[BoulderCouncilHotline] HOTLINE RESPONSE: University Hotel

[Wiebenson, Sarah]

Dear Boulder City Council,

In response to yesterday’s HOTLINE request for additional context prior to tonight’s discussion of the proposed Hill hotel, staff reached out to the University of Colorado at Boulder (CU), the Nichols Partnership and the Boulder Convention and Visitors Bureau (CVB). Their responses are shown in blue next to the original questions.

Members of staff and the development team will be available on the City Council meeting call tonight if there are any follow-up questions.

Sincerely,

Sarah K. Wiebenson
Community Vitality

[COB_double_circle]

She/Her/Hers (what’s this?)<https://www.mypronouns.org/what-and-why>
D: 303-413-7335
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Email: WiebensonS at BoulderColorado.gov<mailto:WiebensonS at BoulderColorado.gov>

Community Vitality
1500 Pearl | Boulder, CO 80302
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From: Wallach, Mark <WallachM at bouldercolorado.gov<mailto:WallachM at bouldercolorado.gov>>
Sent: Monday, May 11, 2020 2:53 PM
To: HOTLINE <HOTLINE at bouldercolorado.gov<mailto:HOTLINE at bouldercolorado.gov>>
Subject: University Hotel

In connection with tomorrow’s discussion on the University Hill Hotel, I am wondering if it is appropriate for staff to comment on the following:

1) I have understood that the hotel is looking to benefit from the overflow business from the University’s planned conference center across the street. In light of this, how has the pandemic altered either the schedule or potential viability of the conference center? Is it simply assumed that in 1-2 years the pandemic will be over and that financing and construction will resume? As the world moves to more online communications, what is the likely reduction in large scale conferences? What is the University’s current timing for putting a shovel in the ground?

From CU:

  *   As you might imagine, the university is as interested in the viability of the conference center as the city is.
  *   In discussions with our development partner, HRV, they remain very enthusiastic about the long-term viability of the CU conference center/hotel project.
  *   Because we are a unique university town with a top-level research university, a cluster of federal labs, highly developed entrepreneurial groups and a combination of a beautiful setting and unique amenities, our partners are committed to this project and remain confident that the conference center will draw significant, in-person events in the future.
  *   While we do not have a “shovel-in-the-ground” date, we expect construction could begin by mid-2021, though that is subject to the financing markets.
  *   The partnership structure between CU Boulder and HRV significantly reduces the university’s financial investment and risk in the project.

From the Nichols Partnership:

  *   Our construction lender has indicated they are still interested in financing the Hill Hotel.  Financing is still available for the best projects with the best sponsors.  The Hill Hotel is one of those projects and Hill Hotel Partners are top notch and proven sponsors.

From the CVB:

  *   The Boulder and the Denver Metro region has a very diverse economy and recovered much faster from the last US recession than many other areas in Colorado and around the country. The US was in a strong economic position, now it will depend on how many of the jobs will come back and the timing of the business recovery.
  *   If, as anticipated, the hotel does not break ground until (at the earliest) Nov 2021, with an 18-month construction timeline, the project would not be complete until mid 2023.
  *   Adam Sacks of Tourism Economics  (division of Oxford Economics) and US Travel Association indicates it will take two to three years (2020-2023) for the US hospitality industry to come back: https://www.ustravel.org/sites/default/files/media_root/document/Coronavirus2020_Impacts_April15.pdf
  *   The demand for face-to-face meetings is still there. Conference planners are looking at what is the optimal ratio of participants to square footage of space to conduct business at meetings in 2020-2021. I anticipate this will be the norm until there is a widespread vaccine available.

2) In the absence of construction in the near term from the University, and  the Covid- generated decline in the hotel industry, is there any impact on the viability of the University Hill Hotel?

From the Nichols Partnership:

  *   Demand from the conference center will be a nice bonus for the Hill Hotel, but the project doesn’t need those users to be viable as we are comfortable with the depth of the market and demand resulting from other events at CU.
  *   The hospitality market will adapt to the new demands created by COVID.  There will be additional cleaning and sterilization as well as more touchless features and other changes that will make the experience safe for users. Travelers will come to realize that staying at a hotel is a completely safe experience and demand will rebound.

3) What is the current availability of construction financing for a project of this type? If there is none, is there any projection of when that market might open to borrowers? What are the criteria the developers will use to determine when to commence construction?

From the Nichols Partnership:

  *   See response to Question 1) above.
  *   We are seeing a reduction in construction pricing that will improve the viability of the project.

None of this is meant to comment on the design or merits of the project, which I believe is important for the Hill, if it can be built. I only want to understand how theoretical a discussion we will be having tomorrow. If our meeting tomorrow is not the appropriate time to review these issues due to the short notice, I hope we can schedule that discussion for the near future.

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