May 16--MCALLEN -- Plans to build a Cambria Suites near the McAllen Convention Center moved forward Monday night, when the City Commission voted to negotiate with the hotel developer.

City Hall and Fulcrum Management Corp., an Orlando, Fla.-based company, will negotiate an economic development agreement for a 121-room Cambria Suites hotel southwest of the Convention Center.

"The McAllen market is loaded with potential," said Christopher Haridopolos, who submitted Fulcrum Management's proposal.

Located near Ware Road and Expressway 83, the Cambria Suites would attract Mexican shoppers from nearby La Plaza Mall and the Palms Crossing retail development, out-of-town visitors from the Convention Center and, eventually, theatergoers from McAllen's planned Performing Arts Center.

The four-story Cambria Suites would be Choice Hotels International's newest prototype, Haridopolos said. Fulcrum Management's proposal estimates that rooms would cost $112 a night.

"So this has the most efficient layout and design," Haridopolos said. "And the biggest appeal for the travel market, for the hotel market."

The Commission, though, remains focused on the meeting market.

McAllen opened the city-run Convention Center in March 2007 without an adjacent hotel, which made attracting major meetings difficult. Other factors, including the recession and drug-related violence across northern Mexico, also hurt the Convention Center's bottom line.

The McAllen Convention and Visitors Bureau booked just four major meetings for 2013, including annual gatherings of the Texas Master Gardeners Association and Texas Chess Association.

During the next six years, the Commission struck deals with developers to build a La Quinta, a Holiday Inn and an Embassy Suites nearby. None have broken ground, and the Embassy Suites deal collapsed in late January.

The Commission carefully weighs incentives, said City Commissioner Scott Crane, but McAllen needs a Convention Center hotel -- and the first developer to break ground may receive the best deal.

"It's a greater need when you have none, no hotel rooms, and that's the No. 1 missing component out there," Crane said. "That's the piece of the puzzle that we most need."

McAllen's agreement with Fulcrum Management to build the Cambria Suites will almost certainly include incentives.

When McAllen solicited proposals for a Convention Center hotel, the city suggested a property tax rebate, payments to the developer for creating jobs and assistance with infrastructure valued at $430,000. Fulcrum Management's proposal also suggests McAllen allow the Cambria Suites to utilize existing parking, which significantly reduces the hotel's land cost.

Concerns about incentives killed long-running negotiations between McAllen and Boulevard Development, which planned to build the Embassy Suites.

"The incentives that they wanted were a little too high," said City Manager Mike Perez.

The Embassy Suites deal included three major pieces. Boulevard Development requested:

--A seller-finance arrangement for the land. Boulevard Development would have paid McAllen for the land over 6 1/2 years with 2 percent annual interest.

--A seven-year hotel tax rebate. Boulevard Development requested that McAllen rebate 5 percent of the Embassy Suites' hotel taxes -- McAllen collects a 9 percent tax on hotel rooms and Texas collects another 6 percent -- for seven years.

--A five-year property tax deal. Boulevard Development requested that McAllen rebate 90 percent of the city's property tax after the first full calendar year of operation. The rebate would drop gradually over the five-year term.

Negotiations collapsed on Jan. 28, when the Commission didn't extend an economic development agreement for Boulevard Development's subsidiary, McAllen Skyline Ltd.

Under the proposal, McAllen wouldn't have fronted any money, said Michael Fallek, general counsel for Boulevard Development. McAllen would have paid the incentives from tax revenue created by the Embassy Suites.

"I don't feel slighted or anything," Fallek said. "The commissioners had to do what they think is right."

Rejecting the Embassy Suites deal wasn't easy, Crane said, recalling the deliberations over incentives.

"They are they premier hotel developer in the Rio Grande Valley and I'd like to have them back," Crane said. "I'd like to have a stab at -- if not that project, another project."

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Dave Hendricks covers McAllen for The Monitor. He can be reached at [email protected] and (956) 683-4452 or on Twitter, @dmhj.

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