Loading...
HomeMy WebLinkAboutMinutes 12/17/2001 4571 City Council Special Meeting in Joint Session with the Lodging Tax Advisory Committee and the Downtown Forward Executive Committee Port Angeles, Washington December 17, 2001 CALL TO ORDER - The special meeting of the City Council, the Lodging Tax Advisory Committee, and the SPECIAL MEETING: Downtown Forward Executive Committee was opened at 7:30 a.m., by Councilman Campbell, Chair of the Conference Center Review Committee. ROLL CALL: Members Present: Councilmembers Campbell, McKeown, Wiggins, and Williams. Members Absent: Mayor Doyle, and Councilmembers Erickson and Hulett. Lodging Tax Advisory Zoe Bayton, John Brewer, Carol Griffith, Jim Haguewood, Committee Members: Bob Harbick, Jack Harmon, Steve Oliver, and Bill Rinehart. Downtown Forward Leonard Beil, Mike Chapman, Don Corson, Dan DiGuilio, Executive Committee Eileen Knight, Karen McCormick, John McCullough, Joe Members: Melton, Vicci Rudin, and Brooke Taylor. Staff Present: Manager Quinn, Attorney Knutson, Clerk Upton, T. Smith, G. Cutler, and P. Rasler. Public Present: Aria Holzschuh, Michael Leuhers, Russ Veenema, Mary & Roy Gotham, Jan Harbick, Allan Bentley, Randal Ehm, Laurie Szczepczynski, Martha Hurd, and Pete Schroeder. Recommendation of Recommendation of Conference Center Review Committee: Tim Smith made opening Conference Center Review remarks, noting that the purpose of this meeting was for the Conference Center Review Committee Committee to share its recommendation with the members of the Lodging Tax Advisory Committee and the Downtown Forward Executive Committee. He reviewed the background of the project thus far, summarizing the 2001 Conference Center efforts, to include the City/Port agreement for marketing the Oak Street property and the City's issuance of an RFP for a Conference Center. Two proposals were submitted, one by Ehm Architecture (Oak Street) and the other by Ravenhurst Development (Landing). Both proposals were thoroughly reviewed by the Conference Center Review Committee, which was comprised of Councilman Orville Campbell, Jim Haguewood, Bob Harbick, John Brewer, Steve Oliver, Port staff members Dave Hagiwara and Pat Deja, DNR staff member Martha Hurd, and City staff members Mike Quinn, Tim Smith, and Craig Knutson. Mr. Smith continued by reviewing the joint meeting between the City Council and the Port of Port Angeles Commissioners, after which the proposals were forwarded to the review committee for analysis. The review committee met on several occasions, and this meeting was then scheduled to hear its recommendation. Mr. Smith reviewed the evaluation criteria used by the committee: compliance with facilities requirements, compliance with operations requirements, return on public investment, likelihood for achieving long term financial success, and compliance with City/community vision for downtown development. It is envisioned that the Lodging Tax Advisory Committee and the Downtown Forward Executive Committee will hold meetings at some future date to formulate recommendations to be forwarded to the City Council in January. Subsequently, the City Council will forward a recommendation to the Port of Port Angeles and the Department of Natural Resources. The process will then enter the "due diligence" phase, and negotiations will commence. Councilman Campbell advised those present that the Conference Center Review -1- 4572 City Council, Lodging Tax Advisory Committee and Downtown Forward Executive Committee December 17, 2001 Recommendation of Committee members had unanimously recommended that the proposal from Ehm Conference Center Review Architecture go forward in the process. Councilman Campbell then proceeded to Committee (Cont'd) review in detail how this proposal met the evaluation criteria, as opposed to the proposal submitted for the Landing Mall: Oak Street Compliance with Facilities Program Requirements: vt Fully meets or exceeds location and facility requirements as outlined in RFP vt New hotel with conferencing facilities and restaurant would be highly competitive in conferencing market vt Fits with community's general vision for development of Oak Street site vt Accommodates Waterfront Trail, public access to waterfront area and Estuary, adds parking vt Design proposal suggests a great deal of flexibility subject to addition of overall costs vt Some question re. quality of final concept and design, medium vs. higher end quality hotel LandingCompliance with Facilities Program Requirements: Improves an under-utilized facility vt Lack of physical connection to hotel a minus in securing conference market Oak Street Compliance with Operations Program Requirements: vt Provides for an all "private sector" operating and marketing management team as opposed to public resources involvement vt Provides marketing leverage via national/worldwide marketing connection (Six Continent Hotels) vt Stated interest in PA unit to be flagship product that may launch replication of new chain of conference center hotels vt Some concern that ROI projects 13% return, when 15% is preferred vt Some concern that marketing specifics are lacking LandingCompliance with Operations Program Requirements: Project occurs in designated area as requested in RFP Requires additional public sector funding of $150K/yr. for operations and marketing in addition to the $100K/yr. of committed lodging tax funds Concern for fair access to catering by Landing restauranteurs Oak Street Return on Public Investment: Although some cost/budget items are not fully defined, budget suggests some "slack" room capable of absorbing other potential costs Proposal seeks no more than $100K annual lodging tax commitment subject to staying within proposed budget Considerably more leverage of public investment compared to other proposal under consideration Good potential for increasing lodging tax revenues by raising average annual room rate due to new construction of a waterfront hotel Concern over lack of response strategy in the event of cost overruns Landing Return on Public Investment: Loss of some existing public parking a concern Proposed building conference facility without hotel, proposes public operation involving ongoing public financial commitment Oak Street Likelihood for Achieving Long-Term Financial Success: Development would be very competitive with similar conferencing facilities Preliminary cost/revenue information is favorable - a more detailed look at this in next phase is required Long-Term ownership and management commitment looks strong, but it is realized these kinds of facilities are always subject to sale Landing Likelihood for Achieving Long-Term Financial Success: The developer lacks any commitment to conference center management or marketing Does put site improvements on tax rolls Marginal leveraging of public financial investment compared to competing Oak Street site proposal Ongoing City contribution would need to be approximately $250K annually -2- City Council, Lodging Tax Advisory Committee and 4573 Downtown Forward Executive Committee December 17, 2001 Recommendation of Oak Street Compliance with City/Community Vision for Downtown Development: Conference Center Review er Proposal is exact match of Downtown Forward Plan vision of development on Committee (Cont'd) Oak Street site er Anchors west end of downtown waterfront and will promote more potential in-fill development along waterfront and west side of downtown er Builder willing to consider further public input on final design er Will attract more people to downtown er Moderately high-end development Landing Compliance with City/Community Vision for Downtown Development: et Fresh and attractive vision for new Landing, but this extent of Landing remodel has not been an identified vision in existing Downtown Forward Plan er Much less leveraging of public financial commitment compared to competing proposal for Oak Street site Discussion followed, and John McCullough acknowledged the hard work of the review committee. He stressed that marketing is critical to the success of the conference center effort. Jim Haguewood agreed, noting that the committee identified this matter as a key issue, something that will be addressed in the next phase of the process. Bob Harbick also agreed, indicating there will be additional marketing money brought in by the hotel chain to enhance the local marketing efforts. Carol Griffith sought clarification regarding a stated increase in lodging tax and, additionally, if the proposed hotel were to be sold what the impact might be on the City's $100K annual commitment. Councilman Campbell responded it was not intended to imply there would be an increase in the lodging tax rate but, rather, the development would raise the level of lodging tax revenues generated. Jim Haguewood noted that the proposal would add 150 new rooms and may influence an increase in the average daily rate within the City. Steve Oliver expanded on the City's financial commitment, noting the $100K is a public investment, and the City will have to protect the City's interests via lease and lease back arrangements. Councilman Wiggins felt it would be helpful for those present to understand Ehm's track record in the past. Mr. Smith indicated a very thorough review had been undertaken on Ehm, to include a Dunn and Bradstreet report, as well as a thorough credit check. However, Mr. Smith also noted that Ehm's venture into the lodging industry would be a new experience and that Ehm did not have a proven track record in this particular field. Michael Leuhers, Red Lion Hotel, voiced his appreciation for efforts to increase tourism in the area. He was uncertain as to the accuracy of the statement concerning lack of marketing and operational management on the part of the Landing proposal. It was his intention that the Red Lion would partner in this endeavor on the Landing proposal. Councilman Campbell indicated it was the review committee's understanding that Ravenhurst would have a landlord/tenant relationship, and that the City would need to create an organization for that purpose. The City would, therefore, sustain the risk in this regard. Mr. Smith offered clarification regarding the proposed partnership between Ravenhurst and the Red Lion, a matter that has been impacted by the sale of the Red Lion chain. Although there is some indication that the partnership can still come together, the review process for the RFPs could not be delayed. Attorney Knutson had the impression that Ravenhurst's position on marketing might end up with some marketing assistance from the Red Lion, but that the City would still be responsible for the operation, which would result in a need for an additional $15OK. Mr. Leuhers felt the competition may have some negative results in the community as relates to others in the lodging industry. He asked for clarification on the proposed rates, which he thought had been understated in previous discussions. Councilman Campbell felt that, if the project harms more local business than is created by the project, then further review is appropriate. However, the basic premise is that the conference center will generally enhance most local businesses. Bob Harbick noted the importance of having hotel beds available at the conference center, as this is a key priority by user groups. Joe Melton indicated he would like to see the process move forward; however, he stressed the importance of doing so with great caution. Pete Schroeder inquired as to what percentage of the land would be covered by the hotel and the parking lot. Mr. Smith responded there would be approximately one-third for landscaping and the Waterfront Trail, one-third for parking, and one-third for the hotel/conference center. -3- 4574 City Council, Lodging Tax Advisory Committee and Downtown Forward Executive Committee December 17, 2001 Recommendation of Steve Oliver indicated discussions have been held concerning the footprint of the Conference Center Review project, the possible amenities, and the like. It was mentioned that the due diligence Committee (Cont'd) phase of this effort has been targeted for completion approximately 45 days after Council approval of the recommendation. Further discussion, with clarification, was held on the matter of Ehm's proposal specifically relating to marketing and management with the added benefit of the City's financial commitment. Attorney Knutson indicated that Ehm would use the City funding for part of the construction, but the City would have a long-term lease with Ehm. All of these arrangement would be well documented in a lease agreement. Brooke Taylor felt it was unclear as to the ownership of the underlying land, and Steve Oliver responded there is contemplation for a long-term lease of the land from the Port and the DNR. Responding to a question concerning DNR's timely responsiveness to the project, Martha Hurd assured the group she has been working with the Olympia office and was comfortable there would be accommodation to meet the group's goals and deadlines. Joe Melton, citing the Landing Mall's previous financial experiences, queried as to how a default might be handled and what kind of interest might the City maintain in the property. Mr. Smith indicated that, through the due diligence process, this type of issue will be addressed. He felt that, if the project's viability were to be placed in question, the City would likely withhold any further payments until the operation were to resume. Bill Rinehart posed the question as to who is responsible for lease costs, and Steve Oliver responded the f'mal structure has yet to be determined but there would be some parameters placed on the City's funding commitment. Further, Steve indicated there would likely be created a leasehold interest that would survive bankruptcy and foreclosure. Mr. Smith added that Ehm might well save on project costs if the land is leased as opposed to the original plan for a land purchase. The pro forma submitted by Ehm suggests a greater value for the land than was established in the resulting appraisal. Further discussion ensued on lease versus purchase of the property and what might be expected in terms of a lease duration. Mr. Smith reiterated the upcoming process in that the two committees will meet to formulate their recommendations to be forwarded to the City Council, hopefully at one of the January meetings. Following an agreement by the City Council as to its recommendation, the matter will then proceed to the Port and DNR for consideration. It is hoped that, by the end of February, the City will know how it will be proceeding for a conference center. At the conclusion of this meeting, the two committees asked to reconvene in separate rooms to set dates for their next meetings. ADJOURNMENT: This portion of the meeting was adjourned at 8:25 a.m. Reconvene Lodging Tax The meeting of the Lodging Tax Advisory Committee reconvened at approximately Advisory Committee 8:30 a.m. After preliminary discussion, there was consensus that the Lodging Tax Meeting Advisory Committee was in a position to make a recommendation at this time. Therefore, Jack Harmon moved to accept the recommendation of the Conference Center Review Committee and forward the recommendation to the City Council. The motion was seconded by Zoe Bayton and carried unanimously. The Lodging Tax Advisory Committee meeting then adjourned at approximately 8:40 a.m. Reconvene Downtown The meeting of the Downtown Forward Executive Committee reconvened at Forward Executive approximately 8:30 a.m. After due deliberation, the members agreed to meet on Committee Meeting January 11,2002, at 7:30 a.m., to formulate a recommendation on the conference center proposal. The meeting of the Downtown Forward Executive Committee then adjourned at approximately 8:40 a.m. ~y J. Ui~, C~ Clerk I ....... Mayor · Lodging Tax Advisory Committee Downtown Forward Executive Committee -4-