Grand Splendor

For years, St. Louis struggled to attract convention-goers to its 2.7 million sq. ft. downtown America's Center, something even a 1991 building expansion didn't help the city achieve.

When the city issued a request for proposals in 1997 to build a large, convention headquarters hotel, New Orleans-based Historic Restoration Incorporated (HRI) proposed jump starting the whole neighborhood surrounding the center by first restoring an adjacent vacant hotel.

Six years later, the former 20-story Statler-Gateway Hotel, first built in 1917 by New York architect George B. Post with St. Louis-based Mauran, Russell & Crowell, was renovated and an additional, adjoining tower was built. Operating under the Marriott Renaissance name, the new $265 million Renaissance Grand is now a two-tower hotel with over 900 hotel rooms, four restaurants and lounges, and almost 70,000 sq. ft. of additional function space.

"The city had a great convention center on their hands and they didn't have a great convention hotel," says HRI vice president Tom Leonhard. "Convention-goers look at transportation sources, quality of hotels, and the convention center itself before choosing [where to go]. They had everything but the hotel package that would make them competitive, and now they do."

The existing hotel was built out to the curbs on three sides, while the fourth side, facing the new building, is shaped like a U. A new building was constructed adjoining the original as its mirror image, while the Statler's exterior renovation was completed simultaneously. Alberici Constructors, the hotel's contractor, completed over 80,000 sq. ft. of historic masonry tuck-pointing and restoration, a project SVP Pete Gass says was the most extensive exterior renovation in the contractor's history.

"There was not a side to this project that we could have relaxed on," says Gass. "Having to devise ways to provide access for workmen to the upper areas of the building and have them work safely was a real challenge."

In order to create accurate designs for the interior renovation, architect RTKL used five of Post's original drawings they discovered at a St. Louis library. Since that wasn't enough to verify the location of all the structural elements, selective demolition had to take place before the design phase of the project could be completed.

A survey team was hired to do hand-measuring using digital photogramatry. The photos graphed every building surface, including critical lengths and heights, and entered them into a computer program, which estimated the scale and dimensions of the structure for the architects.

The building is listed on the National Register of Historic Places, so the shell could not be disturbed, but the entire interior was gutted.

According to architect Todd Lundgren, vice president of hospitality for RTKL, the existing hotel floor was determined to be 12 ft. high, while today's floor heights are typically 10 ft. This enabled the Building Team to run life-safety system lines horizontally throughout the building. In addition, the ceilings in the new structure are also 12 ft., to line up with the old building.

"It costs money in terms of needing to add ceilings that you wouldn't normally have, but it made it easier because we had essentially two feet more of space to work with than usual," says Lundgren.

When the Statler Hotel was built, it was typical to have small rooms without a private bath. Also, the exterior windows were designed to fit the original rooms, so the next challenge was laying out new rooms within existing spaces.

According to Gass, the only way to lay out the hotel was to have a window in the bathroom or an unusual amount of windows in each room.

"Each room is unique in terms of its layout. It creates a really interesting place to stay and to return to stay," says Gass. "You could stay in this hotel once a week for a year before you run out of new room layouts to experience. People are requesting the old building rooms."

Due to the scale of this project, developer HRI was looking for an equity partner to help back empowerment zone bonds, in order to generate funds for the development. They approached global manufacturer Kimberly-Clark with the project.

Once Kimberly-Clark agreed to take on the project, the bonds had to be structured in a way that would make them attractive to the public. Empowerment zone bonds, essentially public offering bonds in which the financial security is bound up in the hotel's asset itself, are difficult to sell because they are secured only by an asset that hasn't yet been built.

"Because we were the equity in the deal, that helped allow the bonds to be sold," says Lynn Fournier, director of tax credit investments for Kimberly-Clark. "Our equity was just under $30 million. It was a good risk for us because once the project was built, the tax incentives on the project were substantial. We received $20 million in tax credits and direct write-offs; we ended up with net equity of $10 million and owning a hotel."

As the largest project of this type for Kimberly-Clark to date, the Renaissance Grand is just one of 23 projects financed by the company since the founding of its wholly-owned subsidiary, Housing Horizons LLC, in 1994. The corporation currently owns 85% of the Renaissance Grand, while HRI owns 15%.

"There aren't a lot of substantial corporations taking this risk," Fournier says. "We thought since we've been doing this for a while that we could take the risk."

The global manufacturer of personal and health-care products is currently involved in five other hotel and multifamily residential property ventures, including revitalizing the Detroit Cadillac Hotel, a $146 million, 700,000-sq.-ft. building that will also operate under the Marriott Renaissance flag.

"We view this project like we view Kimberly-Clark — we call ourselves the little big company," says Fournier. "We are a big company, but we address ourselves by first names, we have a very intimate or homey feel to our company, and I feel that way about this hotel as well."

Empowerment zone bonds are designed to spur economic development and create new jobs in otherwise distressed areas of older cities, like St. Louis. Terms of the financing require that the hotel commit to hiring 35% of its employees from within a specified 20-mile radius of the hotel, typically a lower-economic area. To date, the hotel has already hired 171 full-time employees from the St. Louis and East St. Louis empowerment zone.

"The biggest impact that the hotel had was that it made St. Louis more competitive in the convention business, and equally important is that it was the cornerstone development in creating a 24-hour downtown for St. Louis," says Leonhard. "Without the investment the city made in this project, downtown St. Louis would likely have continued to struggle, as opposed to experiencing a renaissance."