Downtown hotel project funding under consideration by Albany City Commission

ALBANY – The Albany City Commission has an estimated price tag on a proposed downtown hotel development that has been an aspiration since 2020, with that estimate coming in at $43.22 million.

Of that, the city has indicated a willingness to pitch in with a $9 million loan, and in December the development company, Woodmont Lodging, requested an additional $3 million in loans to help secure sufficient funding for the project.

On Tuesday, commissioners heard a proposal from Albany Housing Authority Director John Hawthorne on a third request through a $3.6 million loan guarantee using federal Section 108 funding.

That use is allowed under provisions for using the funds to spur economic development for low-income individuals and address blight, the director said. 

“The developer has indicated the hotel would create more than 50 jobs,” Hawthorne said. 

Of those, at least 51% would go to low-income earners, he said. The federal requirement for an expenditure of that amount would call for the creation of 72 full-time jobs, but a waiver can be requested as the area in which the proposed hotel project is located is in an enterprise community or a HUD-approved neighborhood revitalization strategy area.

The same provision was used to lend $700,000 to the developers of the Hilton Garden Inn, money that was paid back ahead of schedule and with interest, Hawthorne said. The Woodmont Lodging request does not include an interest payment.

The city would not be directly on the hook to repay the funds if the project were to hit a snag, but future Housing and Urban Development Community Development Block Grant money would be withheld until the $3.6 million was repaid, according to Hawthorne.

Woodmont Lodging is the third developer to take a crack at the hotel project slated for the former Water Gas & Light Commission building at the corner of North Washington Street and Pine Avenue. The former Water Gas & Light building, which has been vacant for several years, was built and operated initially as the Hotel Gordon.

The other building involved in the proposed project was the former location of the Rosenberg Brothers Department Store and later The Albany Herald. The city purchased the building in 2019 at a reported price of $850,000. The purchase also included the former building that housed the printing presses and an office building, both on Pine Avenue, plus a vacant lot at the corner of Pine Avenue and Washington Street.

An initial effort at developing the property, launched in 2019, called for a $13.5 million boutique hotel, data center and rooftop restaurant at 207 Pine Ave. That project was scuttled due to factors that included the COVID-19 pandemic and illness of the principal for the project. The second proposal, with a different developer, stalled due to a dearth of financing for hotel projects coming out of the pandemic, according to city officials.

For the previous proposals, the city had offered to provide the buildings and loans as its contribution toward the development.

During Tuesday’s meeting, Woodmont Lodging founder and Principal Elliott Estes, who joined via conference call, told commissioners that Morgan Stanley will be the primary lender.

The project also will include funding through historic credits for developing the buildings.

Currently, the city is awaiting a memorandum of understanding from the developer that will identify costs and funding sources, City Manager Terrell Jacobs said during a telephone interview after Tuesday’s meeting.

“We’re working on an MOU with our attorneys and theirs and hopefully will work out a deal that will be beneficial for them and beneficial for us,” he said.

The commission has not committed to the December request for $3 million in loans that would be “kind of like a reserve, just in case things don’t go as anticipated,” Jacobs said. Some commissioners have expressed concerns about the request.