A proposed deal that would have landed a Hilton Garden Inn hotel next to the Lynnwood Convention Center is dead.
The company KVC Development Inc. of Spokane, which had negotiated with the Lynnwood Public Facilities District, pulled out of negotiations earlier this month, said the public facilities district’s executive director, Grant Dull.
“It’s very disappointing because we worked on this for over a year,” Dull said.
Under the proposal, the facilities district, which owns the convention center would have leased land just west of it off 196th Street Southwest. The plan was to build a three-story, 200-room hotel with underground parking and a restaurant.
Dull said the convention center’s sought to increase the number of multiple-day bookings and having a full service hotel close by would have boosted that business.
“It’s the multi-day events that generate the greatest economic impact,” he said. “When people stay at a hotel, they eat in Lynnwood, shop, maybe go down to Edmonds or to a theater. If they just drive to Lynnwood for a four-hour meeting and then drive home …well.”
He said he’s learned a lot about hotels since the first discussions about bringing a hotel to the site began in late 2006.
“I”ve learned that government land leases definitely do happen but they tend to happen with ports. Ports are different. They can lease land for 99 years whereas we were told we couldn’t go longer than 45.”
Dull said the facilities district will “think carefully” about its options, “then sooner or later go back out to the marketplace and probably cast a little wider net.”
Changes in the economy — particularly in the world of real estate financing — hurt the prospect of closing the deal, he said.
“Unfortunately, between when we started negotiations and when the bank was ready to do financing, the market changed,” he said. “Banks are being very careful and they’re setting the bar higher.”
Attempts to contact KVC Development spokespeople for comment were unsuccessful.
The company is owned by brothers Cal and Kent Clausen, who also own Sterling Hospitality Management LLC, which operates hotels after they’ve been developed.
The fact that the deal fell through is “disappointing,” but understandable in the current real estate climate, said facilities district board Chair Mike Echelbarger May 20.
“These deals for hotels are pretty much hot and cold anyway,” said Echelbarger, a Lynnwood real estate developer. “The market is either ripe for them and they want to do them everywhere or they don’t want to do them.”
Dull said it’s still the facilities districts’ goal to have a hotel nearby. Whether that hotel lies on PFD property or not is another question. The city of Lynnwood and the Edmonds School District are jointly marketing property across the street from the Lynnwood Convention Center.
Dull said hotel occupancy in Lynnwood is good “so the demand is here.”