Convention center makes a reservation

Lynnwood’s Public Facilities District is considering a proposal by Spokane development company KVC to build a Hilton Garden Inn hotel along 196th Street Southwest near Interstate 5.

If a deal is struck, the hotel would likely end up next to the convention center on the southwest corner of the facility district property, said Grant Dull, PFD executive director.

Adding a hotel would mean displacing some existing businesses that lease space from the facilities district, a fact Dull said “is going to be easier for some tenants, tougher for others.”

The facilities district, formed by the city of Lynnwood in 1999, owns nearly 13 acres of land between 36th Street Southwest and 40th Avenue that includes the Lynnwood Convention Center and a number of strip-mall businesses.

This is the second prospective hotel deal near the convention center this year.

Inland Group of Spokane Aug. 9 decided against buying nearly four acres of Edmonds School District land located directly across 196th Street Southwest from the convention center. Developer KVC was a partner in that effort.

Officials with KVC did not respond to requests for interviews.

Data compiled by Smith Data Research shows that hotel occupancy rates in Snohomish County increased 5.8 percent from 2005 to 2006. Revenues increased 24 percent during the same period, according to the data.

“I’m convinced this will be really good for other hotels in Lynnwood,” Dull said.

Lynnwood’s Economic Development Director, David Kleitsch, agreed.

“We track metrics on lodging in Lynnwood and we are a very, very strong market and we believe we have capacity in that market for additional hotel rooms,” he said.

Lori Columbro, owner of Salon Veloce in the strip mall, said she’s not too concerned about the possibility of a hotel coming to PFD property near her doorstep.

“I’m not really opposed to it because I think the hotel will have its own parking lot underground and that’s my biggest concern — the parking,” she said.

Columbro said she’s negotiating an extension on her lease with the facilities district

“I haven’t locked in on anything because I’m waiting to see what’s going to go on,” Columbro said.

Her salon is one of several small retail shops located along an “L”-shaped strip sharing a parking lot with the convention center.

The South Snohomish County Chamber of Commerce sits at the corner of that “L.” Dull said some or all of the businesses located south of the Chamber may have to move to make room for the hotel, if a deal is reached.

But he cautioned that much is still up in the air.

“I’m going to sit down and talk to KVC,” he said. “Don’t forget that at one time, KVC thought they were going to build across the street and that fell through. Real estate matters are complex and time consuming and don’t always work out.”

Since it opened in 2005, the convention center has generated about two-thirds of the revenue anticipated, mostly because of lagging food and beverage sales, Dull said.

Adding a hotel to the site would bolster convention center business “because groups who might otherwise book multi-day events at the convention center sometimes don’t because there isn’t what they perceive to be a headquarters hotel right next door,” he said, adding that the PFD wants the hotel to include a restaurant.

The facilities district received two unsolicited hotel proposals last summer but didn’t enter into negotiations with the parties, Dull said, “because we didn’t feel it was fair to deal with any one of those” without opening competition up to more hotel developers.

He said the PFD issued a request for proposals and on Oct. 25, following two retreats, the facility district’s Board of Directors agreed to enter into negotiations with KVC to develop the hotel.

The facilities district likely would set up a 50-year lease deal with KVC, if the deal goes forward, Dull said.

“It would give KVC enough time to get their financing in place,” he said.

KVC owns eight hotels in eastern Washington and Nevada. Sterling Hospitality, part of KVC, manages KVC developed hotel properties in some western states.