Public Square
657
4
450
528
Tower at Erieview
5 6 7 8 9 10 11 12
419 410 389 370 365 363 356 321 420 430 445
Terminal Tower
Fifth Third Center
Federal Courthouse
Justice e Center
Federal Bldg.
National City Center
Euclid Tower
Cuyahoga County Convention Hotel
Tower Height Comparison
Ohio Bell Huron
Rhodes Tower
Eaton Center Marriott at Key Center
North Elevations
North Elevations
East Elevations
East Elevations
South Elevations
South Elevations
South Elevations
West Elevations
West Elevations
Elevations
When? Hotel Conceptual Schedule
Select Criteria Architect Select Operator/Brand Select Design Builder Cooperative Agreement Issue COPs
PROJECT DESIGN SCHEDULE
Public Outreach Meeting Project Kickoff Meeting Completion of Schematic Design Schematic Design Presentation to Council Public Outreach Meeting #2 Design Presentation to City Planning/Landmarks Abatement / Demolition Activities Commence Issuance of GMP Document Pricing Package Design Development Presentation to Council Early Construction Start Date (Mass Excavation) Receipt of GMP Proposal from Design Builder Reconciliation of GMP Revision of GMP Documents and Acceptance of GMP DRC Submission to Hilton Construction Document Preparation Substantial Completion Hotel Opening August 8, 2013 October 7, 2013 November 8, 2013 November 12, 2013 Mid-Late Nov 2013 November 21, 2013 Late Nov 2013 January 10, 2014 Mid Jan 2014 February 26, 2014 February 28, 2014 March 3 - 7, 2014 March 7 - 21, 2014 March 28, 2014 Jan July 2014 April 1, 2016 June 1, 2016
Who? Key Project Stakeholders
City of Cleveland
Port Authority
Workforce/Business Inclusion Goals
20% City Workforce 40% County Workforce 4% Low Income Workforce 25% SBE ( include tracking 8% CSB) Voluntary MBE/FBE Goals and Reporting
15% MBE; 7%FBE
Prevailing Wage/Section 189 Living Wage)
Why?
Direct Economic Benefits to City
Jobs
Construction
2800 jobs; 1,600,000 manhours Income Tax -- $700k +
Other taxes
Bed tax (other hotels) Admission tax Parking tax Sales tax (via Local Gov Fund) Car Rental Fee Taxi License Fee
Operations
366 Employees Annual payroll $9M+ Income Tax--Present Value = $2.5M
$10M contribution for bridge project Property tax for schools
$1.2M annually
Increased Business in Convention Center and Public Auditorium
Original Plan
How?
Funding Sources
Non- School TIF -Combined Bed Tax Net Hotel Revenue Sales Tax Exempt Misc. + Equity City Contribution Convention Center $ 12.4M 15.6M 121.6M 8.0M 10.0M 8.0M 93.0M
Original Proposed Sources and Uses for Hotel
Hotel +Parking
Original Proposed Sources and Uses for Group Plan Improvements
Essential Hilton Deal Points
15-year Term Base Management Fee - Year 1 $639K; grows to $1.2M after Year 5 Subordinate Incentive Fee - Grows from $267K in year three to $616K in Year 5, but only payable to the extent that funds are available; that Hotel has met 95% RevPAR index; and that owner's priority payment is made. (But unpaid Subordinate Fee paid on termination.) Owner Priority Payment - $8M Year 3; $9M thereafter Room Block Agreement Performance Termination RevPAR falls beneath 95% of competitive set for two-year period Financial Contribution (Key Money)
Hilton Proforma Assumptions
2016
600 Rooms 50% Occupancy Average Daily Rate $150.17
2020
600 Rooms 70% Occupancy (stabilized) Average Daily Rate $182.58 (future rate growth 2.5%)
Hilton Proforma
Stabilized Year 2020 Total Revenue $41,034,000.00 Departmental Expense 15,088,000.00 Overhead Expense 10,480,000.00 GOP 15,466,000.00 Hilton Base Fee 1,231,000.00 Hilton Incentive Fee 616,000.00 Income Before Fixed Charges 13,619,000.00 Property Tax 1,986,000.00 Insurance 247,000.00 EBITDA 11,386,000.00 County Replacement Reserve 1,231,000.00 County NOI 10,155,000.00 Debt Service 9,000,000.00 County Remainder $ 1,155,000.00
Possible Uses of City Contribution
Questions?
