Financing for hotel still eludes
Barsotti
Developer says city must modify laws to
attract downtown lodges
By GREGORY FOLEY
Express Staff Writer
An 11th-hour plan to secure financing for
an 80-room hotel in downtown Ketchum has come up short, prompting the developer
to call for a loosening of city restrictions on new lodging projects.
Brian Barsotti, the Ketchum-based
developer and attorney who has received approval to build a new luxury hotel at
151 S. Main St., said a trip to New York City this month to acquire financing
for the estimated $40 million project was ultimately unsuccessful.
In an interview with the Idaho Mountain
Express Friday, June 25, Barsotti said he believes his repeated failure to
garner financing for the project could provide a valuable lesson to city
officials.
Barsotti said he strongly believes that
new hotel projects in downtown Ketchum are not viable under the city’s current
regulations, which are being enforced amid ever-escalating land and development
costs.
Most hotel developers are asking governing
agencies for incentives to build, he said, and a contingent of resort cities
competing with Ketchum are choosing to provide attractive bonuses.
"They don’t understand what an incentive
is here," Barsotti said. "They don’t want to give any height, they don’t want to
give any size and they don’t want to put any money in."
In New York City, Barsotti said, two hotel
developers echoed comments he had heard during other financing negotiations
conducted in recent months with prominent hotel investors all over the world.
"One developer in New York said he would
finance the project if it could go to 100 or 110 rooms," he said.
Renowned "flag" hotel operators, such as
Marriott, Hyatt and Four Seasons, typically do not consider hotel partnerships
unless the plans call for at least 120 hotel rooms, Barsotti said.
"One Four Seasons operator from Singapore
said he could get a Four Seasons into Ketchum but needed 120 rooms," he said. "I
told the city from Day One that we needed 120 rooms."
When his plan was approved last year,
Barsotti received permission to build a three-story, 47-foot-high hotel but the
building—per city code—was limited to 85,000 square feet. The original plan for
a 59-foot building was rejected.
In addition to a minimum size that can
support their investment, hotel developers and financiers are currently seeking
the flexibility provided by so-called hotel-condominium developments, Barsotti
said.
Developers of hotel-condominiums typically
sell and deed the individual hotel rooms to a single owner who might use the
unit a mere four to five weeks per year. Proceeds from the sales of the units
help offset the building and overhead costs of the hotel project and can serve
to keep a project afloat during lean times, Barsotti noted.
"People don’t want to finance a
traditional hotel," he said.
City officials—many of whom have stated
publicly that Ketchum needs to encourage hotel development in the downtown
area—are currently reviewing regulations for hotel development in the city’s
commercial core.
Barsotti said he will continue to
negotiate financing deals, but anticipated that his Main Street property will
ultimately be sold to another developer. The property is on the market for $6.5
million.
"I’m still talking to people," Barsotti
said. "The next six weeks will really tell the tale."