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December 3, 2021 Deal Watch Today

Downtown North developer Salvatore wants to convert upper floors of Hartford Hilton hotel into apartments

Photo | CoStar There are plans to convert the Hartford Hilton hotel into apartments.
By Michael Puffer

Losing money and dependent on soon-to-end federal COVID-19 relief funds for survival, downtown Hartford’s Hilton hotel is seeking to convert more than half of its guest rooms to apartments.

The Capital Region Development Authority’s Housing and Neighborhood Committee on Friday gave its blessing to a concept that would grant millions in CRDA loans to back conversion of a portion of the hotel and upgrades for the remaining hotel rooms.

The Waterford Group, owner of the 390-room hotel on Trumbull Street, plans to renovate and maintain 166 hotel rooms operating on the lower floors, CRDA Executive Director Michael W. Freimuth told committee members.

A separate developer — Randy Salvatore of RMS Companies, developer of the Downtown North project — would convert upper floors into 147 apartments, Freimuth said. Twenty percent of the resulting housing will be affordable, he said.

Salvatore said Friday he is partnering with the Wolman family – principals of the Waterford Group – to build apartments on the 11th through 22nd floors.

Attempts to reach a representative of the Waterford Group were unsuccessful.

Roughly a year ago an effort to auction the troubled hotel failed to turn up any offers. Salvatore said he was approached about two months ago by the Wolman family, who were trying to come up with a creative solution to keep the hotel from shuttering.

Salvatore said the loss of the prominent central hotel would be a blow to the city’s image and hinder otherwise robust downtown redevelopment prospects.

“I have a huge investment in the DoNo project, which we are building right next door, and reputationally if this hotel were to close it would be a huge black eye to the City of Hartford and it would have ripple effects throughout,” Salvatore said. “So, I got involved to try and figure out some way if we could keep this together.”

The Downtown North project has more recently been dubbed “North Crossing.” The first phase, the construction of 270 apartments and a 328-space parking garage, began last October. Apartments should be ready for occupancy in the spring, Salvatore said.

Ultimately, the North Crossing development aims to create about 1,000 apartments, along with a grocery store and other retail spaces.

The hotel is “tired” and needs to be upgraded to maintain a Hilton brand, Freimuth said. Waterford is seeking CRDA backing for its effort.

“Hilton is running on PPP [Paycheck Protection Plan] money,” Freimuth said. “Those monies are being turned off as we speak. It is likely to close in the near term because it has run out of cash.”
 
The project would follow in the footsteps of several hotel-to-apartment conversions happening in Connecticut including others in downtown Hartford. 
 
The planned conversion will prevent the loss of at least some increasingly sparse hotel space downtown, which is critical for the operations of the XL Center and the Connecticut Convention Center, Freimuth said.
 
The hotel needs to restructure a $4.9 million federal loan, which was guaranteed by the city. The project requires a $5.1 million loan from the CRDA, according to terms introduced at Friday morning’s committee meeting. The owners would contribute another $1 million immediately.
 
The residential development will be financed with a $9.4 million bank loan and another $6 million loan from the CRDA.
 
The CRDA loans will need approval from the authority’s full board, as well as the Connecticut State Bond Commission.
 
The hotel sits on land leased from the city, and the deal will also require the Hartford City Council to approve changes to a payment-in-lieu-of-taxes agreement. That will mean changes to the formula under which the property pays the equivalent of taxes to the city, as well as use restrictions currently written into the agreement.
 
Freimuth said the approvals need to come within the next four to eight weeks, in order to secure private bridge lending needed to keep the hotel in operation and the project moving.

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