Prince Street Hotel Proposal Up For Alexandria City Council Final Approval

ALEXANDRIA, VA — On Saturday, City Council will consider final approval of a tourism zone and funding for a Prince Street hotel project in Old Town Alexandria.

The proposal calls for City Council endorsement of a tourism project at 699 Prince Street and 114 South Washington Street, which is existing office space near the King and Washington Street intersection. The developer, J. River 699 PrinceStreet, LLC, has proposed a 134-room boutique hotel to be operated by Aparium Hotel 32 Group, LLC. The 699 Prince Street property was formerly the George Mason Hotel built in 1925. It remained as a hotel until 1972 and has been an office building in the last few decades.

Under a 2011 state law creating a Tourism Development Financing Program, approval would allow the project to receive gap funding from state and local revenues. The developer expects the project cost to be around $69.6 million, funded by $45.2 million in sale and leaseback proceeds, $10.3 million in federal and state historic tax credits, $8.1 million in private equity, and $6.1 million in Tourism Development Financing Program gap financing.

Under the Tourism Development Financing Program, gap funding would be a loan repaid through certain state revenues. The state and city would each repay $2.3 million through reallocating the 1 percent sales and use tax collected from customers. The developer would repay $12.2 million from a 5 percent access fee charged to hotel and restaurant customers.

A city staff report says the hotel redevelopment would generate an estimated $42.9 million in tax revenue over 20 years. After deductions of the 1 percent sales and use tax and costs for city services, the net gain to the city would be an estimated $37.6 million over 20 years.

The hotel's estimated opening date would be late 2023. According to the city staff report, advantages of the project are accommodations for high-end visitors, continuing commercial use of the building, rejuvenating the 100 block of S. Washington Street, preserving one of the city's older hotels and more.

While City Council approval is expected, one of Alexandria's publications has spoken out against the gap funding. Alexandria Times published an editorial in its Jan. 20 edition criticizing taxpayer support of private development. The editorial pointed out the push by public safety employees to improve staffing and pay.

The first reading of the proposal was provided at the Jan. 11 City Council meeting with second reading and final approval scheduled for Saturday. The Tourism Development Plan draft has already received preliminary approval from the Virginia Tourism Corporation/Virginia Resources Authority.