One of San Antonio’s tallest hotels has a new owner. After opening in 2008 and facing financial shortfalls during the pandemic, the Grand Hyatt is set to be sold to a nonprofit while Hyatt will still manage its operations after City Council approved the arrangement at a vote 7-0-3 Thursday.
The Grand Hyatt is one of the most notable buildings on the San Antonio skyline with over 1,000 guest rooms and residential condominiums on the upper floors. The deal would take $450 million in bonds and sell the hotel to the Community Finance Corporation in Arizona, which would own the hotel for 40 years until the new set of bonds were repaid. After that, ownership would transfer to the city.
Several board members expressed concerns about how quickly the process was moving forward without much time to review it; three members abstained from voting.
The hotel served as the de facto hotel for the convention center; it is adjacent to the city-owned and operated Henry B. González Convention Center. Although the city does not own the hotel, it does own the land it sits on. However, under the plan to sell the hotel, the city would take ownership of the building in about 40 years. Hyatt would still manage and operate the hotel.
San Antonio Mayor Ron Nirenberg praised the plan shortly before voting in favor.
“Our debt is being collected in terms of revenue (hotel occupancy tax) that was used for this service during the pandemic,” Nirenberg said. “In addition to this, we are receiving upfront lease payments that have accrued and have not been paid to date and this occurs immediately upon financial close of this agreement.”
The hotel opened in 2008 with the help of $200 million in construction bonds authorized by the city council at the time.
Although the hotel’s revenue was intended to pay off construction bonds, the hotel was unable to make all of its payments during the pandemic. Under the 2005 agreement, the city was required to pay any difference in revenue from hotel resort tax.
The city had to pay approximately $10 million under this agreement. His last installment dates back to January. The hotel has since resumed payment of the debt.
During the term of the lease with the city, Hyatt had missed approximately $4.9 million in lease payments.
The $450 million approved by the council will cover money from previous lease payments as well as funds the city has paid on the original construction bonds. The bonds would be financed by the Public Finance Authority of Wisconsin. With the new agreement, the city will not be responsible for these payments.
Community Finance Corp. would own the property under the bond. The group presents itself as an organization for the purpose of relieving the burdens of government and erecting, financing the erection or maintaining buildings, monuments or public works. He has worked on projects including fire stations, university housing, as well as prisons and detention centers.
Speaking to the board, David Peters, senior vice president of corporate transactions at Hyatt, said the hotel chain supported the transaction and that Hyatt would continue to operate the hotel’s day-to-day services.
“We would like to take this opportunity to reassure our guests, colleagues and the community that we will continue to brand and operate a hotel as Grand Hyatt under a long-term management contract,” he said. -he declares.
The three council members who abstained from voting included District 2 Councilor Jalen McKee-Rodriguez, District 5 Councilor Teri Castillo and District 7 Councilor Ana Sandoval. McKee-Rodriguez said he had concerns from his constituents about the deal.
“Generally speaking, about the Hyatt and people who think the city has no business in the hotel industry…what business do we have owning a hotel?” he said.
McKee-Rodriguez asked if there were any public hearings on the deal. City Chief Financial Officer Ben Gorzell said one such hearing, known as a Tax Fairness and Accountability Act hearing, required by the IRS when a non-profit organization nonprofit is involved in bonds, held the day before the city council vote. However, no members of the public were present, Gorzell said.
Writing off the debt without having to use taxpayer funding was one of the reasons District 8 Councilman Manny Pelaez said he voted in favor.
“We are not spending any of their taxes and will continue to own an asset and we do it in an open and transparent way and we do it with a company in good standing. I don’t see how it’s not a win-win,” he said.
The sale is expected to close in the coming weeks.