Hotel plan is questioned

In the wake of the Board of Aldermen’s decision to go ahead with Mayor John DeStefano Jr.’s downtown development plan, some have raised questions about the privately-funded hotel and conference center slotted to replace the Veterans’ Memorial Coliseum.

While city officials claim there is a definite demand and investment interest in a new hotel and conference center downtown, others are worried about the city’s ability to get the necessary private investment and whether a need for such a development exists. If the city were able to successfully move forward with the project, some local economic experts have said such a development would bring more business downtown, stimulating economic growth.

The hotel and conference center is the only component of the downtown development project that must be financed entirely by private investment. Though the Board of Aldermen approved funding for the overall project last month — which includes moving Gateway Community College and Long Wharf Theater downtown — any additional public funds must be sent back to the Board for further consideration.

Outgoing New Haven Economic Development Administrator Henry Fernandez said the city had commissioned a feasibility study that found demand for a mid-size conference center focused on regional business. He said he is not concerned about a lack of interest in the space from private investors.

“This may be a little bigger than other projects we have seen, and we probably couldn’t have done it 10 years ago, but I think we can do it now,” Fernandez said.

In order to solicit attention from individual developers, the city will issue a request for a proposal by this summer. Deputy Director of Economic Development Tony Bialecki said although many developers have already approached the city directly about the project, the RFP is a way to ensure everyone gets a fair opportunity.

But according to Yale political science professor David Cameron, a member of the New Haven Urban Design League, the city has not presented sufficient evidence that there is interest in privately funding a conference center.

“On the conference center there’s quite a large literature out there in the policy community … that these centers invariably lose money, and for that reason they have to be done with substantial public money,” Cameron said. “It’s almost always the case that those who estimate the demand for conference and convention centers greatly exaggerate the actual demand. In one city after another, actual demand has been considerably less than the initial estimates.”

With regard to the hotel, Omni New Haven Hotel at Yale General Manager George Soderberg said occupancy levels at New Haven hotels have not exceeded 61 percent annually, and that it should be above 70 percent before increasing the supply.

“I don’t think a convention center here, especially in its early phases, would be enough to make that up,” he said. “To add another hotel would be disastrous, and not just because it would compete with the Omni.”

Outside the hotel sector, experts said such a development could have extensive financial benefits to New Haven. Don Klepper-Smith, chief economist at DataCore Partners, a local consulting firm, said the project will not only have a direct impact but also substantial spin-off effects in the traffic it will bring to New Haven.

“Right now, tourism is one of the economic drivers in Connecticut, and the bottom line is that the convention center would create a focal point for people to meet and would be central to business in New Haven,” he said.

Ward 9 Alderwoman Elizabeth Addonizio said that, provided private investors can be found to develop the site, a hotel and conference center could help the city grow its tax base, a major need given New Haven’s persistent revenue problems. However, she said any public funding needed would have to be carefully considered given the city’s budget constraints.

Given these budgetary concerns, according to Cameron, the city would have been better served by repairing the Coliseum and using its existing parking structure, which provides 2,400 spaces as opposed to the roughly 1,000 spaces contained in two new garages to be constructed in the mayor’s development plan. The Board of Aldermen heard public testimony regarding this proposal but ultimately sided with the mayor’s arguments for demolishing the Coliseum and going ahead with the hotel and conference center plan.

New Haven attorney Mark Sklarz, who specializes in real estate, said regardless of how development proceeds, bringing people to downtown New Haven will ultimately benefit the city.

“I think it’s going to be a while before private investors make a diligent evaluation of the city,” he said. “But we are definitely moving in the right direction and beginning to attract their attention.”

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