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Hilton Garden Inn pact gets unanimous OK from Prescott Council
Inn debate centers on economic benefit vs. under-valued price

Prescott City Attorney Jon Paladini reports to the City Council on a recent economic impact analysis on the planned new Hilton Garden Inn hotel in downtown Prescott on Tuesday, Jan. 22. (Cindy Barks/Courier)

Prescott City Attorney Jon Paladini reports to the City Council on a recent economic impact analysis on the planned new Hilton Garden Inn hotel in downtown Prescott on Tuesday, Jan. 22. (Cindy Barks/Courier)

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An artist’s rendering of how the Hilton Garden Inn in downtown Prescott will tie in with the historic railroad trestle that is located nearby.

Two camps – one strongly in support, and the other vehemently opposed – continued to frame the argument over a new hotel in downtown Prescott.

On one side: A $17.7 million annual economic benefit from additional sales tax, visitor spending and other related demand for goods – seen by supporters as a “significant” boon to the community.

On the other: A lease/purchase cost to the developer of $15,000 per year – termed by opponents as an amount a renter might be pay for a small Prescott apartment.

In the end, all seven of the Prescott City Council members came down on the side of the economic impact.

In a unanimous vote Tuesday, Jan. 22, the council approved the amended agreement that will allow development of a new 101-room Hilton Garden Inn on a 1.9-acre piece of city land at the corner of Sheldon and Montezuma streets.

Developers say construction on the $24 million hotel project could be underway by about May.

BLIGHT OR GEM?

Throughout the months of discussion, city officials have maintained that the hotel project would help to transform the Granite Creek area west of the LaGuardia Bridge into a useable recreation center, complete with a splash pad, a railroad-themed playground, and an area for the Prescott Farmers Market.

Currently, City Attorney Jon Paladini said, the area is “blighted” land that is generating no revenue for the city.

But that prompted a disagreement from local resident Jan Bryan. Rather than being a blight to the community, she said the west-Granite Creek Park area is a “jewel in the real estate portfolio of Prescott.”

Still, another local resident – downtown property owner Connie Cantelme – disagreed with that as well. “Anybody who can say that area is not blighted does not have their glasses on,” Cantelme said.

While allowing that the creekside land is beautiful, Cantelme said homelessness and drug use in the area make it unusable to the general public.

Bryan also questioned the hotel deal’s $15,000-per-year lease with an option to buy after the first five years for $300,000. Noting that the annual amount factors out to $1,250 per month, Bryan added, “A person would be hard-pressed to find a small apartment in downtown Prescott for $1,250 a month.”

ECONOMIC IMPACT

Indeed, the lease/purchase price has been central to the debate from the beginning.

Paladini referred to the “debate over whether the city is under-valuing the property” during his introduction of a new economic analysis, prepared by consultants Applied Economics.

The report, for which the city paid the $4,000 cost, states that the hotel project would bring an estimated impact to the community of $17.7 million per year, or $177.2 million over the first 10 years of operations.

“This is a substantial economic project,” Paladini said. City Manager Michael Lamar added that the project “would pay dividends for generations to come.”

The “overall conclusion” of the economic analysis, Paladini said, is that the hotel project is “a good investment even if it’s under-valued.”

He told the council, “Our investment is basically the land,” and added, "It’s a business question for you – whether this business investment has the right return on investment.”

But local resident Howard Mechanic, who has been vocal in his opposition with the city’s handling of the project, listed 11 mistakes he said the city has made on the project – from the “sham bidding” that he said the city conducted to solicit interest in the land, to what he termed as a “gifting” of property to a private developer.

In response, developer Shane Shumway stressed the additional expenses that the project would require from the developers because of its location in the floodway.

The hotel’s foundation would cost an additional $700,000 to deal with the floodway issues, Shumway said.

In addition, he said the developers will put about $250,000 into making the historic railroad trestle accessible to the public, and another $2 million or so in converting the Sam Hill Warehouse into convention/conference space.

Long-time City Councilman Steve Blair added that the city has been chastised in the past for its financial arrangements on projects that have turned out to be “gifts that keep on giving.” As examples, he mentioned the 1990s-era Costco project, well as the 2000s-era Trader Joe’s project.

After the meeting, Lamar said the city authorized the economic impact analysis after the Jan. 8 council meeting, during which a number of questions arose about the proposed selling price of the city land.

Paladini said the analysis was a professional-service contract, and that city code allows for authorization of contracts of up to $25,000 without taking them to the full council for approval.

The city reportedly received the results of the analysis from consultants on Monday, Jan. 21.

SIGNIFICANT CHANGES

This week’s approval of an amended agreement between the city and the developer comes after the council’s original approval of the hotel deal in August/September 2018.

Since that time, the plans have changed and expanded to include improvements to the surrounding park, railroad trestle, and nearby Sam Hill Warehouse.

The amended agreement also restricts the height of the hotel building to 55 feet rather than the 70 initially proposed. In addition, a number of partners, including Prescott College and Arizona Public Service, have signed on.

The city also re-advertised the project to solicit interest in the property from other hotel developers, and deemed that “There have been no other offers on the subject property.”

Follow Cindy Barks on Twitter @Cindy_Barks. Reach her at 928-445-3333, ext. 2034, or cbarks@prescottaz.com.

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