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This article by Barbara Fox was prepared for the April 10, 2002
U.S. 1 Newspaper. All rights reserved.
Persistence Pays in Trenton’s Hotel Quest
Early in 1998 the long-desired Trenton hotel project
looked like it would fall through. The comeback story was fraught
with drama, says Robert Powell of Nassau Capital Advisors on
Street. "I have been involved in public private financing for
25 years," says Powell, "and I have never had an experience
with so many twists and turns, so many dark moments, so many near
misses — and a successful conclusion. At least one more hotel
will come into the city in 10 years because of the success of this
In addition to Mayor Doug Palmer, the hotel’s advocates included
Shelley Zeiger, a perpetual Trenton booster with a poignant childhood
story of escaping from the Nazis by hiding in a root cellar. A
character, Zeiger made Trenton cultural history in the early 1980s
by enticing the Kirov Ballet to the War Memorial for the first public
performance in the United States since the Cold War began. He had
also attempted to revive a hotel on State Street and failed. "But
I knew there was a great hunger for a flagship hotel in the state
capital," says Zeiger.
It was Zeiger who piqued the interest of no less a personage than
J. Willard Marriott. Zeiger had met the Marriott CEO when they were
board members of the American Russian Cultural Foundation and the
U.S. Russia Business Council. At Zeiger’s prodding, Marriott flew
into Trenton in his private plane to work on the deal in 1991.
"It pays to be persistent," says Zeiger. "It was the last
thing on his mind to have a hotel in Trenton. One day we were at the
embassy and I said, `When are you going to come?’ I picked him up
at the Trenton airport and took him to Drumthwacket for a meeting
with Jim Florio and Doug Palmer. We had a very wonderful meeting.
I drove him to Trenton to make sure we were picking the right
Florio’s administration planned to announce the hotel
at the beginning of his second term, but when Christie Whitman was
elected, the hotel plans went back to the drawing board. Marriott
recommended a developer, Michigan-based Acquest Realty Advisors,
in public/private partnerships, and everyone began to look at a
Powell, the former president of DKM, known for inner city development
in Trenton and New Brunswick, consulted to the Trenton Parking
The Authority turned out to be the lead investor in the Lafayette
Yard Community Development Corporation, the not-for-profit that
and owns the hotel (U.S. 1, October 21, 1998).
Powell enlisted Ryan Beck & Co., a Livingston-based investment banking
firm to sell the tax exempt municipal bonds privately. "But by
the end of 1999, partly due to the Y2K frenzy, that market
says Powell, "and we needed to back the bonds with additional
credit. Early in 2000 we changed our strategy dramatically and asked
the City of Trenton to guarantee the prompt payment of Lafayette Yard
bonds." That brought the price of the bonds down from over eight
percent to just five percent, which lowered the debt service by
creating a lower break-even rate for the hotel. "We also purchased
private bond insurance and ended up with a AAA bond rating," says
Powell, "and we were able to sell a $52 million bond issue at
auction, through First Union and Commerce Bank in April, 2000."
The irony in this arrangement is that if Trenton had already had
hotels, this tax-free bond arrangement would have been impossible.
"In order to set up a nonprofit corporation, the one thing you
must have is city approval," says Powell. "In a thriving hotel
market, such as Atlanta or New York, the hotel industry would scream
bloody murder if a not-for-profit corporation tried to do this."
"This nonprofit corporation is owned by the city of Trenton. There
are no private shareholders, and there will be no dividends to private
investors," says Powell. So unusual is this arrangement that the
standard incentive plan for hotel management had to be deleted from
the contract so that Marriott would not seem to be taking profits
out of a nonprofit corporation. Instead, Marriott agreed to
its management fee to the debt service. This means that if the hotel
is not making money, the bondholders will take their share of the
income before Marriott does.
At each of the key steps, Marriott’s leadership was vital to the
says Powell. "They made significant concessions. They stood by
the project after it experienced lots of delays. At critical points,
J.W. Marriott helped us make the case for state assistance."
Perhaps the most dramatic moment was when the hotel mogul lobbied
the state legislature. "We needed to get $5 million from the
says Powell. "The Whitman administration didn’t have the money
and we had to go to the legislature for a line-item appropriation.
In the middle of that, Shelley bought J.W. Marriott back to Trenton
for a day, and we took him through the legislature to brief key
They were beyond impressed. He has a star quality about him, and his
impact on the leadership was dazzling. He was articulate, persuasive,
and made a case for the hotel in this town that was more persuasive
than any of us had been able to do."
Word of the Marriott visit got around in the State House, and as his
entourage went through the halls, people would come up with cameras
and ask to have their pictures taken with him.
"When he is talking to you, you have the feeling that the two
of you are the only two people are on the planet at that moment,"
says Powell. "When he talked about how important the
of Trenton is to him and Marriott, you believed it. He was a celebrity
— Barbara Fox
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