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HomeMy WebLinkAboutMinutes 02/23/2004 CALL TO ORDER: ROLL CALL: Approval of Minutes Oak Street Conference Center and Hotel LODGING TAX ADVISORY COMMITTEE Port Angeles, Washington February 23, 2004 Councilmember Rogers called the meeting of the Lodging Tax Advisory Committee to order at 3 :05 p.rn. Members Present: Councilmember Rogers, Councilmember MUllo, Carol Griffith, Bob Harbick, Michael Luehrs, and Dave Neupert. Members Absent: Jim Haguewood, Patty Hannah, Jack Harmon, Steve Oliver, and Bill Rinehart. Staff Present: Manager Quinn, Clerk Upton, and Recreation Manager Cole. Others Present: Russ Veenema, Brian Gawley, Randal Ehrn, and Dennis Bragg. Councilmember Rogers introduced Councilmember Grant Munro, who joined the membership of the Lodging Tax Advisory Committee as a representative of the City Council. Approval of Minutes: Michael Luehrs moved to approve the Lodging Tax Advisory Committee minutes of December 15, 2003. The motion was seconded by Carol Griffith and carried unanimously. Oak Street Conference Center and Hotel: Randal Ehrn was present to submit a 60-day status report on the Oak Street Conference Center and Hotel. He advised the committee members that he would be on schedule for the submittal of the plans for the Building Permit. Engineers have been engaged to work on the drawings which will enable him to do hard numbers. He has ordered a new market study from the Chambers Group, the results of which he should have in one week. The investment offering is being prepared, and between the time of submittal and the next Lodging Tax meeting of April 12, he anticipates having more information regarding the financing. The Shoreline Permit established a deadline of September 4'h for the commencement of construction, and Mr. Ehrn was confident the deadline would be met with the facility opening in the spring of2005. Mr. Ehrn was pleased with progress made thus far, as the second set of design comments was submitted by Marriott and immediately incorporated into the design. The plans are for 171 guest rooms, and Mr. Ehrn is working with the City on required parking. He expected to save $1 - $1.5 million by virtue of reduced square footage of the entire building. He described changes to the configuration of the building, which will be a full-service Marriott with three-bay hospitality suites. Questions and answers followed regarding the building, and Mr. Ehrn indicated the overall configuration of the hotel is the same. Nothing has been cut out of the Conference Center, and it is planned there will be a 10,000 square foot ballroom. Russ Veenema inquired as to whether the Marriott name would help in securing fmancing, which Mr. Ehrn felt would definitely be the case. If there is equity for the project, he has been told he won't have any trouble getting financing. Discussion was directed to food -1- LODGING TAX ADVISORY COMMITTEE February 23. 2004 Oak Street Conference Center and Hotel (Cont'd) and beverage, and Mr. Ehrn advised the committee he would be bringing in very expert people for the food and beverage program. Carol Griffith asked ifMr. Ehrnhad secured a letter of intent, but Mr. Ehrn felt it is too early to proceed on that issue. He indicated he should know in the next several weeks what the numbers will be. He further indicated that interest from the banking industry has been evident, and he discussed the benefits of working with a local bank. Michael Luehrs asked about the parking solution, and Mr. Ehrn responded that he has been working with Manager Quinn on that issue and, under the Shoreline Development regulations, the City Light parking lot has been identified for the possible lease of spaces to Mr. Ehm. That possibility has been built into the fmancial projections, but there is a question about whether the development time lines will work for both parties. The various parking alternatives have been reviewed and, over the next sixty days, it is hoped more information will be available with regard to the fmancial situation. At that time, Mr. Ehrn felt he would be in a position to provide firm information to the City in order to address the parking issue in more detail. He noted that the City cannot move forward without knowing his financial situation. Mr. Ehrn reiterated that, by September 4", he must break ground because of the Shoreline Permit requirements. He again expressed confidence that everything would fall in place as planned. Discussion ensued with regard to the various deadlines that have been set, and Mr. Ehm indicated that, if everything goes as presently planned, funding should be available in June. The next step would be the purchase of the property from the Port, after which construction would commence. Mr. Ehrn discussed the production of the modules and how they will proceed on that portion of the project. In response to an inquiry from Carol Griffith, Mr. Ehrn discussed his partners in the project, as well as the anticipated costs. At this time, the project is expected to total $17.5 million, plus $2.5 million the first year for operating expenses, as well as furniture, fixtures, and equipment, for a total loan of approximately $20 million. Responding to another question, he indicated that Marriott has not been locked in to the project, which is something that cannot occur until the time the franchise application has been submitted. The franchise application won't be submitted until the facilitation of the funding. A question was then asked as to when marketing will commence in view of the targeted opening in the spring of2005. Mr. Ehrn indicated that Mr. Bud Green will be the Conference Coordinator, and his scope of work will commence once the financing has been confirmed. Michael Luehrs inquired as to who engaged the services of the Chambers Group, Mr. Ehrn or the City. Mr. Ehrn responded he had asked the Chamber Group to provide analysis, as it is important to obtain a clear understanding of what the facility can or is expected to command, especially post 9-11. Mr. Ehrn responded to Councilmember Mumo' s inquiry as to the size ofthe equity being brought to the table, indicating there is an assumption that 60 - 65% is the amount of equity they need to generate. He noted he will personally contribute $1 million, and he informed the committee of other contributions to the project, such as EhrnArchitecture's donation of his time to the project. Councilmember MUllo asked, with a $3 million investment, what kind of return would people want? Mr. Ehrn responded that 20% is a preferred return over a 3 - 5 year period. Russ Veenema asked about the potential use of the pier in relation to the project, and he also asked what involved individuals are saying about Port Angeles and its future through their eyes. Mr. Ehrn first addressed the pier, indicating the Shoreline Permit application contained information on what he had included in the project, such as a skybridge to the parking, as well as the addition of a water level dock off the pier. However, the DNR and DFW are extremely sensitive to these type of issues, so a formal application must be submitted. The construction permit, however, is a different issue. He continued that most people he has spoken with feel Port Angeles is a wonderful - 2- LODGING TAX ADVISORY COMMITTEE February 23. 2004 Oak Street Conference Center and Hotel (Cont'd) community, and they see a need for such a conference center here. Mr. Ehrn added that he felt it is a coup for Marriott to be thinking about j oining the project, and he reminded the group that Allied Hospitality is assigned to be coming here. Carol Griffith asked Mr. Ehrn ifhe was aware that Quality Inn would be coming to Sequirn. He responded he was aware of that fact, noting they would have sixty rooms, but no conference center. Discussion followed, and Councilmember Rogers asked what Mr. Ehrn was providing in the form of a Peninsula profile, as she wondered if the City could be providing assistance in that regard. Mr. Ehrn indicated that Richard Leider has been gathering information and, as the investment offering is provided, it would be helpful to have as much information as possible. Mr. Leider will be the contact person in that regard. Russ Veenema asked if there is anything the committee could do to provide assistance, and Mr. Ehm responded the project is at the stage where the drawings must progress and the financial offering developed. He felt the most critical issue would be the consideration of the parking, something he would continue to address with Manager Quinn. Mr. Veenema offered a courtesy review of the permit; however, Mr. Ehrn indicated that City staff has been assisting in that regard. There has been ongoing dialogue with City departments regarding the building permit, answering of questions, etc. In addition, they have communicated with the Department of Ecology to make sure the changes made won't alter the existing permit. Responding to a question as to whether Marriott would name the facility, Mr. Ehrn indicated he would be the responsible party for the name. Discussion ensued as to the occupancy needed to make the facility successful, management of the facility in terms of operations and food and beverage, and the fact that two different entities would be running the facility. Manager Quinn shared information on the parking, as one of the challenges is having dual plans for parking with no commitment to design or financing as yet. The parking facility will be shared on site, and there is a specified time line and a need for a contingency plan for alternative parking in the interim. Discussion involved the relationship of the two entities on the parking, and Mr. Ehrn indicated a need to commit to 200 spaces as of now, but the City would build a bigger facility. Manager Quinn clarified 300 spaces is the target for the parking facility. Mr. Ehrn added they would have 27 spaces on site for disabled and limousines. He noted he has served as architect on similar sized parking structures, so he could assist the City to fast track the project and shorten the development lime frame. Further discussion ensued on the matter of parking, with Manager Quinn indicating a second level could be added to the Dupar lot. He felt there would be some practicalities in need of being worked out, especially since this project would be underway at the same time as the Gateway project, thus necessitating some contingency plans such as for the construction workers. Councilmember Rogers then summarized the discussion held: ,/ Mr. Ehrn has been busy with facility value engineering with reduced square footage and related cost reductions of$l - 1.5 million; ,/ The facility will accommodate more rooms in lieu of a lounge on the fourth floor; ,/ Mr. Ehrn has been busy prepping for the application for finances with key items being prepared for the Marriott review team regarding design and development; ./ Efforts are concentrated on getting to construction costs in order to move to financing - drawings are being finalized; ,/ There is a plethora of financing options -local banks, etc.; ,/ There is an expectation of June 2004 funding, with a better feel for that in approximately sixty days; ,/ Parking must still be addressed in conjunction with other City projects, as well as managing parking for hotel rooms and conference attendees - this is a joint effort between the City and Mr. Ehrn. - 3- LODGING TAX ADVISORY COMMITTEE February 23, 2004 Oak Street Conference Center and Hotel (Cont'd) ./ ./ Discussion was held regarding the Shoreline Permit and what it means to commence construction as of September 4; The project is on target to work with City departments to assure a smooth permit package by the March 28'" deadline; Mr. Ehrn is planning a March 26 submittal; Marketing of the facility would commence upon approval of financing; concurrently with value engineering, the Chambers Group has been engaged to study post 9-11 analysis plus look at entire facility, value engineering, costs, and marketing picture of the area so that various costs can be determined. ./ Councilmember Rogers added that, in visiting other towns with construction projects, it is clear things are happening and progress is occurring. She felt Port Angeles could get through these projects in a positive fashion. Discussion briefly involved Marriott's involvement and Carol Griffith's subsequent request that funds be made available for the repair of the Laurel Street stairs, as well as needed repair to the mural at the base of the stairs. Dave Neupert mentioned the possible development of a golf course, something that was supported by Mr. Ehrn as an added benefit to the community. Next Meeting Next Meeting: The next meeting will be held on Monday, April 12, 2004, at 3:00 p.m., in the Public Works Conference Room at City Hall. Adjournment There being no further business, the meeting adjourned at 4:05 p.rn. &~~ ~~^ Becky J. Upt, Cler - 4-