Developer on Board With Convention Center Hotel

BOSTON-The South Boston convention center got a big boost with Starwood Hotels & Resorts Worldwide Inc.’s decision to move ahead with its development plans for the $270-million hotel. The New York-based company increased its nonrefundable deposit to $15 million as required by a November 28 deadline.

Starwood has still not arranged all its financing for the project, but according to Dean Stratouly, development chairman of the Massachusetts Convention Center Authority, “they are optimistic that they can get financing.” FleetBoston Financial Corp. offered to provide a loan of $150 million, and Starwood “is in the process of structuring the balance on its own,” Stratouly tells Globest.com.

A tighter financial market and the notorious difficulty developers typically have in funding hotels led both sides to make financial concessions. Starwood gave up $30 million in a combination of management and development fees while the MCCA agreed to reduce its rental income to $421 million over 50 years, which, emphasizes Gloria Larson, chairwoman of the MCCA, is still higher than runner-up Marriot International’s bid. In addition, infrastructure costs will be shared, with the MCCA considering picking up parking and utilities costs as well as costs relating to the central plaza and the connection tunnels between the center and the hotel.