Lubbock City Council considering Civic Center Hotel project

Published: Dec. 1, 2016 at 10:09 PM CST|Updated: Dec. 1, 2016 at 11:17 PM CST
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Source: KCBD Photo
Source: KCBD Photo

LUBBOCK, TX (KCBD) - The Lubbock City Council approved a market feasibility study for a Civic Center Hotel on Thursday night. The vote was 7-0.

The study will be funded by the Central Business District TIF and is expected to cost $5,000 to $10,000.

The TIF voted in its Nov. 7 meeting to ask the council for the study after accepting a recommendation from its committee charged with studying the viability and recommending an owner for a civic center hotel.

The recommendation, after looking at proposals from two companies that operate hotels in Lubbock, was for Pearl Hospitality to be the private partner in what is anticipated to be a public/private partnership.

Pearl Hospitality's website ( says the company's hotels include the Embassy Suites Hotels in Lubbock and Fort Worth; and the JW Marriott Hotel in downtown Houston. The website lists the company's expertise as development, construction and operation of hotel properties.

If the city moves forward with the hotel after the study, the city's participation in the project is to provide the land.

The city of Lubbock would utilize a provision in state statutes that allows the city to use the city's portion of the hotel occupancy tax to bond and pay for an anticipated $16 million that will pay for the first floor common area.

According to Moffett, the statute requires that the hotel be located within 1,000 feet of the civic center and that the city own the land and the portion of the building that it finances.

The hotel owner will lease the common area space back from the city for an amount projected to be $75,000 per year.

The feasibility study will examine the viability and economic impact of the plan. The original study commissioned by the TIF is approximately 18 months old.

Steve Moffett, the city's consultant for the project, says that during the period between December 2016 and March 2017 the city, its financial advisors and the developer will work together to be certain the proposal will produce cash flow for the city.

"This is a very critical three-month period," says Moffett.

Once it has received the feasibility study, the council could vote as early as March 2017 to approve a Master Developer Agreement. Until this is done, no funds are committed other than the study funded by the TIF.

"We've all got lots and lots of questions, and this study will let us answer them," said Councilwoman Latrelle Joy, "Nothing is being decided tonight."

The hotel would begin construction sometime in 2018 after the design is complete for the hotel and common area. According to Moffett, the owner of the hotel would pay 2/3 of the architectural and design costs and the city would pay 1/3 of the costs.

Bonds for the city's portion of the proposed project would not be sold until construction is ready to begin. Those bonds will be repaid by the city's portion of the hotel occupancy tax and the lease revenue from the owner.

Moffett told the Central Business District TIF board in November that the funding for the city's portion of the hotel will come completely from the tax revenues generated by it.

"There is nothing city wide here; no increase to the taxpayers," Moffett said.

Moffett also pointed out that the city is not bonding the hotel owner's portion of the project. The owner's portion is expected to cost about $70 million.

Henry Patel and his wife own Taj Hospitality which operates eight hotels in Lubbock. Taj Hospitality was the other Lubbock company considered for the project.

"This is a great deal for Lubbock no matter who is picked," Patel said.

The 300-bed hotel is expected to cost a total of $86 million. That includes the $16 million participation by the city for the portion that the city owns. The initial study says that the projected occupancy rate the first year is 63 percent, at an average rate of $165.

Pearl Hospitality is owned by Pritesh Patel, Mitesh Raichada and Isom Holdings.

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