Originally Published: August 28, 2018 8:53 p.m.
In what Mayor Greg Mengarelli called “a landmark deal,” the Prescott City Council agreed to a lease agreement this week that is expected to bring a 95-room Hilton Garden Inn hotel to downtown Prescott.
Council members voted 5-1 on Tuesday, Aug. 28, to approve a 25-page development agreement that allows for the lease of a 2-acre parcel of city-owned land at the corner of Sheldon and Montezuma streets to developers for a new 6-story hotel.
The decision came with plenty of objections from the public, however.
Although most of the dozen or so residents who spoke did not voice outright opposition to the hotel project, they all pushed the council to allow more time for public review before making the decision.
At issue for most of the speakers: The fact that the community knew little or nothing about the deal before the City Council meeting agenda was released late last week.
Local homeless advocate Daniel Mattson, who noted that he regularly helps to feed the homeless on the city property that was under consideration for the lease, called the move by the council to approve the deal this week “a travesty.”
While Mattson said the community might one day view the project as a good deal for the community, he warned that if council members went ahead with the approval this week, they were guaranteed to face claims of sidestepping the public process.
“Maybe legally you guys are in your rights to do this, but ethically, I don’t think so,” Mattson said.
Other speakers questioned the proposed lease amount of $15,000 per year for a parcel that retired Yavapai County Superior Court Judge Ralph Hess called “one of the most valuable intersections in the city.”
Local resident Howard Mechanic added that developers were getting the parcel of land at a “subsidized price.”
Speakers also suggested that the city was violating its own charter requirements by moving forward with the lease to developers WSH Hospitality, LLC, without allowing others to bid on the land.
“Why is the city throwing money at the first developer that walks through the door?” Mechanic asked. “What is the rush here?”
By moving forward without more public review, Mechanic said, the council would raise questions about a “backdoor sweetheart deal.”
City officials responded to the objections by pointing out that the land, which is near Granite Creek, is within the floodway.
City Attorney Jon Paladini said the value of the two-acre parcel was “dramatically affected” by its floodway location. Currently, he said, the parcel is “undevelopable” without significant engineering.
City Manager Michael Lamar noted that developers Steven and Shane Shumway plan to deal with the floodway issue, in part, by locating all of the hotel rooms where people will sleep to the upper floors.
Paladini also disputed the claim that the city was in violation of its charter by moving ahead without advertising the parcel for sale.
The deal is for a lease with an option to purchase, Paladini said – not an outright sale of the land. The lease would be for 50 years, with one 30-year renewal option, as well as an option to purchase after the first five years of the lease for $300,000.
“Our charter is silent on option to purchase,” Paladini said. He added that the city advertised the lease, as required, in the legal notices of the Daily Courier in August.
Councilman Phil Goode voiced the only council opposition to moving forward with the development agreement this week.
Although noting that he viewed the hotel project as a significant, positive move for the city, Goode said, “I’m a little disturbed by how quickly this came to us. I’d like to see it delayed and reviewed more.”
Council members Steve Sischka and Alexa Scholl questioned Paladini about whether the development agreement would be the final council word on the matter.
Paladini responded that two issues – a rezoning, and a special use permit to allow for the 70-foot height – would be going back to the council at a future meeting, and the rezoning also would be going to the Planning and Zoning Commission for review.
If either of the remaining items were to be voted down, Paladini said, “The development agreement would be canceled.”
Lamar added that, along with the $15,000 a year in lease payments, the hotel also would be generating sales tax and bed tax for the city. He estimated the annual tax revenues at about $165,000.
In addition, Lamar said, developers will be contributing to the cost of improvements to the adjoining Granite Creek Park.
Goode cast the only vote against the development agreement Tuesday. Councilman Jim Lamerson was absent from the meeting.
Follow Cindy Barks on Twitter @Cindy_Barks. Reach her at 928-445-3333, ext. 2034, or email@example.com.