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DURA begins negotiations with only interested hotel developer

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Just one hotel developer responded to a request for proposals issued by the Delta Urban Renewal Authority for a riverfront hotel development. While the number of responses was disappointing, the proposal from MARS Hospitality was just about everything DURA commissioners said they had hoped for. The Parker-based firm proposes a hotel with a minimum of 80 guest units, a restaurant with outdoor patio seating, an exercise room and conference space in a 50,000-square-foot facility with 100 parking spaces.

MARS intends to partner with the InterContinental Hotels Group which operates Holiday Inn, Holiday Inn Express and other brands.

The developer currently operates Holiday Inn in Grand Junction and Casper, Wyo.; Holiday Inn Express in Limon, Winter Park and Vernal, Utah; and Candlewood Suites in Craig.

MARS anticipates the development will create 25 full-time equivalent, or FTE positions. Most full-time positions will include a benefit package.

DURA board members reviewed the MARS proposal with Adam Hughes, a representative of Better City, and attorney Carolynne White on Tuesday, March 27.

The cost of the project is estimated at $12 million, and MARS will be asking for tax increment financing, or TIF, for site development, although the amount remains to be determined.

"This is one of the best, if not the best, response we've seen in terms of professionalism and responsiveness," Hughes said via teleconference. "There are a lot of what ifs regarding the project that need to be defined, but they need to be defined together."

Hughes called MARS "a reputable company that recognizes the opportunity in Delta."

In terms of the goals established by DURA, Hughes said he believes the hotel will stem leakage to neighboring communities and serve as a catalyst for development in the project area.

The next major step is the purchase of the TK Mining site near the intersection of Highway 50 and 92. Hughes confirmed MARS project team members have visited the 9.2-acre site twice. "They really like what the site has to offer in terms of recreational proximity, in terms of proximity to downtown," he said, but they also recognize the challenges.

It was his recommendation that DURA begin developing a memorandum of understanding (MOU) with MARS Hospitality. The other option would be to start back at square one with a new RFP.

DURA commissioner Don Suppes said the proposal resulted in as many questions as answers, but he had no problem moving forward with the MOU, knowing the board would be under no financial obligation.

Ron Austin agreed that, based upon established criteria, the response is probably the best that could have been expected, but he is concerned that out of 42-43 requests for proposals sent out, only one was returned. "To me that raises a huge red flag," he said. "I have reservations about jumping in with something that could potentially bind us to some costs that we're not ready to do."

Attorney White clarified that if MARS Hospitality is selected for further negotiations, DURA can not be discussing this same project with other developers while the MOU is in effect.

"And that's what I have a problem with," Austin said. "Nothing in this RFP addresses how we're going to fill that hotel, and that's a huge concern."

He was assured that not only would MARS Hospitality be conducting a feasibility study, equity investors and bond underwriters involved in project financing would also be taking a close look at market potential.

The final vote was 8-1 in favor of pursuing a memorandum of understanding with MARS Hospitality, with Austin casting the dissenting vote.

Once the MOU has been signed, negotiations will begin in earnest. Attorney White said the DURA board will likely have an opportunity to hear directly from the developer and to ask questions.

The hotel is expected to occupy two to three acres of the site just south of the Gunnison River. A comment from DURA commissioner Bill Crank about an overall vision for riverfront development prompted David Torgler, in his role as DURA executive director, to suggest a follow-up meeting Wednesday, April 4. The MOU will also be formally considered at that time.

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