Extracted text (via pymupdf)
4992 characters
AC Hotel by Marriott City Council Study Session June 8, 2026 Jeff McVay Manager of Urban Transformation Stefanie Monge Urban Transformation Project Manager 2 AC HOTEL – PROJECT OVERVIEW • Redevelopment of NEC of Centennial and Main • Upscale AC Hotel by Marriott • 5-stories • 85,000 SF • Designed and operated to AC Hotel by Marriott brand standards • Requires agreement between City and Developer • Development Agreement (DA) • Government Property Lease Excise Tax Agreement (GPLET) • Parking License Agreement AC HOTEL – ECONOMIC DEVELOPMENT BENEFIT • Supports Downtown Mesa tourism and business travel • Projected to generate approximately 45,000 hotel room nights annually • Supports increased activity at Convention Center • Strengthens Downtown Mesa’s position as a regional destination • Provides an upscale hospitality option • Expands dining and entertainment options in the urban core • Creates new hospitality and service industry jobs 3 AC HOTEL – FINANCIAL BENEFIT TO CITY • Generates Transaction Privilege Tax and Transient Lodging Tax revenues estimated at over $500,000 per year • Generates increased utility revenues • Generates parking revenue through licensing of 100 parking spots from City in the Hibbert garage • Direct economic benefit over eight years: $4,917,073* to include: • GPLET Lease: $80,000 • Parking: $96,000 • Sales/Hotel Revenue: $4,603,258 • Indirect economic benefit over eight years: $51,158,875* • Visitor Spending: $30,879,862 • Labor Income: $20,279,013 4 *May 2026 Economic Benefit Analysis, Applied Economics, Sarah Murley AC HOTEL – COMMUNITY AND PUBLIC BENEFIT • Streetscape enhancements along Centennial and Main • Perpetual public utility easement provided to the City at no cost • Addresses conditions of slum and blight through improving vacant lot • Additional meeting room space • Hotel room blocks for major Mesa events and tourism activity • Increased annual SID 228 assessments that support DMA enhanced services 5 AC HOTEL – DA, GPLET, AND PARKING LICENSE Developer Obligations • Construction of AC Hotel • Minimum 150 rooms • Minimum 1,500 SF meeting room space • Outdoor swimming pool • Minimum 2,000 SF bistro/bar • License 100 parking spaces in Hibbert Garage for 50 years • Any access, wayfinding, and/or security improvements at developer cost • Responsible for full license fees if Parking License is terminated early • Public infrastructure improvement • Excavation and backfill of trenches for public electric infrastructure improvements (est. $188,000) • Dedication of perpetual public utility easement • ROW improvements such as streetlights and sidewalks 6 AC HOTEL – DA, GPLET, AND PARKING LICENSE Developer Obligations (cont.) • Reimburse City for cost of Economic Benefit Analysis ($3,500) • In-Lieu payments to school districts ($16,887) • Additional meeting space for City and partner organizations • Hotel room blocks for major events • Maintenance of any non-standard improvements within ROW • Use of City of Mesa Utilities (sewer, water, gas, electric, and solid waste) 7 AC HOTEL – DA, GPLET, AND PARKING LICENSE City Obligations • Provision of a GPLET Lease • Eight-year property tax abatement ($2,100,000) • Reimbursement of non-dedicated Construction Sales Tax • Eligible public infrastructure costs only (electric, streetlights, sidewalks, etc.) • Non-dedicated equals 1.20% of total City Construction Sales Tax of 2.0% • Reimbursement cap: Lesser of actual costs or the eligible construction sales tax estimated at $226,200 • Requires conditions precedent for reimbursement • Obtain permits within 18 months of DA effective date • Complete construction within 24 months of obtaining permits • Commence operations of hotel and bistro/bar within 6 months of completing construction 8 AC HOTEL – DA, GPLET, AND PARKING LICENSE City Obligations (cont.) • Design and construction of public electrical infrastructure improvements, excluding Developer trench and backfill obligations • Estimated cost: $245,000 (approximately $181,000 re- imbursed to the electric utility from FY26/27 RDA Toolkit program) • Provision of a 50-year license to 100 parking spaces within Hibbert Garage • Parking rates: • Year 0-8: $10/month/space ($12k/month, $96k total) • Year 9-50: Council adopted rate ($5.1M, assuming reasonable increases in Council adopted rate) • Sunbelt AN, LLC has agreed to release 100 spaces from their existing parking license • Administrative amendment to reduce Sunbelt AN, LLC parking license by 100 parking spaces • Customized review schedule for Zoning and Permit reviews 9 AC HOTEL – NEXT STEPS • Final negotiation of Development Agreement, GPLET Lease, and Parking License Agreement • Council action on agreements: July 27, 2026 • Complete planning and zoning entitlements • Commence construction • Involves cleaning up a Phase 2 environmental site • Commence operations • Must operate to Marriott Hotel standards 10 DISCUSSION & QUESTIONS