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Convention board selects Commonwealth Ventures to build hotels

State convention officials selected a developer on Thursday to build two mid-priced hotels across from the Boston Convention & Exhibition Center, jump starting a broader $2 billion expansion of the South Boston complex in coming years.

Commonwealth Ventures is expected to begin construction of the $137 million hotels by the end of the year, pending completion of negotiations with the Massachusetts Convention Center Authority. One will be a 330-room Aloft Hotel, and the other will be a 180-room Element Hotel.

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Both will be operated by Starwood Hotels and Resorts Worldwide Inc. The project is the first phase of a larger expansion that would include a 1,000-room headquarters hotel, parking garages, public parks, and a doubling of the South Boston hall’s exhibit space.

“This is another major step forward for us,” said James Rooney, executive director of the Massachusetts Convention Center Authority. Rooney has said that a shortage of hotel rooms around the South Boston hall makes it harder to compete for large trade shows that want more rooms adjacent to the complex.

“We have only 1,700 hotel rooms around the center, where our competitors have 8,000,” Rooney said. “And within that, we have zero mid-priced hotels.”

The authority’s board voted to select Commonwealth Ventures over Carpenter & Co., a Cambridge-based firm that developed the Charles Hotel and the Liberty Hotel in Boston. Commonwealth Ventures, with offices in Boston and Connecticut, has not previously developed hotels. But has built many other significant properties. It is currently building an office tower near the convention center for State Street Corp.

Authority officials said the company demonstrated an ability to move forward quickly and submitted the best overall proposal.

Commonwealth Ventures will pay about $3.4 million in rent to the convention center authority over the next 10 years. The authority bought the land for the hotels for about $18 million last year and initiated a process to find developers to build them.

Rooney said the authority wanted more rent from the developer, but was willing to accept a lower amount to get the hotels constructed and expand the center’s ability to host larger events and trade shows. He also noted the new hotels will generate more than $5 million a year in city and state tax revenues.

“It looks like a pretty good deal on balance,” he said.

Casey Ross can be reached at cross@globe.com.
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