Empty land downtown could sprout a 200-room hotel at Convention Center

Fresno leaders have long envisioned a major hotel to be tucked into a notch of vacant land adjacent to the L-shaped Fresno Convention Center Exhibit Hall in downtown.

Now, a developer with connections to hotels in Bakersfield, Dinuba and other cities is coming to the city with plans to build a 200-room, four-story hotel at the northeast corner of M and Inyo streets. At its meeting Thursday, the Fresno City Council will consider selling the 0.74-acre plot of land to Metro Hospitality Services Inc. for nearly $645,000.

Metro Hospitality, which lists an address in Fowler, proposes to develop the hotel as either a Hilton or Marriott project, according to the development agreement being presented to the council. The hotel would include an enclosed pool and spa, fitness center, conference rooms, business library, lounge and restaurant. A staff report to the council from City Manager Wilma Quan-Schecter said the city received a letter of interest from Metro Hospitality to buy the property for a “four star” hotel “which will complement surrounding uses and activities occurring at the Fresno Entertainment and Convention Center.”

Metro Hospitality’s CEO is Tehal Thandi, according to corporation records filed with the California Secretary of State. Records also show that Thandi is involved with companies that own and operate other hotels including a Hampton Inn in Bakersfield, a Holiday Inn Express in Dinuba and a Days Inn motel near Jensen Avenue and Highway 99 in Fresno.

Thandi and Metro Hospitality represent the latest entry in a nearly two-decade effort to develop a downtown hotel at the convention center. The longtime owners of the site, the Ophelia family, had proposed building a 400-room hotel as part of the new Exhibit Hall project. Among the options being considered by the city in 1999 to help the Ophelia family realize the plan were rebating sales and room taxes generated by the hotel, and a 20-to-30-year bond to help front the development costs.

In mid-1999, city leaders visited Las Vegas and issued a request for qualifications, hoping in vain to attract a developer for the hotel. By 2001, the city and its redevelopment agency were in negotiations with a developer on terms for the city to buy the land from the Ophelia family and sell it to the developer for $1 to be built as a 14-story Wyndham convention hotel at a cost of $78 million. The developers and the Ophelia family also were asking for future property tax revenue as an incentive for the project, as well as a commitment by the city to lease at least 20,000 square feet the first two floors of the hotel.

In 2002, however, the exclusive negotiating deal between the city and Algen Construction and Development expired after the developer was unable to secure financing for the hotel. In April 2005, the Fresno City Council voted to purchase the property from the Ophelia family for about $3.1 million, still with the goal of getting a hotel built at the site.

More than a dozen years later, the site remains empty.

“When the city bought the lot, it grossly overpaid,” Fresno Mayor Lee Brand said Monday. Brand said his research into the property history revealed that one version of plans were for the city to issue bonds and build the hotel itself, “but luckily they could never get the five council votes to do it. … It was a disaster waiting to happen.”

Unlike previous efforts, the terms of the development agreement between Metro Hospitality and the city don’t appear to include any financial participation or involvement by the city in the project. “Nothing in this agreement … shall be construed as creating a partnership, joint venture, agency, employment relationship or similar relationship between City and the Developer,” the agreement states. “The Project is a private undertaking of the Developer.”

Brand said that as the city investigated selling some of its surplus property around the city, two or three potential buyers surfaced for the convention center property. “This was the best deal,” he said. “We didn’t say this has to be a hotel. This is market forces at work … These guys are doing an honest assessment of what the market (for hotel rooms) is right now.”

Brand said that the hotel is not large enough to qualify for rebates of sales or property taxes that the city offers as development incentives for large projects, such as Amazon and Ulta Beauty warehouses now under construction in south Fresno. But it would be able to apply for relief from some of the impact fees that developers are typically required to pay on new projects.

A new hotel would be yet another step in the city’s efforts to revitalize its downtown, following the conversion of a six-block stretch of Fulton Street back into a traffic-bearing street after more than 50 years as a pedestrian-only mall. City leaders hope the launch next year of a Bus Rapid Transit system along Blackstone Avenue and Kings Canyon Road with a hub in downtown will also attract more residents and more commerce into the area.

But the development agreement also includes an ambitious schedule and mechanisms that would return title for the property to the city if Thandi and Metro Hospitality cannot make good on its project. If the deal is approved, Metro Hospitality will have until August 2018 to submit building plans to the city. Escrow would only close on the property once the developer has secured the necessary permits and other approvals needed to move forward.

Construction is expected to begin in October 2018 and be completed by October or November 2020.

“This is what we want to see happening in downtown,” Brand said. The city-owned convention center “is losing about $7 million a year, but I see this as something that will help the convention center.”

This story was originally published December 4, 2017 at 1:49 PM with the headline "Empty land downtown could sprout a 200-room hotel at Convention Center."