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Bay City Tribute to the Nonprofit Ownership Model

The recently completed Doubletree Hotel
Bay City - Riverfront, located along the riverfront in the heart of downtown
Bay City, Mich., was developed under the nonprofit ownership model by Garfield
Traub Development LLC.  The City of Bay City will serve as the sole
beneficiary of all profits under the ownership model.“We introduced the nonprofit ownership model to the City as a way to build
the only full-service hotel and conference center in the region without
extending the City’s general credit,” said Tony Traub, principal of Garfield
Traub.  “The City will be the single beneficiary of all profit plus the
residual value of the hotel.  As the beneficiary of the hotel, the City’s
limited support is truly an investment, rather than a subsidy to a private
owner/developer as originally contemplated.”
  Garfield Traub’s introduction of and leadership of the investment banking
and legal team guided this unique method for developing a hotel and ultimately
led to its success.  Garfield Traub also worked closely with the City and the
design and construction team during the pre-construction phase to ensure that
the design and program were consistent with the City’s expectations and the
operator’s brand standards.  The new development will serve to accelerate the
economic growth of the central business district and riverfront.
  “With the recent opening of the Doubletree, the City of Bay City is moving
to the next level.  This is the only full service hotel and convention center
north of the metropolitan Detroit area,” said Robert Belleman, city manager,
City of Bay City Michigan.  “As other economic development efforts continue in
the area, we can point to the success of the center as the beginning.  The
community as a whole is very excited.  Previously, we had made several
attempts to execute this through the private sector, but the only way the City
could be successful was through this model.”
  “Although lodging capital markets conditions did make conventional
financing unfeasible, Garfield Traub was able to show the City how to finance
the hotel through the establishment of a nonprofit ownership corporation,
separate and distinct from the City,” said Traub.  “Because of the issuance of
non-recourse tax-exempt revenue bonds, the City’s general credit and taxing
authority were not required.  The financing will be repaid out of revenues
generated by the facilities.”
  With Garfield Traub’s assistance, the City identified and positioned
nearly $20 million in federal, state and local grants, low-interest and no-
interest subordinated loans and other incentives to pledge to the development.
The remainder of the development costs was financed by $15,455,000 of tax-
exempt hotel revenue bonds.  The bonds are non-recourse to the City, and in
September 2002 were successfully placed, the first non-rated hotel revenue
bonds placed since the tragedies of 9/11.
  The nonprofit ownership model will ensure that the facilities are
constantly maintained and updated to guarantee the best possible experience
for hotel guests and conference center visitors year after year, according to
  The Doubletree Hotel Bay City - Riverfront is located at One Wenonah Park
Place, Bay City, along the riverfront in the heart of downtown Bay City.  The
six-story, 150-room full-service upscale hotel and conference center is
approximately 127,000 square feet, and includes approximately 25,000 square
feet of conference, ballroom, pre-function and sales space, a three-meal
restaurant with dedicated conference dining, a lounge, indoor swimming pool,
fitness center, business center, gift shop and an attached garage and surface
lots providing 310 parking spaces.