Plans to erect a four-star hotel and conference center on the site of the soon-to-be demolished New Haven Coliseum may be shelved due to high costs, Deputy Director of Economic Development Tony Bialecki said Thursday.
A report commissioned by New Haven’s Office of Economic Development said that building a 250-room hotel with a conference center — a central component of the $230 million Gateway Redevelopment Project proposed by Mayor John DeStefano Jr. two years ago — will not be financially possible without extensive subsidies or development incentives. New Haven has received millions from the state for similar school construction and revitalization projects in recent years, but in the absence of further subsidies, Bialecki said the city seems unlikely to finance the project itself.
“While we still think a hotel and conference center would be a good economic generator that could spin off lots of money, I don’t think the city wants to be in a situation where financially it really can’t afford an operation like that and takes a risk,” Bialecki said.
New Haven has a stable economic base with a high demand for lodging, according to the project study, which was prepared by Pinnacle Advisory Group and released to members of the city’s development commission on Wednesday. But the study also found that the cost of building a hotel and conference center on the Coliseum site would be $143,000-$220,000 per hotel room, approximately 55 percent more than the $101,000-$132,000 of return the city had projected for each room.
The Board of Aldermen voted last February to approve city funding for the Gateway Project, but stipulated that the hotel and conference center would not receive city subsidies. Because subsidizing a hotel and conference center with city funds would put a strain on New Haven’s fiscal health, which city officials have said may be threatened by increasing amounts of tax-exempt property in future years, the city will look at alternative projects for the site, Bialecki said.
“A hotel and conference center is still a possibility,” he said. “[But] responsible development, ideally, the market [would] support on its own without any city subsidies.”
Bialecki said he was not surprised by the study’s findings, and he was not alone. Many community members have questioned the feasibility of building a hotel and conference center since DeStefano proposed the idea last year, said political science professor David Cameron, who is a member of the New Haven Urban Design League.
“Cities all across the country have wanted to build conference centers and the supply of these far exceeds the demand,” Cameron said. “So the question always hanging over this from day one … was, ‘Would this survive on its own without a substantial subsidy?'”
According to the study, possible alternative development for the site includes limited-service hotels, such as the Marriott Courtyard on Broadway, or extended-stay hotels. Projected occupancy levels for such hotels would be higher and construction costs would be significantly lower.
But Executive Director of Town Green Special Services District Scott Healy ’96 said the surrounding suburbs are already saturated with limited-service hotels, and city officials should seek to build something more unique on the Coliseum site.
“I don’t think that’s thinking of the long-term interests of the city,” he said.
Healy said it would be more suitable to pursue “a more interesting project that perhaps feeds on some of the other energy in the Ninth Square.” He also said securing funding for a conference center would be problematic for New Haven because the city has already received so many subsidies from the state and is not large enough to attract private investors, but building a conference center would still offer economic benefits for the city. Many groups seeking to hold conventions in the Elm City are turned away each year because of a lack of meeting space, Healy said, and constructing a conference center would increase occupancy levels at local hotels and inject even more consumers into local retail areas.
But real estate developer Joel Schiavone ’58 said he thinks city officials should abandon the conference center idea completely and heed pre-existing demand for long-term housing.
“They should build more residential apartments and fill it up with people who want to live downtown and spend money,” Schiavone said. “They just built a major conference center in Hartford. Trying one in New Haven … is ridiculous.”
Other developments proposed by community members for the site have included high-rise apartments, a supermarket or a small department store. City officials said they may announce a final demolition date for the New Haven Coliseum early next week, after which the Gateway Project will be able to move forward.