Mesa · case details pending

Okay, council, we're ready to start our study session, Mesa City Council study session for June 8th, 2026. Uh, all council members are present. That's great. Uh, as usual, item one is to review the agenda for tonight's council meeting. I know that we've gone over this previously. Council, is there any other questions for staff that are here? Um, I just want to ask that we pull 5B for the funding agreement with Valley Metro so I can speak on it during council meeting. Thank you. 5B. Yes, please.

Okay. All right. We're going to approve to myself. I'm just speak on 4B. It's a contract renewal for HHW facility which has been very necessary and a great asset to our community to take care of recycling materials as well as uh you know household hazardous waste and find it very essential and and I use it quite regularly.

is close to me, but other in the community to come and take care of those unwanted items and then they have if it's reusable, you can go to a little shopping center and and pull it off the shelf and use it for your own uh use again. So, uh I like having the HHW there on North Center Street so I can bring you my hazardous waste to get rid of. You can take it to them. [laughter] Uhhuh. Okay.

[snorts] 5B and then other than that there's a lot of uh liquor license and then there's the foreign trade zone operator agreement which we've had information on and that's other than that hearing nothing else council anything else all right we'll move over to item 2A which is a presentation and provide direction on the proposed development agreement and lease for the development of an AC Hotel by Marriott in downtown Mesa.

We have, excuse [clears throat] me, Steph and Jeff and Stephanie here to tell us about this exciting new hotel. Hotel hotel are coming downtown Mesa. I think at Centennial and Maine or Serena and Maine, depends which side of Main Street you're on. Right. We're on the Centennial side, Mayor. Okay. Good evening, Mayor and Council. Jeff McVey, manager of urban transformation. And with me today is Stephanie M, urban transformation project manager.

Um we are very excited to be here today to present the AC Hotel by Marriott. Um to get things started, Stephanie is going to give you an introduction to the developer and an overview of the project and then we'll talk a little bit more later on onto the actual development agreements and the the deal that we're working out with the the developer. Good evening, Mayor and Council. Before discussing the project details, I would like to provide a little background about the development team.

The developer is Breakwell Group, formerly known as Oakland Capital. They have significant experience in hospitality development and established relationship with the Marriott portfolio and recently completed and opened the Spring Hill Suites by Marriott in Gilbert at the Santan Village. for this downtown Mesa location.

Breakwell Group has secured a flagship agreement with Marriott for the AC Hotel brand, which reflects Marriott's confidence in both the developer and the long-term success of this location. As you can see from the site plan and current photos of the property, this is a partially vacant, underutilized lot.

The proposal would transform this area into a fivestory 85,000 square foot AC hotel by Marriott, a recognized upscale brand with consistent design and service standards that will reflect well for downtown Mesa. The AC hotel brand is specifically positioned to attract the modern business and leisure traveler. To make this project happen, we are currently finalizing the terms of three agreements. First, a 35-year development agreement. Second, a griplet agreement with an 8-year abatement period.

And finally, a 50-year parking agreement. Together, these three agreements create the framework for a development that will reshape this corner and strengthen downtown Mesa. The result is a project that represents another step forward in the continued elevation of downtown Mesa.

This is an opportunity to add an upscale hospitality product that complements the investments both private and public that have been made in the area while ensuring that the project aligns with the city's goals for economic development, tourism, and downtown revitalization. The economic analysis report for the project was completed by applied economics.

While the giplet exempts the developer from property taxes for eight years, over that same 8-year period, the project is expected to generate $4.9 million in direct economic benefits to the city through giplet lease payments, parking revenue, and sales and hotel revenue taxes. Beyond the 8-year giplet term and during the 35-year development agreement, the total projected parking revenues grow from $96,000 in the first eight years to $3.4 million over 35 years.

The economic analysis looked at what hotel guests actually spend outside of their room rate. And on average, each guest spends $45 per day at restaurants, coffee shops, retail stores, and local transportation, potentially generating over $138 million over 35 years from visitor off-site spending. This project isn't just about building a hotel. This project delivers tangible community benefits that will benefit Mesa residents for decades to come.

Starting with the physical environment, the developer will be completing streetscape enhancements along Centennial and Maine, which improves the pedestrian experience and signals to other investors that downtown Mesa is open for business. They are also providing a perpetual public utility easement to the city at no cost. This site is currently sitting as a partially vacant lot.

This hotel replaces that with quality hospitality development that activates the block and sets a higher standard for what downtown Mesa can look like for our event and tourism economy. This project adds dedicated meeting room space and hotel room blocks specifically reserved for major Mesa events.

And finally, as a new commercial property operating in our special improvement district, this hotel would will generate increased annual SID 228 assessments, directly funding the downtown Mesa Associations enhanced services that benefit every business and visitor in the area. This project improves our streetscape, eliminates blight, supports tourism, and strengthens our downtown ecosystem.

Now that Stephanie has given us a little bit of the why, I get to have the the chance to give you the the the real details behind this. Um this project we've been working with the Breakwell group for approximately 6 months negotiating development agreements um JIP agreement and parking license agreement. So I'll quickly run through the terms of those agreement that Stephanie's highlighted. um in order to um qualify those for those agreements.

So, it would start out with what is the developer committing to the city of Mason. As Stephanie described, we're getting a minimum 150 room upscale hospitality um development with meeting room that's available to public use with outdoor amenities such as swimming pool for hotel guests as well as a a publicly accessible beastro and restaurant space. The developer will be licensing 100 parking spaces from the city of Mesa in the Hibbert garage that will generate revenues from parking license fees.

But it's also important to note the developer the city has no obligation to make any improvements to that garage to meet the obligations of the developer. So if they need to have a separate access control system or signage that would be at the developer's cost is the intent of the city that that garage will continue to operate as it does today as a secured facility for mainly for city employees. And if and when the hotel is developed, they will continue to operate that way for city employees.

They're just if there's any improvements, the developer would be obligated to make those. It's also very important to note that this is a 50-year license agreement. And if it ends beyond early, if it's terminated before 50 years, the developer is obligated to pull pay the full parking license amount for 50 years. So if it ends in year 40, they are obligated to pay the city 10 years worth of parking revenue in order to make us whole.

the [clears throat] the developer is also committing to competing completing some public infrastructure work to support the electric infrastructure necessary to serve the site. Um they will do the trenching and backfilling uh excavation and backfilling of the trenches needed to be able to get the power to the site. Um they will also dedicate free of charge any public utility easements necessary um on the property.

and they will also have improvements to the rightway including sidewalk improvements and and and street leg improvements that you you can see from the renderings on screen. In addition, [clears throat] developer will reimburse the city for our cost to complete the required economic benefit analysis. It's necessary with every giplet that comes before the city. They will pay make one-time lumpsum payments to the school districts taxing within this area totaling $17,000.

Um, as Stephanie noted, um, we are in the final, uh, finalizing the the details of of the aibility of free or reduced rent meeting space available to city and our partners as well as the finalizing the details for room hotel room blocks that can be reserved for city sponsored or city partnering events.

developer will also have every obligation to maintain any non-standard improvements within the rightaway and they will continue to use through the term of the agreement all of the city of Mesa utilities which goes without saying but the important one is the solid waste um they will continue to use solid waste throughout the 35-year term of the development agreement now in exchange for these commitments of the developer the de the city would be committing to providing a giplet lease with an 8-year abatement that abatement value is valued at 2.1 1 million.

Um, in addition, the city would be reimbursing for eligible public infrastructure work the non-dedicated construction sales tax. Um, currently we are estimating that based off of the construction the electrical and streetscape improvement work to be around $226,000. Um, in order to be eligible though to receive that reimbursement, the developer has to meet the minimum timelines that are on the screen.

So they would have to pull a permit within 18 months of receiving development agreement approval, complete construction within 2 years of having a permit and begin operations within 6 months of completing construction. In addition [clears throat] in addition to those obligations, the city is also committing to the design and construction of the public electrical infrastructure work that the that the developer is not completing. So the developer essentially will will excavate a trench.

The city will then go and install the conduit, pull the lines, um en case it in concrete, and then the developer will come back and back fill that trench. Um right now, the city is estimating our the cost of our work at around $245,000. Importantly noting that approximately $181,000 of that work would be reimbursed to the electric utility using the recently approved RDA toolkit funding.

um that is directly intended to offset the electric infrastructure cost being borne by anybody other than the developer themselves. Uh the city would also be entering into a 50-year 100 50-year parking license for 100 parking spaces. Um for the first year eight years during the term of the giplet the developer would be paying $10 per space per month generating $96,000 in revenue.

However, during the remainder of that uh parking license agreement in years 9 through 50, they would pay the then adopted council um parking rate for similarly situated parking facilities. Assuming reasonable increases over time, that would generate approximately $5.1 million in additional revenue for so a total of $5.2 million in parking revenue alone. Um, it is important to note that those 100 spaces that we're talking about today are currently the subject of a parking license agreement.

when the city purchased the Hibbert garage from Sunbelt a as a as a consideration in addition to the cash cash that the city paid for the garage was entering into a parking license agreement that provided Sunbelt the option to license up to 275 spaces within the garage provided that the exercise of that option was to support new private redevelopment. This is exactly the intent of that parking license agreement.

It is just the the goal of the developers of the AC to have that agreement be directly with the city versus be through Sunb Belt A. Sunb Belt Sunb Belt A has agreed to release those 100 spaces from their parking license agreement. So at a parallel time we are we are completing an administrative amendment to their parking license to remove those 100 spaces from their agreement and then we are would enter into a separate license agreement with um Breakwell as part of this agreement. quickly.

We've gone through all these really quickly. Next steps we are going to finalize. We just have a few points that we're finalizing negotiations on. Uh we are scheduled to come back to council on July 27th with the agreements for your consideration. Um the developer has begun the planning and zoning entitlement process. They will complete that and are intending to commence construction.

While I told you that they have to commence construction or obtain permits within 18 months of the council approving a development agreement, is their intent to begin construction in December of this year? Council member Duff, they specifically said they want you to be able to attend a groundbreaking event. Um [laughter] um and they're intending to commence operations by the second quarter of 2028.

So, mayor, this project represents another important investment in downtown Mesa, supporting tourism, economic development, and the continued revitalization of our downtown urban core. Uh, with that, we are happy to answer any questions. Council, any questions? Mayor, can I can I just add though, too, I I appreciate the work that Jeff and his team have put into it. Um, but the developers, too. This is uh exactly the type of brand, the type of quality uh that we would hope for.

This attracts the type of business traveler and and leisure traveler [clears throat] with modern amenities, modern standards, and hoteling that um is exactly what we need in our downtown and can complement efforts that we're looking for um to enhance the arts and innovation district through our work at the convention center, our work on natural history museum, obviously our continuing commitment um at the arts center and and other cultural draws in into the area as well.

But this should be a great compliment for um all the activity that is happening and and will be happening in the the future here in downtown Mesa. So we appreciate them bringing this particular product and brand for this is a a big deal for downtown Mesa. Yes, it is. Miss Duff, I'm sure you would like to very thrilled to have AC Hotel. Thank you for all your work and commitment to make pull this together. It was a difficult um pro, you know, piece of land to develop in this way.

will certainly enhance downtown. I do like that it'll also connect nicely to the art um the lightwalk assume we get that done in that connection to provide you know easy access to the assets that we're developing as well as re redeveloping along that stretch. it it just really connects everything um from Main Street um north and has that, you know, an inviting way to get around uh down downtown Mesa to the other places that we have.

So, I think it's a great location right on Maine, connects to um plans with our arts and innovation district and the lightwalk and um furthering our um reach and our developing that area. So, thank you for all your work on this. Thank you to the developers and everything for all your work. You've been at this going [snorts] reaching people um throughout the months and having these discussions and I've only heard good things. So, I can't wait. Thank you. You bet, Mr. Adams. Thank you, Mayor.

Um before this meeting started, the council's economic development committee met and among the presentations was one from visit Mesa and I have some information here in front of me that demonstrates that we the term I'd not heard before average leaked monthly visitors 40 almost uh four 40 41,000 if I read this right. Let's say it was even 4,000. Um, but we're apparently losing a good number of visitors who will go and stay in adjoining communities in in hotels and other forms of lodging.

So, uh, even if this information were 50% overstated, there's still strong evidence of a demand for uh, additional hotel rooms here in Mesa. So, this further supports this project, I would say. Absolutely, Mr. radio. Uh just Jeff, what's the capacity on the Hibbert garage still? Uh mayor, council member Heredia, the the Hibbert garage has we have 875 spaces of which the city is will always have a minimum of 600 spaces.

Um if there are sufficient number of projects to support it, they could license up to 275 spaces. But until any one of those spaces is licensed, the city has full rights to use. And does the city use all 600? Oh, no. We have capacity still. Okay. Yes. Is the plan to use all 600? I imagine U. Mayor, Council Meredia, when when some other office when we do some of the other uh shuffling around of office spaces and we are able to to maximize the use that we will Yes.

We will probably get close to that usage. Yeah. If we fill them up, council member, that'll be a good problem. That's a good Let's go forth. Thanks, Jeff. Just a quick question on the inloo payments to school districts. I mean, obviously I I know what that means, but can you just give me a little bit more detail? Is that the full abatement period? Sure. Mayor, Council Member Goforth.

Um, whenever we we we we begin negotiations on on a GIPLA project, one of the first things that we do is an assessment or essentially an analysis of what that property would pay in property taxes if it were vacant and undeveloped. So that $16,700ish dollars reflects the three tax school districts taxing within the district, Mesa Public Schools, Maricopa County Community College District, and EVIT.

And it is it is an an estimation of what that those two parcels would pay over the course of that 8-year abatement if they were vacant and undeveloped with an assumption of a 5% escalator every year. Okay, that's helpful. Um, and are this is being built on two vacant and one that isn't vacant, right? Correct. Okay. Network Auto on the corner. It would it it's under contract. Have you purchased contract?

Under contract um to purchase as part of this project and would be um raised and rebuilt as a hotel. Okay. Okay. Thank you. So, I know that this should probably work well with um our desire to, you know, fill the convention center more regularly. Has there been a lot of discussion behind the scenes?

I know I probably haven't been privy to it, I apologize, with how we will work with the convention center to have more events there because now we have this hotel where people can stay right here in downtown. And could you maybe describe some of that to the public so they have a good idea of that relationship?

Mayor, Council Member Taylor, I will be able to to answer as it relates to the world of urban transformation and and that we are very much aware that um as part of the the review of the convention center and the amphitheater, one of the things that was made clear by our consultants was that we do not have the number of hotel rooms in our downtown necessary to support the next level of events at the convention center that we want to achieve. Um this will help fill that gap.

I think it was somewhere around 400 room gap to be able to get where we want to go. This this at 150 rooms and the and the Hyatt unscripted the 233 with another 76 rooms is it's a long ways to helping filling that gap. Now the details of of the next step of being able to attract and and bring the improvements to the convention center to make that happen. That's another step process, but I think this really helps lead us towards that. Yeah. Um Mayor and Council Member Taylor, yes.

everything Jeff said and and I do I do think along with the um I want to applaud our our friends at the Delta who are looking at making substantial investments into their facility, but it's it the great thing is rising tide lifts all boats in this because we need more highv value offerings at our convention center with with the types of conventions that fill more room nights, but we have to have the types of rooms that con that a modern convention wants to um participate [clears throat] in and and be a part of.

And so you see um this hotel complementing the offerings in downtown as Jeff alluded to. And this will be great as we try to position um the convention center um moving forward as as an ability to recruit um those those conferences that are looking for modern um hotels and modern amenities that they'll need for their conventions. Thank you.

And then I'm also guessing that sometimes we have shows maybe at the MAC where people come into town and they want to stay overnight and they just want to explore this area and they're normally going somewhere else instead of staying right here which is heartbreaking. So I'm really excited that this will hopefully keep more people in downtown Mesa. Well, very good. Uh look forward to this. I know the development team is here, so thank you for being here, Mr. Bunker and your team.

Um, any other words of wisdom, Jeff, for this project? Um, the faster we can get it approved, the faster they'll start construction. [laughter] Well, I know. Let's talk about Main Street in this area. Usually our first floors are designed to be retail type. So, I think explain that because as we request in any development along our main street corridor, there has to be a retail component. And so, they've met that standard. Correct.

Mayor, uh, mayor, councel, retail is I'll just nuance it a little bit. Retail is is a narrow is a narrow subset of inactive uses. So, oftentimes retail is considered active uses, but in this case, what we're after is the active uses. So, they're making sure that the the front desk is on on Main Street. They're making sure the beastro is on Main Street, and that any of the active uses, the things that have um activity, that that's what's facing Main Street, not necessarily retail alone. Okay.

Thank you. All right. Hearing nothing else, council, we'll move on to item three is to acknowledge your receipt of various boards and committee minutes. Is there a motion to that effect? So, thank you, Vice Mayor. Thank you, Miss Goforth. All in favor say I. I. Uh, next is current events and conferences attended. Council members, do you have anything you wish Freeman? I'm sorry, you missed an item to appoint board members.

Um, I said item 2B is take action appointments to various boards and committees. I think you said uh did I not say that and ask for a motion? That's item 2B. We could do it real quick. Is that correct? What did I miss? Tell me. Minutes. Oh, did I say minutes instead of committees? Okay. So, let's do it over. Item 2B is take action on appointments to various boards and committees. Is there a motion to approve? Thank you, Vice Mayor. Thank you, Miss Goforth. All in favor say I. I. Covered, ladies.

Okay. Item three is the acknowledged receipt of various boards and committee minutes. Is there a motion to that effect? Thank you, Miss Adams. Thank you, Miss Duff. All in favor say I. I. I. Okay. Motion passes. Next is current events and conferences attended. Council members, anything you wish to share? I'll [clears throat] jump in because I usually do.

Um, last Thursday I attended the Arizona Lodging and Tourism Summit on um going over tourism and its current challenges and future forecasts, which is promising. On Friday, I attended the Salvation Army National Doughnut Day, delivering donuts to all of our public safety facilities across the city, uh, with lots of other volunteers, um, including our dispatch center. And this has been the Salvation Army's annual tradition since World War I.

On Saturday, I attended America 250, Cheers 250 at Cider Core, toasting our nation's 250th birthday at 2:50 p.m. along with many other bars and breweries across the state at exactly the same time. And then that night, we had Parks and Recreation had the skate party at the city plaza. Um, thank you to the Arizona Roller Girls for guiding the skaters and water resources for sharing information on important work um, they do testing and treating our water. Thank you.

And oh, and Chupaca celebrated their seventh anniversary. There's a big party out on the streets and and everything. It was a good time. Well attended. I can't believe it's been seven years since they opened, but it's fun. Okay, Miss Ready, I know you have something. The Turkish team there. Oh yeah. In your district. Yeah. Well, citywide, right? The uh Well, they were in your district. Yeah. The uh at Riverview area uh at the um hotel and then practicing at the Arizona Athletic Grounds.

We got the Turkish uh national team uh ready to uh play in the FIFA tournament uh this upcoming month. So, we're excited. There was a welcoming yesterday. the mayor uh did a pro proclamation with them and um met some of the the manager and the the team the coach. So and then there's opening [clears throat] public opening uh today at the Arizona Athletic Grounds uh for public uh practice viewing.

So uh hopefully folks can make it out um or you know enjoy the World Cup uh these next couple weeks uh as Mr. Summers and I and big soccer fans here. So, um, so thank you. Yeah, football. Yeah. Well, it's in the US, so it's Yeah, soccer. Yeah. Very good. Anyone else? I did attend Cockpit Closeup. That was a great event. They had a lot of people. It keeps getting bigger and bigger. I think the F-16 16 was a big draw. So, thank you to everyone who came out for that.

And then I um also went out to I was invited out to Red Mountain Ranch events. Red Mountain had an event and a luau. It was very good. Lots of people out there at the pool. So, thank you to them. They did a great job. Miss Taylor, anything? [clears throat] So, the week I was in Long Beach for the US Conference of Mayors. Uh Mr. Butler joined me. I'm chair of the energy committee and we had a great conversation about who who should absorb energy in AI and the transmission cost.

So we had a broad-based conversation or committee meeting as well as I was elected to their advisory committee board. So that was unexpected honor but I put in for it so I guess I got what I requested. Um and then our meet and greet with the turkey team was pretty great. There are a lot of fans there at uh Riverview with that. So with that, Mr. Butler, can you share the schedule of our future meetings? Well, this will be music to your ears.

Uh so starting after tonight, we'll have um a little bit of break so that the vice mayor and council member Heredia can enjoy the World Cup in in peace. And so uh council will be on summer break from June 9th until July 15th. And so we won't be back here um until Thursday, July um 16th for study session that morning. But um since this will be the last time we convene prior to that, just wanted you there'll be plenty of information.

You're already getting inundated with information about the Wilm um Arizona Celebration of Freedom. That will be on the 4th of July and it'll be uh bigger and better than ever u because of America 250 and the activities we have planned around that. So, um please uh we encourage all Mesa residents come out, enjoy the the free activities. Uh it's a great evening.

U a lot of different um family-friendly events to do and then a great fireworks show to cap off the evening after that and that'll be of course the evening of July 4th. So, thank you, Mayor. All right. Thank you. I'll entertain a motion to adjurnn. Thank you, Mr. Ready. Thank you, Miss Duff. All in favor say I. I. We'll see everyone upstairs. Heat. Heat. N. [music] [music]