Va. Beach mayor rejects convention center hotel deal

VIRGINIA BEACH

Mayor Will Sessoms and Vice Mayor Louis Jones said Wednesday they oppose the plan to build a $109 million four-star Hyatt hotel next to the Virginia Beach Convention Center, dealing the controversial project a severe and likely fatal hit.

Sessoms and Jones joined five council members who have already opposed the hotel deal, meaning a majority of the body now opposes the public-private partnership with developer Armada Hoffler.

Since late November, the City Council has been grappling with the proposal, which would include a $67 million initial city investment for a 361-room Hyatt Regency, city-owned meeting space, and a pedestrian bridge to the convention center.

The $207 million convention center opened in 2007 with the promise of drawing big-spending conventioneers and trade-show attendees. But much of its business has been from local events, and city officials said the center has been losing business to East Coast rivals. A city consultant concluded that the hotel would help them compete for bigger conventions.

Opponents have questioned the rosy financial projections for the Hyatt hotel and said the industry practice of giving away convention space to attract events is evidence the market is saturated.

In a letter on Wednesday to the City Council, Sessoms recommended canceling next week's public hearing on the hotel, and the City Council vote scheduled for Jan. 24.

"The deal that is in front of us now just does not have the support of the council," he said in an interview. "This letter is certainly saying the deal that is on the table is not acceptable."

Vice Mayor Louis Jones, who helped negotiate the deal but, until Wednesday, hadn't taken a stance on the project, said he believes the Armada Hoffler proposal is dead.

"Too much risk on the part of the city," he said. "As the negotiations continued, the developer continued to make requests for changes and it got to the point where I couldn't accept the changes."

Sessoms, who has been publicly quiet on the project but in recent letters to constituents said the hotel's potential benefits deserved close scrutiny, said he still supports the city's helping build a convention center hotel, but that this plan would require the city to put in too much money. It's up to Armada Hoffler to come back with a better deal, he said.

In a statement, Armada Hoffer said it was "disappointed" by the mayor's letter. "Armada Hoffler and the city invested substantial time, effort and hundreds of thousands of dollars in crafting what Armada Hoffler believes is a mutually beneficial deal in an unprecedented and challenging financing environment," the statement said.

It did not say whether Armada Hoffler would keep negotiating with the city, and a company official and attorney declined to say. The statement thanked the city for allowing the company to participate in the process and said it looked forward to working with the city on future projects.

Hotel opponents on the City Council cheered the moves.

"It's a great thing," Councilman Bill DeSteph said. "Financially, it didn't make sense."

Councilman Glenn Davis said the City Council should formally vote to terminate negotiations with Armada Hoffler so the city can consider alternatives.

Davis is a proponent of a plan to renovate the DoubleTree hotel near the convention center.

Harmony Hospitality Inc., which owns the DoubleTree, has proposed upgrading the 292-room hotel and building a 134-room tower if the city will spend $5 million to $10 million on a walkway connecting it to the convention center.

Harmony will unveil a more detailed plan next week, a company spokesman said.

Aaron Applegate, (757) 222-5122, aaron.applegate@pilotonline.com