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With Tucson's Convention Center Hotel Deal Dead,
Broader Help Urged for Downtown Hotels

By Rhonda Bodfield, The Arizona Daily Star, TucsonMcClatchy-Tribune Regional News

Nov. 30, 2011--The city should offer all Tucson Convention Center-area hotels the same deal being considered for Hotel Arizona -- let them keep any taxes they collect to pay for their own renovations, a competitor has proposed.

The request comes as city officials weigh a deal to offer renovation incentives to the owner of Hotel Arizona, a property adjacent to the Convention Center, now that plans for a new convention center hotel are dead.

"It seems like this discussion so far has been very one-sided, like there's only one hotel downtown," said Pamela Barnhill, chief operating officer of InnSuites Hotels and Suites.

"I don't think it has to be exactly next to the Convention Center to be considered a convention hotel," Barnhill said in an interview, suggesting within a mile radius of the TCC is more reasonable, which could mean as many as 12 others could be eligible.

Many hotels can run shuttles if need be, she said, although in her experience, visitors from back East and the Midwest prefer to walk. "There are so many hotels in downtown Tucson that could benefit from this."

The InnSuites, 475 N. Granada Ave., has 267 units and 14,000 square feet of meeting space. And while it's completely full for the gem show, for example, renovated properties could draw more events, she said, which would benefit all of Tucson.

Barnhill suggests hotels would also have to be at least 150 rooms to qualify for the incentives.

Under her proposal, the city or Rio Nuevo would hire an expert to work with the hotel owners and come up with a renovation plan. The city would agree to a per-room subsidy, she suggested, of about $20,000 per room to fix up the room and public areas, capping out at about $5 million for a 250-room property.

The subsidy would take the form of retaining on-site bed, sales and property taxes to help fund the renovations, which could translate into a hit on city tax coffers in the millions of dollars if all the eligible hotels participated.

Barnhill estimated it could mean more than 700 convention-quality rooms could be available as soon as 2013.

"Tucson would avoid the bullet of getting involved in either purchasing or leasing an older hotel and trying to renovate it and/or building an insanely expensive new hotel that can never be profitable," she wrote in her letter to the mayor and council.

Barnhill said the taxpayer subsidy is justified because visitors are being redirected to properties outside of downtown because of an "unfair" sentiment that the downtown properties aren't sufficient.

"I would argue they're getting unfair treatment now," she said. "I just think it's important to take care of the current business owners. We've been around for a long time, and we believe in Tucson."

She floated the proposal to the mayor last year, she said, and resurrected it when she heard of the city's work with Humberto Lopez on a deal for Hotel Arizona.

City Councilman Paul Cunningham said that while the city is just in broad discussions with Lopez currently, he doesn't blame the other hotels for trying to get in on any similar deal.

"It would make sense that whatever deal we give to Mr. Lopez should be available to any hotelier downtown -- and possibly in the whole city. It has to be an even playing field, although we have to take a look at the cost," he said.

Cunningham said given the city's dearth of alternatives, it wouldn't have been prudent to dismiss Lopez's proposal out of hand. "Running away from it because it's politically difficult and dismissing it automatically would be irresponsible."

His council colleague, Steve Kozachik, said, in a general sense, he's not opposed to offering incentives to regenerate the downtown area, but said there are a number of considerations to weigh. "To the extent we are reaching out to one person in the private sector, it does give the appearance that we're picking winners and losers."

There are constitutional and legal questions, however, he said, including the gift clause, which attempts to prohibit governments from getting entangled in private enterprise and functionally, means cities have to demonstrate they're getting back in excess of what they're giving.

Hotel Arizona is offering the city the use of its garage to get around the gift clause, for example, he noted, and he isn't sure what other hotels could offer.

Mayor-elect Jonathan Rothschild said he agrees, in general, that a healthy downtown would have a number of smaller hotels. "I don't think we need one monolithic hotel," he said. He said he's still evaluating Lopez's proposal to make sure it protects tax dollars. "If it's a program that can work for Humberto, maybe we can apply it to other folks as well."

Contact reporter Rhonda Bodfield at rbodfield@azstarnet.com or 573-4243.

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(c)2011 The Arizona Daily Star (Tucson, Ariz.)

Visit The Arizona Daily Star (Tucson, Ariz.) at www.azstarnet.com

Distributed by MCT Information Services



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