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HomeMy WebLinkAboutMinutes 04/19/2004 CALL TO ORDER: ROLL CALL: Approval of Minutes Oak Street Conference Center and Hotel LODGING TAX ADVISORY COMMITTEE Port Angeles, Washington April 19, 2004 Councilmember Rogers called the meeting of the Lodging Tax Advisory Committee to order at 3:30 p.rn. Members Present: Councilrnemher Rogers, Jim Haguewood, Bob Harbick, Michael Luehrs, Councilmember Mumo, Dave Neupert, Steve Oliver, and Bill Rinehart. Members Absent: Jack Harmon. Staff Present: Economic Development Director Smith and Clerk Upton. Others Present: Jan Harbick, Russ Veenema, Brian Gaw1ey, and Randal & Grace Ehm. Approval of Minutes: Dave Neupert moved to approve the Lodging Tax Advisory Committee minutes of February 23, 2004. The motion was seconded by Bill Rinehart and carried unanimously. Oak Street Conference Center and Hotel: Randal Ehrn introduced his wife, Grace. He then submitted a status report on various components ofthe conference center and hotel, as set forth on a detailed progress report that was distributed at this time by Economic Development Director Smith. The report was entitled, Progress Activity Report 6, and is attached to these minutes as Exhibit "A". Mr. Ehrn advised the committee that he had submitted the plans for the building permit on March 26. Marriott's Vice President of Design had scheduled a trip to Port Angeles to review the new design and to get a sense on how the building design would fit with the waterfront character; however, that trip was postponed to another date. Mr. Ehm showed the group the most recent drawings of the new design, explaining the roof design was changed to accommodate height limitations as well as ballroom requirements. He indicated he is working closely with Marriott on the details of the design so that no problems are encountered when he meets with the design committee for Marriott. Noting that the Rafn Company had withdrawn from consideration as a general contractor, Mr. Elun indicated he has been meeting with other possible construction contractors. In addition, Allied Hospitality is no longer on the approved list of operators, so Marriott shared with him a list of other possible operators. Mr. Ehm is working with contractors on finalizing the numbers, and the numbers on food and beverage are being refined. Discussion ensued on such matters as food and beverage and construction costs. Mr. Ehrn indicated that Marriott doesn't anticipate any problems as long as the equity is forthcoming. Michael Luehrs inquired as to what information from the Chambers Group might be considered new or of concern. Mr. Ehm responded there was nothing surprising in the findings, and the direction has not been changed. He added that Marriott will now be looking at like properties to assist in determining what can be expected in this market. The Chambers Group had difficulty quantifying the numbers, so Marriott will be assisting in that regard. -1- LODGING TAX ADVISORY COMMITTEE April 19, 2004 Oak Street Conference Center and Hotel (Cont'd) Jim Haguewood asked for an update on the number of rooms, square footage, etc. Mr. Ehrn indicated that, as of this date, 171 guest rooms are planned. There would be 14,000 square feet in conference space, which Mr. Smith observed would exceed the 10,000 square feet requested in the RFP. The ballroom is scheduled to be 10,000 - 11 :000 square feet. Discussion then centered around the parking situation, and Mr. Elun advised the committee that he was still in the same position with the City as before. He indicated that the City intends to help provide as much parking as needed, and two possible locations have been identified for a parking structure. He has been negotiating the issue directly with the City Manager. Mr. Smith indicated that the Planning Department has been reviewing the documents submitted and will be provided comments. There will be some level of outside review of the plans, the costs of which will be passed on to Mr. Ehrn. Bob Harbick expressed concern with the current time frame, feeling more of the details should be locked down. Mr. Ehrn and Mr. Smith provided commentaries on the time frame, noting these issues are under Mr. Ehm's control. At some point, he will need to make a decision as to whether the deadlines can be met. Mr. Ehm agreed it is "crunch" time, but he felt it important to resolve certain issues now to preclude future problems. Mr. Smith reiterated Mr. Ehrn's goal of securing financing in June and beginning construction in July. However, he suggested the possibility of working with the deadline set by the Shoreline Permit and going backwards to establish certain target dates. He indicated that proof of financing must be established before a contractual agreement can be entered into with the City. There is a draft agreement in place, but there must be a date certain for review of the Building Permit application and issuance. Mr. Smith added that the matter of finalizing the land transaction with the Port must be accomplished as well. There are many issues to be fmalized, and Mr. Smith felt that a time line could be worked out for the next meeting. Mr. Ehm felt that such a document would be helpful. Discussion then followed on Mr. Ehm's budget, which he hoped could come in at $18 million. Discussion also followed on the land transaction with the Port, the cost per room, as well as projected room rates. Mr. Ehm indicated that the Marriott now averages $114.00 - $145.00. Rates are being developed and are driven by the market. Councilmember Mumo discussed the high quality of the rooms at the Quinault Lodge, and the question was raised as to when Mr. Ehm would expect to sign with Marriott. Mr. Ehm responded a time line is being developed for implementation of a franchise agreement. He planned to move forward with the project while the franchise agreement is being addressed. Mr. Smith indicated he would work up a schedule, keeping in mind the September Shoreline Permit deadline. He felt there may still be some room, in spite of the tight schedule. ]imHaguewood returned to the issue of parking. Due to the placement of the building, he asked about the number of required parking spaces. Mr. Smith indicated that the City has identified the number of spaces required, and that Mr. Ehm has negotiated with an adjacent property owner. There is an option to provide him with an air space development above the City Light lot in the form of a second level. He added that Mr. Ehm, as the developer, would be required to build at his cost. It was Mr. Smith's recommendation that the City make the air space available over City-owned land. Mr. Haguewood cautioned that the parking matter should not be an issue to the success of the project. Mr. Smith reminded the group that building and parking cannot take place on the shoreline. Steve Oliver, noting the community has a significant parking problem in the downtown area, expressed the hope that the issue of parking will be addressed collectively. Councilmember Rogers indicated the City had done a comprehensive review of parking because of the Gateway Project, and Russ Veenema indicated that the downtown needs are being looked at in their entirety. Mr. Haguewood - 2- LODGING TAX ADVISORY COMMITTEE April 19, 2004 observed it would be difficult to obtain return on investment in view of the number of rooms and the parking requirement for 200 spaces. Mr. Ehrn indicated their parking models were based on discussions with the City, and the need for 351 parking spaces has been identified. Resignation of Committee Member Resignation of Committee Member: Michael Luehrs inquired as to the status of filling the position vacated by the resignation of Carol Griffith. Councilmember Rogers acknowledged that a new member must be appointed to fill the position from the lodging industry. Next Meeting Next Meeting: The next meeting will be held on Monday, June 21, or Tuesday, June 22, 2004, at 3:30 p.m., in the Public Works Conference Room at City Hall. Mr. Smith advised the group he would begin work on the time line schedule and have it ready for consideration at the meeting in mid-May. Adjournment ~tI~ ~,l~ Becky J. UPt~ Cit lerk - 3- - , . , , Pier Group LLC , , ~.ro"il ~riJ.'i'.it~hmad-,.ccrl' Interne! .www.ehmarch.com Facsimile 619299-0957 ToJlFree 600299-5453 1016Wasl Washington Street San Diego,CA 92103-1808 Randal Jr,'/Ehm Presid,,,,: Exhibit "A" April 15, 2004 Tim Smith, Economic Development Director City 01 Port Angeles 321 East Fifth Street Port Angeles, W A 98362-0217 RE: Port Angeles Hotel and Conference Center Dear Mr. Smith; Please find attached a copy of Progress Activity Report 6, pursuant to our agreement. As always, do not hesitate to call me if you have any questions or comments about this submittal. Respec hm AlA, CO~ PAR 5 April 15, 2004 Page 2 Progress Activity Report 6 1. Submit a regular Progress Report. Activitv: . Submitted PAR 5 to City of Port Angeles on March 16, 2004. 2. Attend regularly scheduled meetings. Activitv: . Randal Ehm will attend Chamber of Commerce, Port Commission, PABA and Downtown Association meetings April 19 and 20. . Randal advised Peninsula Dailv News of our progress on April 12. . Randal will return to Port Angeles June 14 and 15, when he will meet with City Representatives, the Port Commission, PA Chamber of Commerce and PABA. 3. Narrow the field of interested investment partners. Activitv: . Submitted Confidential investment Contact Report Number 6 (lCR) for review by City ONL Y with this PAR Number 6. The ICR continues to reflect our focus on strong prospects, but holds several potential equity sources in reserve until we finalize cost information. . We are still holding on investor contact until we have determined a proper course of action for investment procurement. We expect to have an appropriate level of information by May 7, 2004 to make this determination. 4. Work with Pier Group's hospitality advisor to determine the best investment scenarios. Activitv: . Marriott Vice President of Design Paul deCourt had planned to visit Port Angeles on April 20, but his visit has been postponed. Mr. deCourt desires to see Port Angeies first- hand, to get a sense for how the building design fits with the waterfront character of Port Angeles. We have received a round of design review comments from Mr. deCourt pursuant to our previous design response, and are working to develop a further response. . We are continuing to value-engineer the project to reduce construction cost to a level more commensurate with projected debt service. . We are working with Dexter Tom of Marriott to clarify all tasks necessary to initiate the franchise application once the financing structure becomes clear. . We are negotiating with alternative hotel operators who are in "very good standing" with Marriott and who were referred to us by corporate executives, with the intention of engaging the best available management company - idealiy, a company that has strong regional experience. Executives from Interstate Hotels and Resorts (IHR) will be visiting Port Angeles on April 20, to consider amenities in the area and how they may positively impact average daily rates and occupancy rates. . We are using the results of The Chambers Group (TCG)'s new Market Analysis to verify financial projections and to determine investment scenarios, which include percentage of ownership retained by Randal Ehm, percentage of preferred return to be offered to equity partners, other availabie funding resources, etc. We are revising our Pro Forma model to reflect the findings contained within TCG's report, the impact of revised construction costs, and the impact of more efficient operational costs by engaging a larger management company such as Interstate Hotels and Resorts. . Pier Group LLC is aware of federally-guaranteed loan programs that may be available for our use. We continue to hold these options in reserve. . Financial Consultant Richard Leider of Trinity Real Estate is reviewing The Chambers Group's new Market Analysis, as well as a new pro forma that was provided by IHR. We are working with IHR to determine the financial impact of their invoivement, which may include equity participation, and to refine staffing projections in light of opportunities to share management staff with other IHR properties. . The Rafn Company has withdrawn its name from consideration as General Contractor, due to commitments on other projects that recently moved forward. The Rafn Company has referred us to a larger contractor in Seattle with whom we are now negotiating. PAR 5 April 15,2004 Page 3 Richard Leider has referred us to a large Seattle contractor with whom we will begin negotiating after we receive initial construction cost estimates from our estimator. These estimates are expected later this month. Marriott has provided the names of several Northwest contractors who have recent experience with Marriott and a strong reputation for quality construction of their full-service hotels. o Upon review of the pending construction costs, and upon selection of a General Contractor which we expect to do by May 3, we will being to involve all subtrades and material suppliers to determine definitive costs and seek options for value engineering. o We have received financial projections from L&R Culinary on Food & Beverage Department Revenues, which resulted in operational cost savings of approximately $100,000 annually. o Once Mr. Leider has completed his review of likely investment scenarios with Mr. Ehm, Randal will determine the percentage of ownership that will be made available to equity Investors. We anticipate completing this activity by May 3. 5. Proceed with construction documents and specifications. Activitv: o MMP Inc. continues to refine the Estimate of Construction Cost. Representatives of Britco Structures Inc. are visiting Port Angeles on April 19 to review logistics for delivery, staging and installation of the modular guestroom components. MMP is meeting with Barrett Transport and Interstate Modular on April 16, to discuss transportation and installation costs based on the current design. We anticipate that we will have the construction budget revised on or about April 30, 2004. o Ehm Architecture Inc. submitted plans for the building permit to City of Port Angeles on Friday, March 26. We generated 198 sheets of drawings for the project to date. We anticipate a full set of approximately 220 drawings. We will proceed with the Construction Documents phase, which will include full coordination of engineering systems, after completing the current value engineering effort. o The following Consultants are producing Construction Documents at this time: Civil Engineer I Surveyor: NTllnc., Port Angeles Structural Engineer: Wooldridge-Waibel Engineering, LLC, Vancouver BC (aka Canstruct Engineering) Mechanical/Plumbing Engineer: Saiyed Engineering Group, Seattle Electrical Engineer: EPI, San Diego Landscape Architect: Hough-Beck and Baird, Seattle Green Roof I Planting Consultants: Roofscapes Inc., Philadelphia, PA with Teufel Nurseries, Seattle, WA and Andrew May, Port Angeles Kitchen Equipment Consultant: Ehm Architecture Inc. with L&R Culinary and Michael Kennedy, Food Service Consultant. Laundry Equipment Consultant: Western State Design Inc. Audio-VisuallTelecommunications/lnternet Consultant: Design Consultants Engineers, Seattle Acoustical Consultant: TBD Lighting Consultant: Lighting Design Alliance, Long Beach CA Security Consultant: Communication Design Associates, Seattle Swimming Pool I Spa I Solar Heating Consultant: Saiyed Engineering Group, Seattle with Heliadyne Solar Consultants, Richmond, CA Elevator Consultant: TL Shield & Associates, Thousand Oaks CA. Otis Elevator Company 13035 Gateway Drive, Suite 157 Seattle, WA 98168 2062486432/2062486401 fax ioel.kallman@otis.com email / fax spec Satellite TV Consultant: EPI Interior Designer: Architectural Concepts, San Diego Propane Service Provider: Ferrell Gas, Sequim - Eddie Lamphear 800 422 8871 o Wooldridge-Waibel Engineering LLC has completed Structural Engineering. o Saiyed Engineering Group Inc. has completed Mechanical and Plumbing Engineering. . EPI has completed Electrical Engineering. o The General Contractor will provide information technologies under a design-build scenario. o NTI has completed Civil Engineering. o Western State Design has completed the Laundry Services area design and equipment specification. PAR 5 April 15, 2004 Page 4 . Hough-Beck and Baird has completed Landscape Architecture. The firm is providing pricing for a base-level of plantings as required by the Shoreline Development Permit. Larger trees may be planted initially rather than smaller trees, depending upon budgetary considerations. . Ehm Architecture Inc. desires to incorporate an "eco-roof" into the first floor roof areas, and is working with Roofscapes and Samafil on detailing of system components. Local "Flower Guy" Andrew May will oversee planting and maintenance operations. . Ehm Architecture Inc. continues to work with Land R Culinary on the Food and Beverage program, to maximize reputation, profitability and longevity of the restaurant. . The west-facing, fourth floor loft rooms may be omitted as a cost-saving measure. . Specifications Writer William Kelly will complete the specifications by April 21. . Ehm Architecture Inc. continues to work with the City of Port Angeles regarding parking requirements for the facility. . All consultants continue to coordinate with the City of Port Angeles, all utility providers, trash collection companies and other service providers. . MMP Inc. will update its project timeline again after receiving input from Britco Structures and the selected General Contractor. We anticipate having a revised timeline on or about April 30. . MMP Inc. will initiate meetings between the PA building official, Labor and Industries Inspectors and Britco's plant representatives to discuss separation of responsibilities and joint coordination of disparate activities. We suggest a field visit to Britco's factory by PA building and planning officials and other dignitaries as funding availability becomes more clear, with a possible field visit to Quinault Beach Resort to view that recently-completed modular structure. Respectfully submitted,