Hammons hotel could break ground by summer

LOVELAND – Snow now covers the yet-undisturbed site of the future Embassy Suites Hotel at The Ranch.

But the apparent lack of activity at the Larimer County Fairgrounds doesn’t represent the work being done behind the scenes to prepare for a groundbreaking in late spring or early summer of this year. The slightly scaled-back project is going through the typical legwork needed for any major development.

Jay Hardy, director of The Ranch, said that since the August approval by the Board of Larimer County Commissioners of a new agreement with developer John Q. Hammons, there has not been much activity on the county’s side. He said that the project is now in the final stages of the application process with the city of Loveland.

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“We have reviewed the plans and are okay with everything submitted,” Hardy said in an e-mail interview.

Last year, the project almost became the hotel-that-never-was. Missed deadlines put a strain on the delicate public-private partnership needed to make the hotel possible.

Current plans call for Hammons building the Embassy Suites on 20 acres of county land at the southwest corner of the fairgrounds site. The developer will lease the land from the county and pay royalties on the hotel’s sales. The agreement will last for 55 years with up to four 10-year extensions.

After missing a June 1 deadline for groundbreaking, Hammons wound up owing a $300,000 penalty to the county under the partnership agreement. Additionally, the missed deadline allowed the county to seek partnerships with other developers on the project.

For his part, Hammons was struggling with increased costs and competition. Design changes coupled with rising materials costs resulted in an estimated price increase of 77 percent over the original estimates. The challenges threatened to drive a wedge between the parties.

However, Hammons, a nationally known hotel developer who also built the Hilton Fort Collins in 1984, and the county worked through the issues to make sure the project didn’t derail.

At an Aug. 29 meeting, the county commissioners unanimously approved a new lease agreement.

The reworked agreement calls for a somewhat smaller version of the previously proposed hotel and conference center. The plans originally unveiled in 2003 called for a 300-room hotel and 80,000-square-foot conference center on 19 acres. The cost was initially estimated at $35 million.

The latest cost estimate, according to Hardy, is $62 million for an eight-story, 263-room hotel with 37,000 square feet of meeting and convention space.

Early in the planning process – before Hammons had decided to build on county land – his officials had indicated that a hotel could be open as early as mid-2006.

Despite the setbacks, the project appears to be back on track. Hardy said that there were only a few minor elements that weren’t completed on time, such as the county approval and the review of the drawings, none of which was a cause for worry.

Bumpy road to completion

The Embassy Suites project in Loveland isn’t the only Hammons project that has hit some speed bumps on the road to development.

n A 10-story, 283-suite Hammons Embassy Suites hotel and 80,000-square-foot conference center in Murfreesboro, Tenn. recently broke ground. An article from the local newspaper indicated that the project was originally planned in May 1997.

n A recently opened 261-room Embassy Suites hotel in Albuquerque, N.M., was built on property that Hammons purchased about 13 years ago.

n Hammons inked a deal with the town of Normal, Ill., in July 2004 to build a 230-room full-service Marriott hotel and conference center and a parking structure. The project would require a complex public-private cost-sharing partnership, with the town building and owning the conference center, and Hammons funding and owning the hotel.

“This project is part of a downtown redevelopment project,´ said Mark Peterson, town manager for Normal.

The first delays came from the town’s side. In order to make the necessary property acquisitions, the town had to exercise eminent domain, which translated into a lengthy court battle. Once the property was in line, plans were drawn up, but the costs had increased significantly in the interim.

“We knew the costs were going up,” Peterson said. “Part of it is that we decided to increase the size of the parking structure.”

The original estimate put the project’s cost at about $43 million. By the time the plans were prepared in March, the estimate had risen to $60 million. Hammons asked the town to increase its monetary commitment to match his increased costs.

Peterson said that the city increased its cap for the amount to spend on the conference center from $8 million to $10 million and agreed to provide Hammons with an additional $2 million loan.

After the revised agreement was in place, the project was put out for bid.

“They all came in very high,” Peterson said. Another request for bids was put out in October. They came in lower, but still more than the recent estimates. The project is now going to cost around $70.6 million.

Again, the city and Hammons agreed to share the increased costs. Now, after two and a half years, site work for the project has finally started.

“We were hoping for a fall 2006 opening (at the start of the project),” Peterson said. The hotel is now slated for a fall 2008 opening.

Despite the delay, Peterson is excited for the project and what it could mean for downtown Normal.

“It’s basically guesswork at this stage,” he said of the potential economic impact, but added that this project has garnered more interest and investment in the downtown area.

“All of these things work together to create a lot of excitement and investment opportunities,” he explained. “Without the (Hammons) facility, I don’t know if this other stuff would be occurring.”