The Brazos Commons project on the riverfront near Interstate 35 has taken a step back after developers called off talks with a hotelier and withdrew their request for some $15 million in local incentives.
But project officials expect to apply for incentives again later this year with a new hotel developer in place.
Brazos Commons partners Joe Beard and Rick Sheldon had planned a $130 million project with retail space and 400 residences, anchored by an 11-story Drury Plaza full-service hotel. Drury had planned a 160-room hotel with a conference center, restaurant and garage parking.
But Drury balked at the terms of the public incentives that were key to the project, Brazos Commons spokesman Mike Anderson said.
In September, the downtown Tax Increment Financing Zone board recommended $7.9 million for public improvements supporting the Brazos Commons. The Waco-McLennan County Economic Development Corp. later recommended a $3.5 million business grant, which would be matched with an equal city grant for a total of $7 million.
The city-county grant would require the hotel to pay minimum wage of $12 an hour, which was a term Anderson said Drury would not commit to.
“Unfortunately, Drury couldn’t meet minimum requirements for the EDC funds,” Anderson said. “The $3.5 million was important to them, and we weren’t going to let them find a way to save $3.5 million.”
Drury South real estate director Brian Nenninger did not return calls seeking comment Friday.
Anderson said a signature full-service hotel is crucial for the Brazos Commons project, and the partners are actively recruiting other potential hotel developers that can deliver one.
“We can get just a hotel, but that’s not what we’re looking for,” he said. “We think Waco has turned the corner in terms of being a tourist attraction, and we believe the demand is there for something that’s not in Waco today.”
The TIF incentives would require Waco City Council approval, and the EDC incentives would require city council and McLennan County Commissioners Court approval. Neither entity has scheduled a vote on the incentives.
Waco assistant city manager Bradley Ford gave the news about Brazos Commons to the TIF board Thursday, saying most of the $7.9 million in TIF funds would be available for other development projects.
But he recommended keeping $2 million in place for electrical transmission line relocation that would benefit both the Brazos Commons project and the adjacent Brazos Promenade project the city of Waco is backing.
Oncor Electric Delivery would use the money to relocate two sets of transmission lines that cross the river into the development areas. Most of the lines would be moved closer to the Union Pacific railroad bridge, though Oncor has indicated that not all the lines could be moved, Ford said.
Ford said Dallas-based Catalyst Urban Development is expected to start construction this year on the $100 million Brazos Promenade, which includes retail, housing and a destination restaurant around a renovated Waco Downtown Farmers Market site. The plan also calls for a 110-room full-service hotel, though it is not included in the first phase of construction.
Ford said he believes both hotels will be built. Waco’s hotel occupancy rate is among the highest in the state, and the Waco Convention Center needs more full-service hotel rooms, he said.
“I fully anticipate that Brazos Commons will reapply,” Ford said. “That’s a great place for a hotel. … It’s great to realize that the developers have patience. People want to get the river right.”