Construction has begun on the city’s newest hotel: Hampton Inn and Suites, located off South 317th Street.
The City of Federal Way issued a building permit July 31. On Aug. 18, ground was broken on the property, located near the Gateway Center and Truman High School. When completed in June 2010, the hotel will be the city’s 21st lodging establishment. It is expected to bring much-needed revenue to Federal Way. It could also be a sign that the local economy is slowly recovering.
The five-story, 80,000-square-foot hotel will feature 143 guest rooms, a swimming pool, tennis court and nearly 2,000 square feet of meeting space, property owner Koong Cho said. The east side of the hotel will also look out on Mt. Rainier.
The privately built project, with Bellevue-based Royal Hospitality LLC as the developer, is expected to cost $23 million. Two of Cho’s existing hotels — one in San Diego and another in Phoenix — plus bank financing supply the funds to build the hotel, he said.
“I didn’t have any problems getting financing,” Cho said.
Cho bought the site in 2004, with the vision to build the Hilton-brand hotel. Federal Way’s regional location, and the location of the property in proximity to Interstate 5, drew Cho to the area, he said.
“Federal Way is currently positioned for significant growth, chiefly due to an increase in mid-size corporate business,” he said. “This provides a superb market opportunity for this type and brand of hotel, as it meets all the needs of corporate travelers.”
The city’s permitting process and a legal battle with an adjacent property owner held up the construction until now. The city’s permitting is a daunting experience, and the traffic fees and mitigations are higher than Cho has encountered in other cities where he’s developed, he said.
“Even Hilton was shocked because they had never seen such high traffic mitigation fees before, especially when compared to the size of this hotel,” he said.
However, many city staff members were helpful throughout the permitting process, Cho said.
The developer’s ability to build, despite the setbacks, impresses Federal Way’s economic development director Patrick Doherty. The litigation and economy could have easily killed the project, Doherty said.
“They came out of it and won,” he said.
This is to the city’s advantage. The City of Federal Way collects both lodging and sales taxes from hotels and motels. In 2008, the city collected $188,321 in sales taxes and $200,000 in lodging taxes from these businesses, Doherty said. In 2009, the city expects to collect at least 10 percent below 2008’s figures, he said.
But the local economy does appear to be getting better.
Summer 2008 through spring 2009 illustrated a vast market decrease in the city’s economic development, Doherty said. Things have really picked up in the past few months, Doherty said.
There has been a jump in developers showing an interest in Federal Way, he said. This year has brought nearly 600 new jobs to the city, Doherty said.
“That’s a good sign (that) someone’s investing,” he said.
Behind the scenes, talks are occurring in the economic development arena, but the city and developers are not yet ready to make anything public, Doherty said.
“It’s baby steps, but I think we are seeing signs of improvement,” he said.
A four-story Holiday Inn Express and a four-story Marriott Residence Inn, among several other private projects, are also now in the permitting process.
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