D.C. developers seek subsidies to build two more Marriott hotels near convention center

The developers planning two Marriott hotels across from the Walter E. Washington Convention Center say they want to begin construction next year and have asked the city for $35 million in subsidies to help finance the project.

Quadrangle Development and Capstone Development, both based in the District, began building a Marriott Marquis on Ninth Street NW nearly a year ago. Financed with $272 million in District money on city-owned land, the 1,167-room, $550 million hotel was long pushed by the city’s elected leaders, who expect it to provide a major boost to business at the convention center across the street.

With the Marriott Marquis more than two years from completion, Capstone chief executive Norman Jenkins said the development team wants to start building two other hotels on land owned by Marriott immediately north of the Marquis.

He said the hotels, a Courtyard and a Residence Inn, would add 500 rooms, further strengthening the city’s convention business. The $172 million project, he said, would require $35 million in subsidies, which he asked the District to provide via tax increment financing, whereby the city would issue bonds backed by future tax revenue.

“The convention center has said that to ensure they are competitive with other major convention markets, they need a few more rooms that are within a rock’s throw of the convention center, so 1,500 or 1,600 I think is the magic number,” Jenkins said.

He added that having three hotels — rather than one large one, as had once been proposed — would provide the city and its convention manager, Events D.C., with rooms at an array of prices. “It’s better than a single hotel because it’s a diversity of room stocks,” he said.

The Courtyard by Marriott would face Ninth Street, incorporating the facades of existing buildings on the block, and the Residence Inn would face L Street, around the corner. Jenkins said the hotels would create 250 construction jobs and about 300 permanent jobs.

Gregory A. O’Dell, chief executive of Events D.C., said extra hotel rooms nearby would boost convention business because it “further reduces exposure or cost to our customers for transportation.”

“The more hotels that are within walking distance for them, the less they have to shuttle their members,” he said.

But like many state and local governments, the District has had to fill hundreds of millions of dollars in budget gaps in recent years. Jose C. Sousa, a spokesman for Victor L. Hoskins, deputy mayor for planning and economic development, said in an e-mail that the deputy mayor had received the request but that “we are not entertaining new TIF applications right now.”

The District also has nearly reached a self-imposed borrowing limit.

To borrow $35 million, the city would have to cancel subsidies planned for another project, according to John Ross, senior adviser to Chief Financial Officer Natwar M. Gandhi. “If we want to add any new projects to what we already have, we would have to pull something else out,” he said.

Ed Lazere, executive director of the D.C. Fiscal Policy Institute, which studies issues affecting low-income District residents, said the latest request is not considered a priority.

“Of all the developments that are likely to need help to succeed, it’s hard to see downtown hotels rising to the top of the list,” he said.

Jonathan O'Connell has covered land use and development in the Washington area for more than five years.
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