Center City Hotel: With Hammons out, other developers surface

John Q. Hammons’ announcement last week that he’s backing out of his plans to build an Embassy Suites in center city Springfield has started rumblings among hotel developers.

At least two developers have expressed interest, and both were involved in the city’s initial request for proposals of the St. Louis Street site three years ago.

A day after the city had given Hammons a 45-day window to begin construction, Hammons said he wouldn’t be building on the 1.7-acre tract between the Springfield Expo Center and the Jordan Valley Car Park due to the economy and lack of financing for large hotel projects.

“We have all noted the horrible financing problem businesses face in today’s world,” Hammons said in a news release. “Reasonable financing is not available for hotel development and won’t be for another one to three years.”

Developer interests and obstacles
Among the developers reconsidering is Cathy Baier, a principal with Kansas City-based BC Development Co., which worked with a local hotel owner, Becky Spence, during the first RFP process. Baier said her company would be interested in developing a downtown hotel, when informed by Springfield Business Journal that the Hammons deal was off.

“The short answer is yes, we’d be interested,” Baier said, noting that her team will now review the situation.

However, Baier said BC Development would not be working with Spence, who has her own independent interests this time around.

Spence has submitted a letter to council seeking another RFP process. The letter said she has “letters from our funding group stating preapproval to fund the entire project.”

Spence said a feasibility study is in place, but she wouldn’t reveal her financial backing.

“We had funding three years ago, we have funding today, and right now, I will not openly disclose that,” Spence said. “If John Q. Hammons cannot find funding, then why would I openly disclose who my funding source is? I have already told the mayor and the council members that I will disclose it to them, but I will not disclose it to the public.”

Another developer, Branson-based HCW Evergreen, withdrew its proposal for the site in October 2007, citing Hammons’ management of the Expo Center as an obstacle. HCW CEO Rick Huffman still sees the lease deal as an obstacle the city must overcome before he would consider building a hotel.

“As long as Mr. Hammons owns the parking garage and has control of the expo hall, I don’t see how anybody can make a go of it putting a hotel on that site,” Huffman said. “If the city would happen to free up the parking, and they can get some control back of the expo hall, it’s a good location for a hotel.”

According to the city’s lease agreement, Hammons has a 20-year operating lease on the Expo Center with four five-year renewal options extending through 2038. Hammons receives no fee from the city for managing the Expo Center, but his company does collect concession revenues.

If another developer builds a hotel, it would be allowed to connect to the Expo Center, according to city Economic Development Director Mary Lilly Smith. However, the parking garage is owned by Hammons, and a developer’s agreement would have to be negotiated.

“I wouldn’t be interested until they work out all the agreements to get parking and get control (of the Expo Center),” Huffman added. “Otherwise, we have no interest whatsoever.”

What’s next?
Burris said options exist for the city, starting with buying back the land from Hammons for $1, which Burris said it plans to do.

Then the Tax Increment Financing Commission and the city could put out a request for proposal to gauge developers’ interests or hold the property and wait for the economy to improve before releasing an RFP. A TIF is an additional tax paid on products and services in a specific area, and the center city site is within an existing TIF district.

Burris said a bill regarding the city’s plans for the land would be presented to City Council on June 1 or June 14.