Jun. 27, 2003 - Last week the city of Flagstaff chose three finalists to develop a 250-room hotel and conference center in downtown, but one local businessman believes the city is making a grave mistake. 

"This can't happen," said George Nackard, president of Consolidated Investments of Flagstaff. "If it happens, I'll resist it any way I can, legally." 

Nackard contends that putting a conference center downtown will only serve to further congest traffic and make parking -- already at a premium -- even more difficult to find, despite plans to include a parking garage with the center. 

Two months ago, Nackard spent $1.3 million for six acres of property south of the Red Lobster and Olive Garden restaurants, along Beulah Boulevard near the junction of Interstate 17 and Interstate 40, that he said would be ideal for such a development. 

Plus, Nackard said he can develop the conference center at no cost to the city. His track record of projects in the city includes the Target shopping center and other commercial properties in the South Milton Road corridor. 

Nackard's plan to finance the $40 million project was to sell rooms as an investment at $150,000 apiece. Investors wouldn't be able to use the room whenever they wanted. Instead, they would get a portion of the profits from the hotel and whatever appreciation was generated by their investments. 

"I could almost guarantee they would make 20 to 30 percent on their money," Nackard said. "With the blessings of the city, it would be a dead cinch." 

The trouble is Nackard couldn't get the blessing of the city. Flagstaff Redevelopment Director Michael Kerski didn't go on record about the specific reasons why the city wouldn't sign on. He said it was too late in the process for the city to drop its negotiations with the final bidders and start negotiations with Nackard. 

But Nackard contends that doing so would save the city headaches in the long run. "When I bought the property, I told the city I had a better spot, but they said it was too late," Nackard said. "I say it's never too late when you're making a mistake." 

Nackard said he plans to develop the property one way or another. If the conference center isn't located there, he plans to build luxury condominiums that would sell at $500,000 apiece. 

Part of Nackard's conference center proposal would include some luxury condos, where residents would be able to take advantage of the amenities provided by the hotel. 

It is still unclear just what the city would have to contribute to make the downtown conference center, its preferred location, a success. City officials hope to choose a developer by the end of the summer. 

CITY ROLE IN FINANCING CONFERENCE CENTER DEPENDS ON FINAL CHOICE 

Richard Stormont, CEO of Stormont Hospitality LLC, is one of three finalists for the downtown proposals. He said there is a wide range of financing options for public entities looking to bring a conference center to their cities. 

Stormont is one of three final bidders that include Hines of Phoenix and Garfield Traub Development. The three finalists have each developed numerous properties, both large and small. 

Hines developed the Chattanoogan Hotel and Conference Center in Chattanooga , Tenn., Garfield Traub developed Doubletree Hotel and Conference Center in Bay City, Mich., and Stormont developed a Renaissance Conference Center in Portsmouth, Va. 

Because his company is still in the competitive bid process for the Flagstaff location, Stormont wouldn't reveal the financial particulars of his company's proposal, but he said financing could range from 100 percent privately funded, to a partnership between public and private ventures, to completely funded by the city and operated as a nonprofit. 

Stormont suggested that some form or partnership, or operating the center as a nonprofit, is more common. 

"In the public finance area these days, there are a lot of advantages for a public entity to own the asset," he said. "They can be unbiased in how they promote the center and how it is used. Most are developed as an economic stimulus for the community. In today's environment it is a very complex and very lengthy process." 

Kerski said one of the reasons the city hasn't revealed its role in financing the center is because the city doesn't know what role it will play. 

Each of the three proposals has distinctly different ways of financing the center, which could cost between $35 million and $45 million to build, he said. 

Because of that disparity and the fact that the three companies are still competing for the final contract, Kerski said, it isn't in the best interest of the city to release those details yet. 

Despite the fact that Flagstaff already has more than 4,000 available hotel rooms and that some hotels, such as the Radisson and Little America, provide meeting space, there is still a market for the kind of center the city wants to build without competing with existing hotels for visitors, Stormont said. 

Stormont suggests that the current inventory of meeting space in Flagstaff appeals more toward niche conferences. Because of that, he believes that a new conference center, regardless of who ultimately develops it, will serve a broader market. 

"A conference center would serve multiple needs for the community and do a better job of bringing new business to the market," Stormont said. 

Kerski said other markets haven't experienced competitive problems between local hotels and a new conference center. Part of the reason he doesn't expect it to happen here is the nature of the three companies vying for the final contract. 

"The whole goal of this is that they don't go in and cherry pick from the existing market," Kerski said. "They go out and find new business." 

Another of the criticisms offered by George Nackard, president of Consolidated Investments of Flagstaff, of the downtown site is that there are few hotels in the vicinity to handle the overflow from conferences. Nackard contends that his location is ideal because of the proximity of other hotels in Beulah Boulevard area. 

But Kerski said overflow isn't as big an issue as it seems. The conference center, with 20,000 square feet of meeting space, would have room for up to 1,200 people at once. 

Those types of meetings would be rare, he said. "It's not designed to be a convention center," Kerski said. "This is a facility that will be broken down into small meeting rooms, where a corporation can fly in 40 to 50 executives and they would go into a meeting." 

Kerski continued: "All of the operators that we talked to said there isn't a market here in Flagstaff for a larger convention center." 

-- By Jeff Tucker 

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