|By Karen Smith Welch, Amarillo
Globe-News, TexasMcClatchy-Tribune Business News
Jan. 18, 2007 --The historic Fisk Building in downtown Amarillo could undergo a $15 million hotel conversion in a deal that might hinge on incentives the city of Amarillo could offer developers.
On Wednesday, building owner Dick Fausset and property manager Barbara Scroggins of CAP Commercial Realty began asking tenants to prepare to relocate to make way for a potential sale, Fausset said.
Fausset Neely's F&A Realty of Ventura, Calif., has had the 10-story office building at 724 S. Polk St. for sale with a $2.2 million price tag since March. The price includes an adjacent three-story, 125-space parking garage and surface parking lot.
"We have two developers that have submitted letters of interest in the property," said Leslie Cox, the Amarillo Sperry Van Ness real estate agent representing the Fisk. "They're still trying to figure out how to make the hotel profitable, and we're still trying to figure out, with them, what kind of incentives the city of Amarillo might be able to offer that are similar to what's being offered in other cities."
Cox said he and property owners plan to meet "soon" with city officials for a preliminary discussion of incentive possibilities.
Incentives will be needed for a developer to decide to spend $15 million to build the kind of "three-star destination hotel" that Fort Worth consultant James Toal has told the city is key to downtown revitalization, Cox said.
The outcome of such a financial risk is unproven, Cox said, because no such hotels exist in downtown Amarillo for developers to look at to see a track record of profitability.
"That's a lot of risk," he said. "They would like the city to share in that risk a little bit."
Before 2006 ended, the city established a tax increment reinvestment zone that allows taxes generated by property improvements in downtown to be used for public facilities and infrastructure -- streets, lighting, utilities -- in downtown to spur revitalization.
"My guess is they will want more than that," Amarillo City Commissioner Paul Harpole said. "So I think we're still defining what we're able to do as a city. ... We're really going to base it on what our expert that we've hired tells us could be offered to this kind of (developer). Hopefully, we'll be able to come to some accommodation."
The two developers have proposed hotel franchises that would convert the office building into a "three-star destination" hotel of about 150 rooms, he said. Plans would include an upscale ground-floor restaurant.
"We're not close to a deal," Fausset said. "We have interest. In the real estate business, interest is just the beginning."
Among the franchises being discussed are the Hotel Indigo, the newest InterContinental Hotels Group brand, he said.
A representative of the chain has toured the Fisk and given it a favorable review, Cox said.
Wednesday afternoon calls to two Hotel Indigo spokeswomen were not immediately returned.
Information on the company's Web site said the boutique hotel chain has opened six locations since 2004, with 20 in the pipeline. Texas locations include a converted hotel built in 1925 by Conrad Hilton in Dallas' central business district.
Fausset estimated Fisk occupancy at about 20 percent. Leasing was halted months ago in anticipation of a sale, Cox said.
The decision to ask the remaining tenants to move was twofold:
Occupancy in the building has been low, meaning rent isn't offsetting building operation costs, Cox said.
And, "if there's a three-year lease in there and we can't relocate (the tenant), developers won't close on a building if it's encumbered for three years," Cox said.
Tenants are being offered leases in other Amarillo buildings Fausset Neely owns, if available spaces fit their needs, Fausset said.
"We're trying to negotiate with each of our tenants," Fausset said. "We don't want any victims.
"We'd like to do it in 60 to 90 days. We could do it, but we know it would be a hardship on any tenant. The good news is there's not too many tenants, so we should be able to achieve what we want to do."
--Site: 724 S. Polk St., at Southwest Eighth Avenue
--Current Owner: Fausset Neely's F&A Realty, Ventura, Calif.
--Building Particulars: 10 stories with three-story parking garage and surface parking lot.
--History: Architect Guy Carlander designed the Fisk and many other historical Amarillo buildings, including the Santa Fe Railway Co. building now housing Potter County offices.
To see more of the Amarillo Globe-News, or to subscribe to the newspaper, go to http://www.amarillonet.com.
Copyright (c) 2007, Amarillo Globe-News, Texas
Distributed by McClatchy-Tribune Business News. For reprints, email firstname.lastname@example.org, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.