Down the Rabbit Hole. Again.

And here we go, yet another time.

Over the weekend, the Board of the Lafayette Yard Community Development Corporation (LYCDC), the City of Trenton-owned entity that owns and runs the town’s only hotel, voted to recommend that the City accept a proposal to re-flag the property as a Wyndham Hotel when the franchise agreement with Marriott expires later this year. Along with that proposal for re-branding is a new management company, bringing in Marshall Hotels of Maryland to replace the Waterford Hotel Group.

In the Trenton Times article by Jenna Pizzi published Sunday, members of the LYCDC Board were quoted about what a great opportunity this will be for Wyndham and the City, and how the Wyndham/Marshall  sales force would be much stronger in attracting corporate and government business than the troubled Marriott/Waterford team.

Yeah, yeah, yeah. We’ve heard this many times before. What’s the catch?

According to the weekend’s article, “[LYCDC Board Member John] Hatch said all the companies interested in taking over the operations at the hotel had required that there be renovations to the 10-year-old building. The company is ‘flexible’ about the timeline and the kind of renovations, Hatch said… Last year, city council permitted an additional $500,000 in funding for the hotel to help ease cash flow problems. Board members said they will ask the city to approve more funding this year.” [Emphasis mine. – KM]

Of course they will.

Saturday’s article quoted one Council member, North Ward rep Marge Caldwell-Wilson, as being skeptical of such a plan. “[S]he is concerned about how the city is going to fund the expensive transition to a new brand. ‘It is one thing welcoming a new flag, but how are we going to pay for that?’ she asked.”

Indeed!

This morning, we read another article in the Times, by Erin Duffy, as a follow-up to the weekend. City Business Administrator Sam Hutchinson addressed the LYCDC Board yesterday morning to caution them that “some very serious changes” will have to made by the City and the Board if the hotel can ever be expected to become profitable and self-sustaining, something it has never been. “Otherwise,” Hutchinson said. “it’s going to be a hard, hard sell to council and residents to pump any more money into the hotel industry here;” also implicitly agreeing with the earlier suggestion that such a request to “pump more money” into the hotel is definitely on the horizon.

What are some of the changes that Mr. Hutchinson recommended? According to Ms. Duffy’s article this morning, “Hutchinson said he wanted to see the board and hotel staff reach out more to the state and county government, for both financial help and to persuade them to steer conventions and customers to the hotel.”

Reach out more to the State Government? What a great idea.

Except, perhaps, for the fact that the state of New Jersey has some other hotel-related headaches to consider. Because elsewhere in the Garden State, we read this morning that the Revel Casino-Hotel in Atlantic City has filed for Chapter 11 bankruptcy protection. This project cost more than $2.4 Billion to construct, of which about $300 Million came from an investment from the State of New Jersey.

According to the press accounts available this morning, the bankruptcy petition filed includes a plan to restructure more than $1 Billion of the hotel’s total $1,5 Billion of debt into equity. Although the Associated Press reports this morning that the casino’s management promises “No taxpayer funds will be used to finance the restructuring,” there is no mention of what happens to the state’s – and therefore yours and mine – $300,000,000 previous stake in the business.

My guess is that it will go, like a lot of previous investments in this property, to Money Heaven, never to be seen again. This two-year-old article in the Shore News Today, summarizes Revel’s dodgy pre-construction history of massive expenses and massive losses leading up to the state’s investment. An investment that allowed Revel to be built at all, and an investment that did not, in the end, prevent the failure that a lot of people saw coming years ago. An investment, which you will recall, from the Shore News Today article as well as a piece in this space, made possible by lobbying efforts undertaken by Atlantic City law firm Cooper Levenson, of late and unlamented association with the Administration of the Indicted Occupant.

I will be very curious to see how much of the fallout from this bankruptcy will hurt Governor Chris Christie, who pushed through the quarter-billion-dollar Revel bailout two years ago to strong criticism from Democrats as well as members of his own party. If all or most of that $300 Million is swirling down the Chapter 11 drain, Mr. Christie will have a lot of explaining to do during his re-election campaign.

So our Mr. Hutchinson would like our hotel to reach out to the State Government for financial help? His timing for such a request leaves something to be desired!

In addition to the Revel deal, which after all has a more immediate impact to the far-away Atlantic City economy than Trenton’s, we have a lot of other city real estate news to consider, and a mixed bag it is.

The NJ Schools Development Authority (SDA) may move into the Front Street building being vacated by Wells Fargo Bank. But that may leave the SDA’s current home, the historic 1 West State Street building, near-empty with few if any prospects for new tenants in a downtown area with a current serious glut of available commercial office space.

And with all this office space available, we read of another effort to develop an estimated $20 Million office complex next to the Trenton Transit Center, an effort to be undertaken by a real estate company headed by former US Senator Robert Torricelli. But this proposal itself will need a state tax break not currently available for a project of this size, so going ahead with this plan will require Mr. Torricelli to successfully lobby the Christie Administration and the Legislature to change the current laws and regulations. In light of the Revel fiasco, that may be a hard sell, too. I won’t even get started on one aspect of this story, that Torricelli’s company seems hell-bent on knocking down the existing structure, the former Pete Lorenzo’s Restaurant, in the next few weeks, a move that the City of Trenton is saying is kind of premature.

Ain’t this fun?

Finally, I will mention that these real estate dominos are teetering and falling around downtown in the same few weeks after our City Council gave its approval to Thomas Edison’s State College’s plan to build another new building downtown.

All these new buildings on the boards. All this new projected office space. At a time when we can’t even fill the buildings we have.

To bring this back around to the prospects for our hotel: we are about to be told what a great opportunity this will be for the people of this city, and for the future of our downtown. If we can just invest a little more money. If only we can pay for needed renovations. If only we can finance cash flow during the transitional period out of Marriott/Waterford into Wyndham/Marshall, everything will be great.

Mr. Hutchinson is right. This will be a very “hard, hard sell to council and residents to pump any more money into the hotel industry here.”

From where I sit, it will be an impossible sell.

Council will hear a presentation about this plan – and what it may cost us – on March 5.

Here we go, down the rabbit hole.