|By Richard Metcalf, Albuquerque Journal,
N.M.McClatchy-Tribune Regional News
Sep. 17, 2007 - A plan to renovate the 15-story Wyndham Hotel at the airport is at a dead stop because of differences between owner American Property Management Corp. and the city of Albuquerque.
The two sides basically disagree on proposed ground rules for the $6 million project.
But American Property's construction of Albuquerque's first indoor water park has resumed after stalling in the city approval process.
An unexpected city requirement triggered a two-month delay in the water park project at what is now the Park Plaza Hotel and Conference Center, said Michael Gallegos, president and CEO of American Property.
The water park near Carlisle and Interstate 40 is now expected to open in January.
"We had to increase the number of public restrooms and showers," he said. "We had to rework the drawings and rework the bid with the contractor.
"It's unfortunate because it caused delays, but in the long run, it's best for the water park and best for our customers."
The hold-up in the planned renovation of the Wyndham at 2910 Yale SE involves the city's ground lease for the property.
The 276-room Wyndham sits on land owned by the city as part of the Albuquerque International Sunport campus. As a result, the hotel operator must lease the land from the city.
In the six months since American Property purchased the building, the company and the city's Aviation Department have been unable to agree on terms for a new ground lease.
"We cannot start the renovation of the Wyndham until we have a ground lease," Gallegos said.
A lease could be finalized in another month, said Jack Scherer, who is in charge of business development at the Sunport.
"There's no deal breaker here," he said. "It's a negotiation. I may have stepped a little further than what he (Gallegos) expected."
More than money
Terms of the lease are outlined in a negotiated letter of intent signed before American Property's purchase of the hotel, both Scherer and Gallegos said.
"We thought the ground lease would be automatic," Gallegos said.
In the letter of intent, American Property agreed to a fourfold increase in the basic lease rate for the hotel land, he said. In addition, the hotel pays a percentage of its revenue to the city.
Add it all up and Gallegos said, "If we apply the new lease figures to the existing hotel's performance, then the lease payment would increase by 74.28 percent a year."
But money is not the issue in the prolonged negotiations.
Gallegos said the city wants to assume the roles of lender and hotel franchiser in the ground lease, neither of which was included in the letter of intent.
"We've never seen language like that," Gallegos said.
For example, from a lending perspective, the city wants detailed financial reports on the hotel's operation -- the kind a bank would require from business customer, he said.
"We are very hesitant to do that because it becomes a public document and our competitors can look at it," he said.
From a hotel franchiser perspective, the city is seeking what's called "territory protection." That means American Property would not be able to operate a competing hotel within five miles of the Wyndham.
"We're already in violation because we own the Doubletree and (soon-to-be) Radisson," Gallegos said. "We cannot agree to any territory protection."
Ground lease negotiations for existing hotels are typically straightforward and predictable, he said.
"I've sat down with some of my contemporaries -- good friends of mine -- who own these types of hotels," he said. "They think I'm going through a nightmare."
The two previous out-ofstate owners of the Wyndham, both of which did not reinvest in the 35-year-old hotel, were not subjected to such ground lease terms, he said.
"It makes no sense that they are roughing up a New Mexican who wants to reinvest in the property," Gallegos said.
Founded in Albuquerque in 1990 and headquartered here until 2000, American Property is now based in San Diego.
Gallegos grew up in Las Vegas, N.M., graduated from the University of New Mexico and still has a home in Albuquerque.
The company has a total of more than $33 million in major renovations and new construction nearing completion at two of Albuquerque's major hotels.
The 33,000-square-foot water park caps a remake of what was once the Four Seasons Motor Inn. On Sept. 25, the hotel will become a Radisson franchise, a full-service hotel brand based out of Minneapolis.
The indoor water park will have two slides -- one 275 feet long and the other 325 feet -- that start on a 34-foot tower.
In addition, the park will have a two-person FlowRider, a water attraction in which riders use a board.
The water park will be open to the public as well as hotel guests.
In addition to the soon-to-be Radisson, American Property is finishing a top-to-bottom overhaul of the 16-story, 295-room Doubletree Hotel in Downtown.
The Doubletree's street-level space is currently a construction zone as it undergoes a makeover.
American Property hired Graham Downes Architecture of San Diego to give the hotel's public space the kind of urban chic found in boutique hotels in coastal California.
The street-level remodel should be completed in about a month, Gallegos said, capping off the $6.5 million renovation of the Doubletree.
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