Mesa council approves luxury hotel agreement

The Mesa City Council approved an agreement for a more than $50 million hotel that would reimburse the developer just under $1 million for public infrastructure construction.

The council unanimously voted in favor of the agreement. The deal required five votes to pass.

No members of the public or council commented on the issue.

The Cannon Beach Hotel is part of a larger 35.61-acre mixed-use development project called Cannon Beach at the southeast corner of Power and Warner roads that will include commercial, recreational and entertainment services built around Revel Surf Park.

The agreement with developer Cannon Beach Hotel LLC will apply only to the 1.32-acre hotel.

The hotel project is set to have 148 rooms and amenities such as a rooftop deck and event space, ground-level pool, hot tub and lawn area.

It will also include a bar and lounge connected to an outdoor terrace overlooking a surf pool, as well as an “upscale or upscale casual” full-service restaurant with a minimum of 7,000 square feet of indoor and outdoor space,” according to a staff report.

“The potential fiscal impact of the proposed development agreement will include reimbursement of up to $950,000 of dedicated public infrastructure costs for Warner Road if the developer completes all the minimum requirements as set forth in the development agreement,” according to the report. “Construction sales tax and retail sales tax will be used to provide reimbursement.”

The incentive period begins when construction of the hotel is completed and extends over 10 years.

Under the agreement, the developers must obtain building permits for public infrastructure within 18 months of the deal’s effective date. The public infrastructure must be completed within 36 months of the effective date and must be designed, bid and built per applicable law and state statute.

The public infrastructure that is required on Warner Road includes:

• Pavement and turn lanes
• Curb and gutter
• Sidewalks and landscaping
• Driveways and streetlights
• Storm drain, retention and retaining wall
• Signing and striping
• Staking and testing

The deal also calls for the hotel, which is currently a planned Tapestry by Hilton, to be completed and open to the public within 36 months of the effective date.

A financial analysis conducted by Applied Economics looked at projected sales tax, city tax revenues, public improvements, total economic impact, job creation, annual labor income and construction activity, the staff report continued.

The total estimated costs of construction are $51.7 million, Cannon Beach Hotel “has already spent approximately $10.3 million in site improvements and design costs that are not part of the reimbursement agreement,” the financial analysis stated.

The project is expected to generate 162 full- and part-time jobs and could attract additional visitor spending within the Cannon Beach development and elsewhere in the city, supporting additional jobs and sales taxes. The project could generate $9.4 million in gross non-dedicated sales and hotel taxes, dedicated sales and hotel taxes, and secondary property taxes to the city.

“The Canon Beach Hotel could also create a total economic impact of $281.6 million on the Mesa economy over 10 years,” the analysis stated. “The hotel could directly and indirectly support 223 jobs and $84.9 million of labor income in Mesa over 10 years.”

Guest spending is expected to create an induced output impact of $58.6 million over ten years and support an estimated
52 jobs in Mesa and elsewhere in the county.

Janet Perez can be reached at jperez@iniusa.org. Please send your comments about this article to AzOpinions@iniusa.org. We are committed to publishing a wide variety of reader opinions, as long as they meet our Civility Guidelines.