Convention Center Hotel Will Need Financial Help

BOSTON-With less than three weeks left to get the financing together, the private developers for the $270 million anchor hotel in South Boston’s convention center have reportedly agreed to cut its fees for developing and managing the hotel by a third. The recent tightening of the capital markets has made it difficult for Starwood and Carpenter to obtain financing for the project.

The developers have stated that unless there are financial concessions on both sides of the deal they cannot go ahead with the project. The hotel is considered vital to the success of the convention center. Richard Friedman, Carpenter’s local partner says he has no comment, but the reduced fees would save $1.5 a year million over 30 years.

The Masssachusetts Convention Center Authority is also planning to lower the rent it will charge but it is unclear how much less they can go. When Starwood was chosen as the developer, it agreed to pay $12.6 million in average annual rent on a 50-year lease. Marriott International Inc., the losing finalist in the bidding, offered $8 million annually and the MCAA cannot cut rent down to that level without reopening the bidding.

The developers are also reportedly looking for a tax break under Chapter 121A of state law. The mayor’s office did not return calls by presstime, but Mayor Thomas M. Menino is quoted as saying that such a tax break would be considered a subsidy defying bidding rules and inviting the prospect of lawsuits from losing bidders.