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HomeMy WebLinkAboutMinutes 06/07/2004 CALL TO ORDER: ROLL CALL: Approval of Minutes Oak Street Conference Center and Hotel LODGING TAX ADVISORY COMMITTEE Port Angeles, Washington June 7, 2004 Councilmember Rogers called the meeting of the Lodging Tax Advisory Committee to order at 3:05 p.m. Members Present: Councilmember Rogers, Jim Haguewood, Bob Harbick, Jack Harmon, Councilmernber Munro, Dave Neupert, Steve Oliver, and Bill Rinehart. Members Absent: None [Three vacancies]. Staff Present: Economic Development Director Smith and Clerk Upton. Others Present: Debbie Atwell, Jolm Platt, Randal Ehm, and Brian Gawley. Councilmember Rogers informed the committee members that a news release had been provided to the media with regard to filling the vacancies on the Lodging Tax Advisory Committee. Approval of Minutes: Steve Oliver moved to approve the Lodging Tax Advisory Committee minutes of April 19, 2004. The motion was seconded by Jim Haguewood and carried unanimously. Oak Street Conference Center and Hotel: Copies of Randal Ehrn's Progress Activity Report #7 were distributed to the committee, and Mr. Ehrn indicated Progress Report #8 would be submitted to Tim Smith on the 18" of this month. Mr. Ehrn reviewed the elements ofthe progress report, noting that the estinrate provided by Swinerton Builders was higher than anticipated, especially due to escalating prices for steel. In an effort to reduce building costs, the green roof was eliminated as was the artificial stone for the facade. Mr. Elun summarized other efforts toward cost reduction, to include a reduction in ballroom size, relocation of meeting rooms, and additional guest rooms. With the incorporation of these changes, the total guest rooms as of this date are at 177. Mr. Ehm indicated that steel would need to be re-priced because ofthe changes, and the structure ofthe building would need to be Ie-engineered by virtue of a change in weight. He felt that the changes would result in a savings of$5 million in the project. Mr. Ehm has met with local trades and asked them to contact another potential builder, SD Deacon of Seattle. Mr. Ehrn indicated he is doing much of his own pricing in other areas, plus he has his own estimator who is knowledgeable about the quality required of a Marriott. It is expected that costs will exceed $20 million and, once the numbers are known, the financial models can be addressed. Mr. Ehrn described some of the financial options being considered, and he noted that Richard Leider felt it would be helpful to have a benefactor or engineer in the community who would be willing to take a deferred return. Other possibilities include public/private investment, or a State loan program. Mr. Ehm summarized an issue relative to the Davis Bacon wages that must be paid, something that must be studied carefully. There is the possibility ofthe USDA Rural Loan Program as welL At the present time, there are give high-end investors who have expressed interest in the project. -1- LODGING TAX ADVISORY COMMITTEE June 7, 2004 Oak Street Conference Center and Hotel (Cont'd) One of the difficulties of the project, as identified by Mr. Ehm, has to do with the seasonality of the visitor traffic in Port Angeles. Marriott has indicated that, if the project were anywhere else, construction would already by underway. Because ofre- engineering and value engineering, the permit process has been placed on hold. Tim Smith asked about the steel prices and whether it is expected that they will decrease. Mr. Ehrn understood that steel prices have escalated because Asian purchases have driven the prices up, and he was hesitant to delay the project with the hope that the prices would go down. He felt it important to get the project locked in as soon as possible. Regarding the deadline on the Shoreline Permit, Mr. Ehrn felt it to be unfortunate that he was having to deal with unforeseen circumstances. However, he noted that everything has been put together, with the exception of the Building Permit and the fmancing. For a process that started three years ago, he has been diligently working on the project on a daily basis. Brief discussion followed, with Mr. Ehrn clarifying that he will replace only those sheets already submitted to the Building Department that reflect recent changes to the building. He was uncertain as to the timing for submitting these revisions, as he was awaiting the fe-engineering. Mr. Ehm noted that only a certain amount of changes could be incorporated because of the Marriott flag. Tim Smith, noting that he had previously offered to provide a time frame tied directly to the Shoreline Permit, advised the committee that he was unable to proceed with the time frame in view of the changes being made. He was uncertain as to when the schedule should commence. Mr. Ehrn indicated he still planned to meet the deadline for the Shoreline Permit; however, he was doubtful ifhe could make that date ifhe were to pursue a loan program. Mr. Ehm further discussed the loan program option, noting that the USDA program could take 30 - 60 days and, more realistically, it could take up to nine months. Tim Smith indicated the City has some experience with tax credit programs, which might be an option. Mr. Ehm responded to questions posed by the committee members, indicating he received a list of items from the Building Department that need to be addressed. Plan check fees have not yet been paid, because of the value engineering. Tim Smith indicated that further review of the current documents was curtailed because of the revisions. Absent payment of the permit fee, the process can only go just so far, as the City often contracts out the plan check. Mr. Ehrn responded to a question as to the purchase of the property, indicating a Purchase and Sale Agreement has been entered into, and the next step is to sign the purchase documents and make the payment. Discussion returned to the matter of the Shoreline Permit deadline, and Mr. Ehm indicated that, if the USDA loan program is pursued, he may need to request an extension from the Department of Ecology. The DOE advised him that it would be up to the City's process in determining an extension. Tim Smith has asked the City's Director of Community Development to seek further clarification on this specific issue, as he was certain the DOE would seek the City's opinion, but the final authority would rest with the DOE. Nevertheless, Mr. Ehrn advised the committee that he was moving forward with the September 4 deadline in mind, and he was committed to have made a decision by July on the other funding mechanisms. He noted he would have to make a decision by the end of June on the matter of the Shoreline deadline. In the discussion that followed, Tim Smith felt that if Mr. Ehrn could generate full financing no later than the end of July, then he could make progress on construction in September. However, lacking that fmancial commitment on a timely basis, then the deadline for the Shoreline Permit may need to be extended. Mr. Ehm was confident that the deadline could be met, as long as they were moving dirt by September 4". - 2 - LODGING TAX ADVISORY COMMITTEE June 7, 2004 Oak Street Conference Center and Hotel (Cont'd) Lodging Tax Advisory Committee Vacancies Other Business Next Meeting Adjournment The matter of parking was addressed, and Tim Smith clarified there has been an indication of possibly using City-owned property in tenns of air space as an option for parking. In addition, City capital financing has been extended, subject to Mr. Ehm's commitment to the debt service for his portion of the parking. It was noted by Bill Rinehart that steel prices must be factored into the cost of a parking structure as well, and Mr. Ehrn advised the group that he had been given a figure of $15,000 per space. Because that estimate was approximately 20% high, perhaps the savings could be used for the added steel costs. Consideration was given to how long it would take for Mr. Elun to have some solid numbers, and he indicated he would need more time in order to address the Marriott quality issues. He felt it important to have solid numbers before proceeding, and he expressed the hope that he would have the numbers within the next week. He hoped Progress Report #8 would include many of the answers to questions being asked. A question was raised as to how the Marriott affiliation assists with marketing, and Mr. Ehrn indicated it has a worldwide reservation system, as well as Regional Vice Presidents assigned to specific regions. Marriott is committed to expanding in the northwest, as other properties are being developed in Redmond and Victoria. Mr. Ehm then cited the Britco facility at Quinault Beach, and he encouraged visits to see that particular facility, as this would be Marriott's first full-service modular facility. Mr. Ehrn concluded his presentation by emphasizing his commitment to the project. Lodging Tax Advisory Committee Vacancies: Tim Smith noted the current vacancies on the Lodging Tax Advisory Committee, expressing the hope that the Red Lion would submit an application to fill one of the vacancies. Other Business: Brief discussion was held on the Cascadia project, as well as the schedule for funding requests. Tin Smith felt the funding requests should be addressed no later than August 2nd because of the upcoming budget process. Discussion was briefly conducted on current funding levels. Next Meeting: A date for the next meeting was targeted for mid-June. Adjournment: There being no further business, the meeting adjourned at 3:55 p.m. - 3-