Suite Deal

Developer offers city subsidy if Crowne Plaza ownership will sell

TR: Why does it matter? I mean, basically, if we could cut a deal, we could bring, for example, I bring Host Marriott to a meeting . . .

SC: Uh huh . . .

TR: And they say, guys, here's the property and we think we can deliver a $10 million subsidy. What do you think you need to ren -- , how much money do you need to renovate the hotel? I guess is the first question, and, "We think we can deliver $10 million." And they say, "With that number I can pay you guys $35 million." And you say, "Okay that works, I'm comfort -- " I'm not saying you should, I'm just saying, if that happens. Or if you say you need more, and then we'll go to the city and we'll say, "Here's . . . They'll sell it for $37 million, Marriott will buy it and we need a $12 million subsidy to make it work. Do you want to do the deal?"

Steve Cohn, outside the Crowne Plaza.
Paolo Vescia
Steve Cohn, outside the Crowne Plaza.
Sheryl Sculley, deputy city manager.
Sheryl Sculley, deputy city manager.

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SC: See, I don't see the city approving the subsidy.

TR: Well, they said they would. I mean, maybe -- it needs to be an arms-length transaction. It needs to be they're giving the subsidy to Marriott and that's their end. But I think you can cut your deal, ya know, with confidence that there's a $10 million subsidy.

SC: Well, I mean, Sheryl [Sculley, deputy city manager] maybe thinks there's a subsidy, but I don't know that I see the mayor and council doing a subsidy, I mean . . .

TR: I guarantee they will. You don't think they want this Marriott to happen? They don't give that much shit about, they don't give shit about, ya know, the Embassy Suites, but they want this Marriott to happen.

SC: They probably do want the Marriott to happen.

TR: I think that if you came, if Marriott . . . forget the Marriott, let's say the Marriott died. If Host Marriott or anybody else came to the city and said, "I want to renovate the Crowne Plaza. I have it under contract and I want a subsidy." They'd give it to them independently, in my opinion. They would like that as well. A renovated Crowne Plaza with a Host Marriott or an institutional-type owner would be something they would subsidize, independently.

SC: Well, I can't go down that path at this point. I mean, I get a newspaper article that the hotel's for sale when it wasn't. If it really was, imagine what kind of article I'd be getting.

TR: Well, I guess, why does it have to be announced to anybody?

SC: What?

TR: Why does it . . . Why can't we confidentially meet with the logical buyers?

SC: Because you can't confidentially get a subsidy from the city.

TR: No. What I'm suggesting is, basically, we tell Host Marriott we think we can deliver, with confidence, a $10 million subsidy. What's the hotel worth? They'll make you an offer, assuming it's acceptable to you, put it under contract, subject to them getting their subsidy. Then we'll go finalize the subsidy.

SC: Um . . .

TR: Subject to that, you have a $10 million subsidy. And if there's a difference between what you want and what they'll accept, well, go and ask them. But they'd have to be under contract with somebody else for them to go finalize the subsidy. But they can tie it up subject to being a subsidy. And then they can then negotiate with the city and make the deal.

SC: See, the problem is, we're not going to be willing to have the property to be speculatively tied up, for starters.

TR: It wouldn't be speculative. It'd be a buyer in hand that's basically saying, "I'll buy the hotel subject to a $10 million subsidy from Phoenix, City of Phoenix." And if they can get it, then it goes forward. I mean, that's not speculation. That's basically having a buyer in hand subject to a concession from the city or a subsidy from the city. We wouldn't tie it up and shop it to the world, I understand your concern there. All I'm suggesting is there's probably a list, a short list, of logical buyers for this hotel. If Host Marriott is one of them, they certainly had some reason to try and want to do this. And at some number, the city would probably make it work.

SC: I, I don't know. I mean, it all sounds very speculative. Uh . . . I mean . . .

TR: We need you guys to buy off on the concept. "Hey guys, if I can deliver a buyer that buys the hotel at a price that is satisfactory to you, would you sell it?" And then we will help bridge the gap between what they can afford to pay and what you want with a subsidy from the City of Phoenix.

SC: Uh . . .

TR: What have you got to lose, man?

SC: Now the first part of the concept, as in, you know, what will I take for the hotel, what I want for the hotel or would I sell it at a price? I suppose, sure. As far as the city's subsidy goes . . . umm . . .

TR: They're not gonna give it to you, obviously.

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