A Marriott hotel may not be coming to downtown Austin after all.  Developers had a very public fight with Las Manitas restaurant.  Now, Mayor Will Wynn says the deal is in jeopardy and it could cost the city millions.

Wynn says he’s “not optimistic” that a deal will be struck between the two sides, and he fears the city’s opportunity to land a project valued at several hundred million dollars may have passed.

“I'm nervous it may not happen,” said Wynn.

Wynn knows the stakes involved.  A proposed Marriott development for the block would add 600 jobs to the economy and bring in an estimated $7 million annually to the city.

“It's not just another hotel, it's a convention center hotel, which is a very different and important product,” said Wynn. 

Until last week, city leaders thought they had the deal locked in.  The city had approved a controversial and mostly-forgivable $750,000 loan to Las Manitas to help the restaurant move to the La Pena building it owns on the same block.  In turn, Las Manitas had to give up access rights to the back alleyway, which runs in the center of the project.

KVUE

Las Manitas

But when the restaurant’s owners, the Perez sisters, turned down the loan, everything changed, including the mayor’s optimistic outlook.

“In this case, I think the finances are difficult enough, the economy might be shaky enough, the cost of rehabing the Perez sisters' building on the corner is going to be high enough.  I'm concerned without our involvement, the transaction doesn't happen... and we essentially lose both businesses,” said Wynn.  “Las Manitas’ lease is now expired... they may go out of business as a restaurant that's very popular, and for different reasons, the second convention center hotel doesn't get built.”

Austin City Councilmember Brewster McCracken says although the restaurant and developer reached an impasse in December, perhaps the two are ready to strike a deal.

“Both sides really do need to work together,” he said.  “I don't detect the same level of animosity between the two parties right now, so that by itself makes it more optimistic that something can be worked out.”

If Las Manitas and the developer, White Lodging, are ready to move beyond their differences, they’re not talking about it publicly.  KVUE’s calls to both sides were not returned.