Port Authority trustees voted on a resolution modifying an earlier resolution — first approved in mid-2022 — approving a capital lease to back construction of 87,500 square feet of hotel and commercial space in the Arcade, known as the “North Arcade.”
Geraghty referred to the latest resolution as a “clean-up resolution,” modifying earlier references to the space set aside for the planned hotel and retail uses on the north side of the Arcade.
While a hotel has long been envisioned for the renewed Arcade, developer Cross Street Partners first announced last year that the Hilton Garden Inn would be the hotel operator at the site. About 14,400 square feet of retail space are also planned on the arcade’s north side.
The overall redevelopment of the Arcade has invested about $100 million into several buildings around a renovated historic rotunda.
Developer Cross Street Partners said in May 2022 it planned to invest about $35 million in the North Arcade.
“They want to close on this in the April time period, and then start construction on the hotel and access from Third Street into the main rotunda,” Geraghty said Tuesday.
The Port Authority’s support for the project, a capital lease structure, is similar to the port’s role in early Arcade development.
Capital lease transactions are deals that allow the port to shield new construction projects from state and local sales taxes on the purchase of construction materials, then leasing the improvements to an occupant company on a capital lease basis.
Dave Williams, senior development director for Cross Street Partners, agreed with the Port Authority’s timeline and said preparation for construction and site work for the hotel have already started. He said the hotel may open in the second quarter next year.
Also Tuesday, trustees voted to approve $7.95 million in tax-exempt revenue bonds for the Delco District parking facility in the 536,261-square-foot former Mendelson’s building, which developer Crawford Hoying is remaking for residential and commercial uses.
The facility will offer about 482 parking spaces, according to Port Authority documents.
The port has supported all three facets of that project — residential, commercial and parking.
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