Albany leaders pave way for new downtown hotel

Aug 14, 2015

By Carlton Fletcher, Albany Herald                  

ALBANY — The Albany City Commission agreed to a memorandum of understanding Wednesday that will allow for the construction of a second hotel downtown.

At a special called meeting, the commission voted 6-1 to approve the agreement that will allow Albany Holdings LLC to seek franchise approval and funding for construction of a Home2 Suites hotel adjacent to the company’s Hilton Garden Inn.

City Manager Sharon Subadan told the commission the potential rewards associated with construction of the new hotel outweighed the risks. Consultant Gary Mongeon, the vice president of Atlanta-based Bleakly Advisory Group, told the commission that the Home2 Suites would have an estimated $3.6 million economic impact on the community that, combined with the Hilton Garden Inn, would create a total $10.4 million impact.

Albany Holdings would be responsible for a study that would determine the most feasible use of land around the hotel site to create adequate required parking for both Hilton Garden Inn and Home2 Suites guests.

Albany City Attorney Nathan Davis talks with city commissioners Wednesday about a memorandum of understanding with Albany Holdings LLC that will allow that group to move forward with construction of a second hotel downtown. (Staff Photo: Carlton Fletcher)

“They (Albany Holdings) are basically in a holding pattern until they hear from us on this agreement,” Subadan said.

Among the concessions sought by the city and agreed to by Albany Holdings is the payment of $25,000 annually into an account that will be held in escrow until the company begins construction of the new hotel. At that point, the money will be released to Albany Holdings. If it does not begin construction in 10 years, the $250,000 cumulative funding will go to the city.

Subadan said the memo includes a timeline for construction to begin within 34 months.

“We looked at the Hilton Garden Inn’s 2014 operating statement, and all indications are that the hotel is operating at a profitable level,” Mongeon told the commission. “They’ve made all of their loan payments on time, so there’s nothing that would suggest an undue level of risk.

“Our study also shows that the city would receive $355,000 a year in revenue for the 2.5 acres of land the two properties would be located on. That’s a much greater return than you’d typically get for a parcel that size. (Albany Holdings) has paid its HUD loan (provided by the city) down from $5.5 million to $2.2 million, and they have agreed to further pay down an amount equal to 22 percent of the HUD loan.”

Consultant Gary Mongeon, vice president of the Atlanta-based Bleakly Advisory Group, told the Albany City Commission Wednesday that rewards outweigh risks on a proposed downtown hotel. (Staff Photo: Carlton Fletcher)

Mongeon said Bleakly Advisory Group recommends using the payment to retire a One Georgia loan acquired through the Albany-Dougherty Inner City Authority and to come up with a city parking plan.

“It clearly states in the MOU (memorandum of understanding) that costs for any parking spaces needed by the hotel will be their costs,” Subadan said. “We could control a parking study based on our needs for future downtown development. In order to get and maintain this agreement, (Albany Holdings) must demonstrate that there is adequate parking for both hotels.”

Mongeon estimated that as many as 213 parking spaces would be needed to meet state requirements.

Subudan said the agreement could become a “true downtown success story.”

“I’m pleased to see where we are (with the memo),” Mayor Dorothy Hubbard said after the vote. “This has been a good partnership for the city.”

Hubbard and Commissioners Tommie Postell and Roger Marietta praised Subadan for her work on the agreement, Marietta noting the “transparency of the process.”

Commissioner Bob Langstaff asked that an amendment be added to the agreement that, in effect, “makes it clear we are not to provide parking and that the owner warrants that information (presented to the commission) is true and accurate and that the city relied on that information” in reaching the agreement.

Mongeon said, “If (Albany Holdings) executes their plan, this is a fantastic win for downtown Albany.”

Commissioner Jon Howard cast the lone vote against the agreement.

Also at the called meeting, the commission agreed to sell land in the unused Gowan Avenue alley to Nathaniel Payne for “$1 and other considerations.”


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