The city wants a land buyer. The real question is whether the hotel pencils.

Same price, same day, one more party at the table.

The city acquires the site, by purchase or by condemnation. Under the MOU or the redevelopment agreement it resells to you at an agreed price. At that closing, we fund the land at that price. Title to the land lands in a single-purpose entity we own. You sign a 99-year ground lease and hold the leasehold, which is where the hotel, the franchise and the loan all sit.

Two sequences work. The city conveys to you and you convey to us in the same closing. Or the city conveys directly to our entity with you as ground lessee, if the agreement allows it. Either way the city sees one closing and one funded price.

Watch the city’s retained rights. Redevelopment agreements often carry a right of reverter, a repurchase option, use covenants or transfer limits. A leasehold lender will not lend behind a reverter that can wipe out the lease. Those rights need to be drafted so they recognize the ground lease and the leasehold mortgagee, or so they fall away at completion. Get this into the agreement before the city signs it, not after.

A letter, proof of funds, and a sequence that makes sense.

The city typically wants a signed letter of intent from the land buyer at the MOU price, evidence that the buyer has the capital, and a short memo showing who holds title at each step and who is bound by the development covenants. It wants to know the covenants will run to whoever builds and operates.

The franchisor wants site control for at least the franchise term. A 99-year ground lease gives that easily. It will also look at what happens if the lease defaults. More on that in what the franchisor checks on a ground lease.

One honest limit. Our letter of intent is conditioned on things any construction lender also requires: committed equity, leasehold financing, plans and entitlements. We will not sign a letter telling a city that financing is secured when it is not. Most cities prefer the honest letter. It is the one that survives their counsel.

When land is 2 or 3 percent of the budget, the land is not the problem.

City-resold sites are often priced low on purpose. That helps the developer and it shrinks what a land buyer can do. Here is an illustrative 100-key hotel. These are not a real deal’s numbers.

Hotel lenders size to debt yield, and for hotels they want it high. Ground rent also comes off the top before the lender sizes, so the land sale trades a little leasehold debt for land capital. On the thin deal, no land structure closes a $15.7M hole. Public money, tax increment, grants, a PILOT, real equity: those close it, or nothing does.

This is the question we ask first on every city-land hotel: what does the hotel yield on its full cost, and what fills the gap after a conservative loan? If the honest answer is “not enough,” a land buyer just adds a party to a deal that does not close.

X plus Y: the land, plus a contribution toward the building.

When the land is cheap but the hotel is sound, the useful structure is not land alone. It is the land at its contract price plus a landlord improvement contribution toward the vertical cost, funded through milestone draws after your equity is spent, and recovered through a higher ground rent. It is never drafted as a loan. The full price stays inside a 35% cap on appraised real-estate value, and rent stays at 20–25% of stabilized NOI for a hotel. We explain the mechanics in how a ground lease helps when your land is worth almost nothing.

It helps a healthy deal close faster or with less dilution. It does not rescue a thin one. For the broader hotel case, see hotel ground leases.

Have the whole stack on one page.

Cities that resell land under an MOU have usually been burned by a developer who had a flag and a rendering but no capital. They want to see the stack, not a list of people you have talked to. Put these on one page before you ask anyone for a letter:

Total development cost, with land, hard cost, soft cost, FF&E, pre-opening and reserves broken out. Stabilized NOI from a hotel consultant, not from the franchisor’s sales deck. The senior loan you have a term sheet for, and the debt yield it was sized on. Every public source by name and status: approved, applied for, or hoped for. The equity, who is putting it in, and the guarantor who will sign the completion guaranty.

If the one page balances, a land buyer’s letter makes the city’s decision easy. If it does not balance, no letter fixes it, and the city’s counsel will find the hole in the first meeting.

FAQ.