Feb. 04, 2012--MCALLEN -- A Pharr hotelier plans to break ground on a Holiday Inn near the McAllen Convention Center no later than March 1, which would finally give the complex an on-site hotel -- considered a critical asset when attracting conventions.

Vinod K. Kasan, who owns the Fairwinds Executive Inn at 1415 W. Business 83 in Pharr, inked an economic development agreement with City Manager Mike Perez on Dec. 27, committing to the March 1 date and cementing numerous financial incentives for the project.

"We've been wanting it for a long, long time," said Mayor Richard Cortez. "We're appreciative of Mr. Kasan and his interest and investment."

Kasan didn't return numerous calls or an email requesting an interview, and an attempt to contact him through his attorney was unsuccessful.

The contract describes a four- or five-story, full-service hotel called Holiday Inn Hotel and Suites Convention Center with 138 to 150 rooms. An attached site plan shows a restaurant with an outdoor dining patio, a pool and a large plaza containing a waterfall.

If built, the hotel would stand directly south of the city's war memorial on 29th Street and immediately east of the plot where McAllen plans to build a new performing arts center. The address would be 2900 W. Ithica Ave.

THE DEAL

The agreement contains numerous financial incentives for Kasan's company, KGC Investments. They include:

>> A two-and-a-half year property tax deal. McAllen will reimburse KGC Investments an estimated $109,655 over the period. Those calculations are based on a hotel valued at $7 million, a lot worth nearly $2.6 million and personal property worth $600,000.

>> Help with various infrastructure improvements, ranging from construction of an access road to fire hydrants. The city will cover half the construction cost or a maximum of $35,000 for an access road off 29th Street and up to $10,000 for four fire hydrants. McAllen also offered a grant to cover a 6-inch water meter, not to exceed $6,100; a backflow preventer, not to exceed $10,000; and a grease trap, not to exceed $15,000.

>> A provision that McAllen will build a covered walk between the yet-to-be-designed performing arts center and the hotel property.

>> Use of a convention center parking lot.

McAllen tied the incentives to the March 1 groundbreaking deadline and the company's commitment to create 36 jobs.

THE BENEFITS

While elected officials knew the convention center probably wouldn't make money -- much less become a cash cow -- the recession, drug-related violence across northern Mexico and lack of an on-site hotel have dogged the convention center since it opened.

In September, city leaders approved a budget showing the convention center would cost $3.3 million to operate but generate only $1.8 million in revenue. Money from the city's hotel tax would make up the difference.

"The good thing is that those losses are being absorbed by hotel occupancy taxes," Cortez said. The convention center brings people to McAllen, Cortez said, where they spend money, that helps local businesses and generates tax revenue that flows back into city coffers.

"It's just like going to a grocery store. A grocery store doesn't make money in everything it sells," Cortez said, comparing the convention center to a loss-leader designed to bring people into the store, where they'll buy other, more profitable items.

An on-site hotel will help the convention center attract more and larger events, increasing direct revenue and the residual impact, said Omar Rodriguez, who oversees the convention center.

"It's a definite positive," Rodriguez said. "The meeting planners are looking for that, what's adjacent."

Developers have proposed building two other hotels near the convention center, but those plans have been delayed by the economy and financing problems.

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Dave Hendricks covers McAllen and general assignments for The Monitor. He can be reached at [email protected] and (956) 683-4452.

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