This piece of Project Marvel is officially off the table.
The City of San Antonio and the San Antonio Water System decided not to build a new convention center hotel at the site of a downtown chilled water plant after projected costs to move the plant climbed to $300 million.
Initial plans for Project Marvel included a new hotel at the site of a SAWS’ facility between Market, Commerce and Bowie streets. It would be built near the existing Grand Hyatt San Antonio River Walk, which serves convention center customers.
The multi-billion dollar downtown development still includes a new arena for the San Antonio Spurs and renovations to the Henry B. Gonzalez Convention Center, but city and utility officials now say that moving that downtown chilling plant would be far too expensive.
“The city has said publicly since last fall that we would not pursue a second convention center hotel if the costs were not reasonable. Currently, we are not pursuing a second hotel,” said Brian Chasnoff, a city spokesman, on Wednesday.
Canceling the hotel project will not impact city funding for the Spurs’ new downtown home. The city’s $489 million piece of the $1.3 billion arena is coming from hotel occupancy taxes in the area and a tax increment reinvestment zone, which funds current projects using projected tax dollars from after they’re completed.
Neither of those calculations included the new hotel, Chasnoff said.
SAWS operates a district cooling system for buildings in the area. Customers include the convention center, the Alamodome and hotels like the Grand Hyatt and Hilton Palacio del Rio.
The recently-opened Kimpton Santo San Antonio-Riverwalk and The Monarch San Antonio hotels are now using the cooling system. They’re the system’s first new customers in over two decades.
The system pumps cold water through pipes, absorbing heat from a surrounding area. That warm water is then cooled down again at a chilling facility and then circulated back out. SAWS operates systems downtown and at Port San Antonio.
SAWS approved a $2.3 million feasibility study for moving the central chilled water plant on Commerce Street in 2025. The study isn’t done, said SAWS Communication Director Anne Hayden, but SAWS did determine the cost for moving the facility.
“SAWS evaluated the feasibility of relocating the downtown district cooling plant and determined that moving the facility would be cost-prohibitive,” Hayden said in an email. “An engineering study found relocation costs would exceed $300 million, leading SAWS and the City of San Antonio to mutually agree not to pursue moving the plant.”
SAWS also started a $30 million update to its downtown chilling system in 2022, increasing rates for the system’s customers to pay for those costs. Funding for improvements would not come from other SAWS customers or an impending rate increase.
SAWS has spent $20 million so far on updates, replacing piping, installing new coolers and making other improvements at the central plant on Commerce Street and a Cherry Street cooling plant that also serves the downtown chilling system.
The cooling system can utilize 22,000 tons of chilled water when operating at peak capacity — 8,000 tons through its Cherry Street facility and 14,000 tons at its downtown plant. But the Cherry Street plant has been operating with 6,000 tons of water since 2023, when one of its chillers failed.
On Tuesday, SAWS approved a $3.1 million replacement of that chiller. Hayden said the chilling system has 4,000 tons of chilled water available for additional customers.
Project Marvel’s various pieces are coming into focus. A new arena and a convention center expansion have headlined the project. The Spurs also recently announced developers and consultants for a mixed-use district around the proposed arena, which could include retail, housing and hotels.
“We are exploring with our consultant some upgrades to the Commerce Street plant, particularly cooling tower upgrades, that could bring us some additional capacity,” Hayden said. “We will know more in the coming months as the study is finalized.”
Chasnoff said the city will have an official proposal later this year when the study is done. He added that upgrades to the district cooling system could include building more satellite facilities.
