The ownership group at Hill Country Galleria may expand its borders beyond Bee Cave if a deal to bring a Sonesta hotel to the property fails to materialize.
Adrian Overstreet, Hill Country Texas Galleria asset manager, said Sonesta Hotels CEO and Chairman Bill Sheehan visited the area late last month and approved both a site at the retail center and one at the Lakeway Medical Village development farther up the road on RM 620 near Lakeway Regional Medical Center.
“We’re committed to building a hotel in this area that will be flagged a Sonesta international” hotel, Overstreet said. “The reason that we even had to look at sites other than at the Galleria was simply because of the water and sewer impact fees” in Bee Cave.
According to his estimates, West Travis County Public Utility Agency impact fees for a hotel would rise by $1 million after this October.
“If we can’t get a building permit by October, then the tap fees will be over $2 million to build a hotel,” he emphasized. “If we get a building permit by October, then they go down to a million dollars, which is still more than you can afford to spend on tap fees for a hotel. In Lakeway, the site includes the tap fees.”
The State of Texas Local Government Code, Chapter 395 regulates utilities’ impact fees and limits the use of those fees to payment for capital improvements necessitated by growth.
Water Resources Management, the firm that conducted the PUA’s impact fee study, reported that capital improvements utilized in the calculation may include existing improvements that have excess capacity as well as future improvements that will meet the needs of growth.
Overstreet stated the developers are gathering evidence to file an appeal with the PUA.
“Hopefully, we can work something out so we can build a hotel here” at the Galleria, he said. “It will cost us $1 million more if we wait a day after Oct. 31. Within the next 90 days we are going to have to decide where this hotel is going to go.”
International architectural firm Gensler Group will design the 200-room Sonesta hotel that will feature pools and exercise room. If the hotel locates at the Galleria, it would possibly contract with restaurants there to offer their fare as room service menu options. At the Lakeway site, an in-house restaurant would be added.
Overstreet said demand for a hotel in Bee Cave has picked up after the Galleria added two NYSE company headquarters that bring employees to the city for training or meeting.
“Whichever location it’s at, we’ll have a great deal of meeting space because there’s a demand for that,” he said.
If developers build the hotel in Bee Cave, it would be a five-story hotel. Overstreet said they are investigating what height variances the project would need from the city of Lakeway. Either way, they hope to break ground in October and complete construction in nine months and outfit it in three months.
“I think you could expect to see it open by Christmas 2014,” Overstreet said.
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