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Overton Hotel and Conference Center

Overton Hotel and Conference Center, Lubbock, TX

The Need:  Lubbock, Texas, a community of 200,000 population and a trading area of 750,000 located in the high plains area of west Texas and home to Texas Tech University and its student population of 35,000, lacked a full service hotel and a modern convention center to attract business meetings and tourism.  Significant tourism was being sacrificed and the city itself lacked quality meeting and support facilities for its businesses and its citizens.  Texas Tech had a Majors Program for Restaurant, Hotel and Institutional Management and no appropriate property in the community for its students to utilize for their laboratory experiences.

The Challenge: Historic hotel economic data would not support the private financing of a full-service hotel and conference center, creating a demand for public financial support in order to ensure the successful financing for the development.  Three attempts by private developers had been attempted with no success over more than half a decade leading up to the selection of Garfield Traub Development.  Texas Tech’s leadership had other priorities ranked above this initiative.

The Risk: The city had been led each time in the past to believe that the level of municipal financial participation to accomplish the successful financing of such a development was less than reality.  The real number was in excess of what the city wanted to contribute, so a gap existed that needed to be filled, and the city leadership had a great need to be schooled in the realities of hotel finance and operations.  Texas Tech might not be able to exert its influence in assisting.

 

Overton Hotel and Conference Center Tech View

Overton Hotel View from Texas Tech Stadium

The Opportunity: The city was ready to be taught and to be more collaborative because of the previous disappointments.  Texas Tech now had a new Chancellor and a desire to collaborate with the city.  The Lubbock CVB and EDA were ready to help, and the economy was advancing with tourism ripe to attract to Lubbock.  Importantly, the largest mixed use redevelopment in the nation, a 325 acre land development stretching from Texas Tech’s front door of University all the way east to downtown was advancing in its evolution and had planned for a hotel and conference center to be located within this Tax Increment Financing Zone.  The time was right.

The Solutions:

  1. Financing – A capital stack was created using a Public/Private Joint Venture with the City.  The financing consists of an equity investment by the hotel owner/operator totaling 10% of cost, a bank loan totaling 53% of cost, a city bond totaling 17% of cost, Foundation Grants to the City totaling 17% of costs, and Naming Rights and Room Licenses totaling 3%.  Because of the City’s investment, it owns the conference facility and the land underneath, and leases the facility to the hotel owner and operator for a period of 80 years.  The City’s bonds are amortized by its traditional revenues, but are enhanced by new property taxes, hotel occupancy taxes, enhanced sales tax revenues from new tourism, and do not lien the new facility.  The Foundations justified their generous contributions as enhancing the Texas Tech curriculum and enhancing the infrastructure of the community.  The new hotel designed and constructed within the conference and hotel facility separate spaces for the use of students, a new classroom, teachers office and locker facilities for weekly training.  Finally, the Naming Rights and Room Leases were geared to the alumni and friends of Texas Tech and done in concert with the Alumni Association.  Similar to stadium seat license agreements, for a onetime fee to the hotel development fund, an alumnus could purchase the rights to a room for every Friday and Saturday night for every home football game for a period of ten years.
  2. Delivery – Design-Build was utilized by the City for the conference center utilizing a fast-track, best qualifications competition allowed by Texas legislation.  The facility was delivered on time and on budget.

 

Overton Hotel Conference Ballroom

Overton Hotel Conference Ballroom

The Result:  Garfield Traub delivered a 303-room, full-service hotel with a 22,000 square-foot conference center. The Overton Hotel and Conference Center is located across University Boulevard from the Texas Tech University campus and Jones AT&T Stadium.  As mentioned above, the hotel was financed with private debt and equity and the whole development with a classic Public/Private Partnership.  The facilities offer convenience for hotel guests attending conferences, business meetings, weddings and many other social events. Guests are greeted by a stunning lobby and enjoy the expansive first class facilities and amenities. This innovative public/private partnership has produced the finest hotel and conference center in Lubbock and the region. The Overton is the only hotel in West Texas to receive the Four Diamond Award from AAA.  In Fiscal Year 2010-2011, 85% of the top room night-producing events hosted in Lubbock utilized the Overton Hotel & Conference Center as their headquarters facility. Because of the development of the Overton Hotel the increase of jobs, tourism and citywide visitor spending, sales and use taxes all took place as well as reduced pressure on residential property taxes.

To find out how your City can successfully build a hotel and conference center to meet your City’s needs contact Garfield Traub.

Public Private Partnerships in the Travel Industry

What makes a city great? What sets a city apart from others in attracting new industry, new growth, civic pride, and robust economic development? We have found over and over that the magnet that draws business and tourism is most often found in the heart of the city, its convention center. Although the travel industry, like so many other facets of an economy, is vulnerable to the economic cycles that periodically impact the nation, it is vital for a city to be able to constantly attract conventions, association meetings, exhibitions, leaders of industry, and tourism in general.

Top Factors in Choosing an Event Location

Source: 2006 Meetings Market Report, Meetings and Conventions Magazine

Certainly, being located in an inviting climate and an accessible part of a region and the nation is important to a city’s success. So, too, is having modern infrastructure and attractions, such as museums, performing arts centers, sports, and entertainment activities to enhance the allure for business associations, as well as the casual traveler. Keep in mind also that the first introduction to a city for prospective business leaders who might decide to relocate headquarters or establish regional offices in your city may be their experience when they attend a conference or convention at your convention center.

When reviewing the top reasons for choosing a particular event location, group planning experts determined some years ago that second only to a city having a modern convention center with the available meeting space needed by its group,
is the number of quality hotel rooms attached or adjacent to the convention center. If your city has no modern and attached or adjacent headquarters hotel with “room blocks” available for a majority of convention delegates, planners are likely to select another city that offers that critical combination. This is supported by numerous exit interviews of groups that cite the lack of a dedicated onsite hotel as the reason they selected one convention destination over another.

Approximately 50 cities have successfully built, expanded, or modernized their convention centers and developed connected headquarters hotels over the past decade, and about half of them have used public private partnerships to accomplish those developments. Surprisingly, about another 50 cities have tried
and failed to develop the headquarters hotels so essential to ensuring the success of their convention centers. Those cities that succeeded in completing their developments have several characteristics in common, just as those that have failed have very similar stories about why they are still on the outside looking in. What separates success from failure in funding this vital economic engine for a city?

First, this undertaking can be highly politicized and controversial. The public must be informed as to the benefits to the city of the development, and all-too-common disinformation campaigns by narrow interests opposing such a development should be addressed head-on. There is room for debate about the right approach for a city to take in funding, developing, operating, and maintaining the facilities given political, legal, and economic factors, but there is no denying the benefits of having competitive, modern public assembly facilities and related headquarters hotels. Those cities that have recognized this and value their ability to “sell” their city as a convention destination, know they must build and maintain their public assembly facilities, which must include a headquarters hotel, to be successful.

Tangible benefits of such a development include tens of thousands of new annual visitors, who stay two or three days in the city and spend money on hotels, transportation, dining, entertainment, and shopping. Millions of dollars in annual visitor spending creates jobs, generates substantial tax revenue, and stimulates development of related, private mixed-use development. The incremental travel-related tax revenue is more “profitable” than property taxes, due to the limited burden of visitors on city infrastructure—like police and fire departments, schools, and hospitals—when compared to community residents. Increased tourism-related tax revenue bolsters other revenue to operate the entire city and reduces reliance on resident property taxes.

Returns to the public from a development of this nature are real and substantial—but public investment is required to realize the benefits. Too many cities, however, have failed to recognize or have tried to deny the obvious—the substantial cost of designing and constructing a full-service, first-class headquarters hotel including all the extra meeting space required, versus the limitations on adequate revenue to pay the mortgage and provide an appropriate return to the owner. Those cities too often succumb to the “best sounding” solution—the promise of little to no public financial support asked by developers,
who hope to be selected and to amend their low-budget targets by asking the
city for more money once plans and pricing show the real costs. The loss of time associated with a failed procurement alone hurts the city immeasurably when conventions are lost for three, five, or ten years. But the loss of confidence in civic leadership can be even more devastating through dashed community hopes and aspirations and broken promises to develop those facilities.

Overton Hotel and Conference Center

Overton Hotel and Conference Center, Lubbock, TX

Two recent examples of public private partnerships that have been boons to their cities are the Overton Hotel and Conference Center in Lubbock, Texas, and the Durham Performing Arts Center in downtown Durham, North Carolina. The Overton in Lubbock is that city’s first full-service, first-class conference hotel, situated across University Boulevard from Texas Tech University. It not only serves as Lubbock’s modern conference center, but is also the teaching facility for one of Texas Tech’s restaurant hotel investment management classes. The project financing included grants funded by foundations supporting Texas Tech, a Lubbock city bond issue, plus equity and debt raised by the private development team.

Since the Overton Hotel and Conference Center opened in August 2009, Lubbock has been able to attract associations that have either never hosted an event in Lubbock, or have not done so in many years. Examples of these groups are the Texas Apartment Association, the Texas Payroll Conference, and the Texas Hospital Association. In Fiscal Year 2010-2011, 17 of the top 20 room night-producing events hosted in Lubbock used the Overton Hotel and Conference Center as their headquarters facility. The Overton Hotel and Conference Center has allowed the Visit Lubbock staff to provide decision-makers with more options in facility space and facility features. Lubbock is also seeing an increase in repeat business from groups that experienced the first-class service provided
by the Overton staff.

Durham Performing Arts Center (DPAC)

Durham Performing Arts Center - Durham, NC

Similarly, the Durham Performing Arts Center, or DPAC, is a public private partnership in which the capital necessary to finance the facility included Durham city bonds amortized by revenue from a portion of citywide hotel occupancy taxes, a grant from Duke University, and naming rights Theater operations and promotion of events and talent are handled by a private sector theater operator. Profits are shared between the operator and the city, with the operator guaranteeing a minimum number of annual events and no operating loss risk for the city. This award-winning touring Broadway Theater was ranked number 9 in attendance among U.S. theaters by Pollstar in 2010, and number 4 in 2011, and generates $28 million in annual economic impact to the City of Durham.

Financing public assembly facilities and related hotels is an activity that mayors and city councils, even city managers, may undertake only once in their public lives. The costs of designing and building these facilities are significant, and the economics of operating and paying for these facilities is complex to grasp. Hence the need for public private partnerships and the selection of well-qualified developers, consultants, and other specialists to help lead the city in understanding these facilities and their financial structures and to help ensure their successful completion. We are aware of a number of Texas cities that are wisely taking these steps in considering or planning public assembly facilities and headquarters hotels, following the example of cities like Lubbock and Durham.
Ray Garfield is a principal of Garfield Traub, a development services firm focused exclusively on essential public facilities. For more information, please visit www.garfieldtraub.com or e-mail rgarfield@garfieldtraub.com.

Click here for the original print out as seen in the April Edition of Texas Town and City Magazine: Private-Public Partnerships in the Travel Industry

Public Private Partnerships (P3s) Solving Government Budget Deficits

Public Private Partnerships (P3)As Government budget deficits continue to climb for state, local and federal Governments, you will hear much more about the utilization of Public Private Partnerships, also known as, “P3s” or “PPP” to solve this problem. P3 projects are quickly rising in popularity due to the success of obtaining funds to renew Government infrastructure, improve transportation, and construct new projects that they could not afford before.

Public Private Partnership (P3) projects involve a contract between a public sector authority and a private party, in which the private party provides a public service or project and assumes substantial financial, technical and operational risk in the project. In some types of PPP projects, the cost of using the provided services is given exclusively by the users of the service and not by the more traditional method of using the taxpayer.

But why would a private company assume such a huge risk?

Like any investment with large risk, there is a great opportunity for an invested private business to make a lot of money. With Public Private Partnerships (P3s), revenues can be in the form of either a fee for service, paid by government, or fees collected from users, as in the case of highway tolls, automatically ticketed red lights, or hotels attached to convention centers.

One example of a development company successfully using Public Private Partnerships structured to benefit various parties, is Garfield Traub Development. Garfield Traub Development has developed over 40 hotels using primarily P3 funding. One example specifically is the Overton Hotel and Convention Center located in Lubbock, TX. This 303-room hotel with a 47,000 gross square-foot conference center is located across the street from Texas Tech University and Jones AT&T Stadium in Overton Park, the largest private redevelopment project in U.S. history, to date.

The hotel was financed with private debt and equity. The conference center was financed with City bonds to be repaid by site-specific occupancy taxes and property taxes. The capital plan also included naming rights, room licenses and nonprofit foundation grants.

The City now leases the conference center on a long-term basis to the hotel owner who operates the entire property. In addition, the hotel also partnered with Texas Tech University’s Restaurant, Hotel, and Institutional Management (RHIM) program to provide hands-on laboratory experiences in a variety of areas that will truly benefit the RHIM students, giving them the opportunity to become successful professionals in the hospitality industry.

With P3s solving Government budget deficits and successfully creating development projects like these, it is no wonder that they are on the rise. It really is a win-win situation for everyone involved and creates a solution to a big problem.

If you want more information on how Public Private Partnerships (P3s) might help you, visit http://www.garfieldtraub.com or e-mail Garfield Traub.

Overton Hotel and Conference Center References – Lubbock, TX

City of Lubbock City Manager Lee Ann Dumbauld Reference Letter

City of Lubbock LogoMay 6, 2011

To Whom It May Concern:

As City Manager of the City of Lubbock, I am writing to say how impressed I am with the leadership, professionalism and attention to detail shown by Garfield Traub Development LLC as part of the development team for the Overton Hotel and Conference Center. This project includes a 304 room hotel and a 47,400 square foot conference center.

Garfield Traub delivered a high quality product that has become a landmark for the City of Lubbock. I would highly recommend them to your city should you consider a project of this scope.

Best regards,

Lee Ann Dumbauld, City Manager

Mayor of Lubbock Texas Tom Martin

May 6, 2011

To Whom It May Concern:

As Mayor of the City of Lubbock, I have had the pleasure of dealing directly with Garfield Traub Development LLC as the developer of the Overton Hotel and Conference Center. This project includes a 304 room hotel and a 47,400 square foot conference center.

Garfield Traub Development’s professionalism in completing this project was very impressive and the result is a first class, state-of-the-art facility. I would highly recommend them to complete a project of similar scope in your city.

Best regards,

Tom Martin, Mayor of Lubbock, Texas

Assistant City Manager Development Services Rob Allison

November 18, 2009

To Whom It May Concern:

As Assistant City Manager for Development Services for the City of Lubbock and being involved with the Overton Hotel and Conference Center, I am writing to say how pleased I. am with Garfield Traub Development LLC. The City of Lubbock contracted with Garfield Traub Development LLC to perform development management services for the hotel and conference center project including fund raising, operational solutions, design and construction. This project has been a dream of the City for many years and we are extremely satisfied with the services of Garfield Traub Development LLC and the final product. The project broke ground on September 26, 2007 and includes a 304 room hotel and 47,400 square foot conference center as part of a large redevelopment project called Overton Park adjacent to Texas Tech University.

1 have been impressed with Garfield Traub Development’s leadership, professionalism, and their attention to detail. Their staff, including Steve Moffett, has taken great pride in providing outstanding service and commitment to the project.

The selection of Garfield Traub Development- LLC as part of the team has delivered our community a high quality product, and I would give them. my highest recommendation to complete any first-class facility for you. If the City of Lubbock has a future project of similar scope, we would not hesitate to use Garfield Traub Development.

Best Regards,

Rob Allison, Assistant City Manager Development Services

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Garfield Traub Opens Overton Hotel and Conference Center

Overton Hotel and Conference Center

Overton Hotel and Conference Center, Lubbock, TX

As written in Hospitality World Network

Garfield Traub Development, a real estate development services firm, announced today the completion and grand opening of the 303-room Overton Hotel and Conference Center in Lubbock, Texas.

The facility is expected to be a driving engine of development and economic growth for Lubbock for years to come. With more than 20,000 square feet of meeting space, the Overton Hotel and Conference Center is poised to attract state and regional conferences to Lubbock. The hotel is part of Overton Park District, the largest privately funded redevelopment project in the United States, based on acreage.

The Overton Hotel and Conference Center is a public/private partnership with the City of Lubbock, owner/operator 1859 Historic Hotels Ltd, and developer Garfield Traub, who led the project. Other project team members include DLR Group as design architect and MEP engineer; Turner Construction Company and Lee Lewis Contractors as general contractors; Loewen Design Group as interior designer; and AMD Engineering as civil engineer.

“From the beginning, we envisioned a world-class hotel and conference center for Lubbock,” said Steve Moffett, president of Garfield Traub’s Hospitality Division. “The overwhelming positive response from City officials, Texas Tech University, and citizens indicates that we have exceeded the community’s expectations. This is a model example of how a public/private partnership should work to benefit all involved.”

“In addition to building such a fabulous new hotel and conference center, we have recruited an excellent team to serve our guests,” said General Manager Hunter Carmichael, “and it is exciting to see them working so well together. We have spent months in planning, construction, outfitting and training, and now we have hit the ground running with an excellent facility and staff providing the level of service modern business, conference and leisure travelers expect in an upscale facility.”

At 15 stories, the hotel overlooks the adjacent Texas Tech University campus and Jones AT&T Stadium. The connection to the University is evident on the second floor, where a classroom for the Restaurant/Hotel & Institutional Management (RHIM) program prepares students for careers in the industry.

A short walk from retail stores, the Texas Tech campus, and other nearby attractions, DLR Group designed the hotel and conference center to accommodate both pedestrian and vehicular traffic in the simplest manner.

“DLR Group designers located parking adjacent to the conference center to enhance the streetscape and pedestrian experience leading to the hotel. The exterior architecture incorporates a glass pillar illuminating the nightscape,” said Ken Martin, AIA, Principal with DLR Group. “Once inside, guests are greeted by a stunning lobby with 22-foot-high ceilings.”

Amenities for the $66-million hotel and conference center include a business center, fitness center, restaurant, bar and outdoor pool. The hotel bar and lounge area serves as a hub of activity, situated between the hotel lobby and conference center.

An exquisite 11,250-square foot ballroom is connected to the hotel and located at street level to allow for ground-level courtyard access. The second level meeting rooms and executive boardrooms are accessed by a grand staircase connecting them to the ballroom level and hotel.

In addition to improving the local economy by attracting guests to major events, meetings and conferences, the facility has boosted Lubbock’s employment outlook by hiring some 150 permanent employees. That is in addition to the hundreds who worked on the facility’s construction.

The innovative capital plan structured by Garfield Traub for the development included private debt and equity, City bonds, naming rights, room licenses, and nonprofit foundation grants. The City will lease the publicly-owned conference center on a long-term basis to the hotel owner, who will operate the entire property seamlessly.

“This public/private partnership has produced the finest hotel and conference center in Lubbock and the region,” Moffett said.

1859 Historic Hotels has owned and operated hotels for nearly 100 years. The company portfolio includes over 2,500 guest rooms nationwide, in hotels ranging from a small 4-Diamond mountain resort to a state-of-the-art big-city conference center to an urban airport hotel to several restored historic landmarks. Based in Galveston, Texas, 1859 Historic Hotels takes its name from the year in which its oldest hotel, The Historic Menger, was built next to the Alamo in San Antonio. Other properties include: The Crockett Hotel, San Antonio; The Cliff House at Pikes Peak, Manitou Springs, Colorado; South Shore Harbour Resort and Conference Center, on Clear Lake between Houston and Galveston, Texas; The Brown Hotel, Louisville, Kentucky; The Hilton Houston Hobby Airport; Inn at the Waterpark in Galveston; Fredericksburg Hospitality House, Fredericksburg, Virginia; and Inn of the Hills Resort and Conference Center, Kerrville, Texas.

Turner is the leading general builder in the U.S., ranking first or second in all major segments of the building construction field. During 2008, Turner completed $10 billion of construction. Turner is the only builder offering clients a nationwide network of offices across the U.S. Founded in 1902, Turner Construction Company is a subsidiary of the Turner Corporation located in Dallas, TX.

DLR Group is a nationally recognized, integrated design firm with 15 offices nationwide. Design is the driving force behind our architecture, engineering, planning, and interiors practice. DLR Group’s philosophy is to listen to clients, create exciting design that fulfills the client’s goals, and deliver on the promise of quality, integrity and sustainability.

Garfield Traub is a national development services provider focusing exclusively on public and public/private developments. The company uses innovative and cost-effective financing solutions tailored to the requirements of public sector clients. Garfield Traub employs a “turnkey” delivery method that minimizes client risk and administrative burden, maximizes transparency and accountability, and enables “fast track” delivery of high quality facilities months or even years ahead of when otherwise thought possible. Garfield Traub and its executives have developed more than 30 million square feet of all property types nationally and abroad, and have financed more than $11 billion in debt and equity. The experience of Garfield Traub’s management team includes the development, financing and/or asset management of more than 40 hotels comprising more than 16,000 guestrooms, 1.3 million square feet of function space, and $2.5 billion of debt and equity under both private, public/private and public nonprofit ownership structures.

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