New Orleans-based hotel developer HRI Properties has backed out of its plans to build a $52 million Westin-branded hotel on University Drive across from the Modern Art Museum saying it couldn’t finance the project.
Hal Fairbanks, an HRI vice president, said Monday his firm came up about $20 million short.
“The costs were higher than the sources,” Fairbanks said. “It was disappointing. We couldn’t make it work.”
The hotel was to serve as the primary hotel for the new 14,000-seat multipurpose arena planned for the Will Rogers Complex nearby in the city’s Cultural District.
In August, the City Council approved a 10-year economic development agreement that would have returned as much as $7.8 million in city hotel taxes to the developer.
Jay Chapa, an assistant city manager, said the developer approached the city about possibly increasing the incentive, but they were turned down. In late October, HRI notified the city it would not be pursuing the project, he said.
“Maybe someone else can make it work,” Chapa said.
Instead, HRI recently assigned its purchase rights to the property to another buyer. Fairbanks said he is under a confidentiality agreement and could not name the new buyer or when the deal will close.
HRI had planned a six-story, 250-room hotel on University Drive between Morton and Bledsoe streets. Its plan included meeting room and ballroom space, as well as a full-service restaurant and a parking garage. Construction was to begin early next year.
Under terms of the city’s incentive package, HRI was required to enter into room block agreements for events at the Will Rogers center and the new arena for 10 years. The arena is scheduled to be completed in 2019.
As part of the agreement, HRI was to deed the land to the city. The city, in turn, would lease the land to HRI. HRI was required to buy back the land after 10 years, otherwise rent on the ground lease would increase to market value.