City rejects Majestic proposals

The city rejected the two redevelopment proposals submitted for the Majestic Hotel property last month. It plans to seek additional proposals for the city-owned Park Avenue property that was condemned and demolished in 2016. – Photo by Richard Rasmussen of The Sentinel-Record

The city has rejected both redevelopment proposals submitted for the Majestic Hotel property, explaining that the submissions for the 101 Park Ave. site were incomplete.

The request for proposals the city issued earlier this year required the inclusion of a bid bond guaranteeing respondents have the capital to realize their plans or a standing letter of credit. Financial statements from the previous year were also acceptable. Deputy City Manager Lance Spicer said information showing respondents have the financial wherewithal to execute their plans wasn’t included.

“Once we reviewed the proposals, it was clear that complete responses were not submitted and that was the basis for the rejection,” said Spicer, who has headed the city’s effort to certify the property is free from environmental liabilities, solicit public input on its redevelopment and draft an RFP. “More specifically, there was a requirement to demonstrate their financial capacity and present a fiscally sound plan for the property development, which was not fully addressed in the submissions.”

The response window coincided with the emergence of the coronavirus pandemic, causing the city to extend the March 30 submission deadline to April 30. Spicer said the uncertain economic climate likely led to the low number of responses for a project that had garnered wide interest after state regulators issued the property an environmental clearance in late 2018.

He said the city is reviewing the RFP and plans to solicit additional proposals soon. The city spent more than $2 million from its solid waste fund to buy the property in 2015 and demolish the condemned “red brick” building, Lanai Towers and Lanai Suites in 2016. Recouping the investment is one of the redevelopment goals set by the Hot Springs Board of Directors.

Grand Point Investment Group and Cienda Partners’ joint submission said they were undeterred by the current uncertainty, proposing a more than $100 million thermal water resort with 250 guest rooms, 30 luxury residences, an outdoor civic/park space, rooftop club, full-service spa, mountain biking concierge program and public-private parking.

The proposal said construction could begin by June 2021, with the resort ready to open in June 2023.

“Team Majestic does not intend to simply build a nice hotel, but an iconic wellness and water-centric destination resort unlike any in the region and potentially the country,” according to the group’s proposal.

The group proposed buying the 5-acre property for $2,099,000 or leasing it long term for $1 a year. It said the resort would generate $1.5 million in annual local sales tax revenue and employ more than 200 people, increasing pedestrian traffic that would benefit other downtown hotels and businesses.

Grand Point offered to buy the property last year for $2.1 million, an offer the city said amounted to a six-month option that would rescind the offer if a purchase and sale agreement wasn’t completed at the end of the term.

The proposal submitted in response to the city’s RFP is a more detailed version of what Grand Point President and Managing Member Matt Deuschle outlined during public planning sessions last April, when he explained that an upmarket resort is lacking from the area’s lodging portfolio.

DHM Design of Colorado also responded to the city’s solicitation, proposing to design a project that the city could find investors for. The design would “look to integrate the hot springs into the natural environment,” according to the proposal.

Deuschle said in an email response that Cienda Partners, a Dallas-based private real estate firm that’s properties include the La Fonda Hotel in Santa Fe, N.M., has the experience and financial wherewithal to realize the ambitious vision fleshed out in the group’s 127-page proposal.

“Our development and investment partner is significant, has decades of experience and a sterling reputation,” Deuschle said. “They focus on historic preservation, broad-based urban redevelopment and public-private transformational projects. They have executed on over $1 billion worth of projects and have another $1 billion in the pipeline.

“Also, they have immediate family ties to Hot Springs and Arkansas spanning over 30 years and have long believed in the city’s future. We regret to have misjudged that our 127-page response and credibility would be sufficient to get to the negotiating table.

“With a most dire economic backdrop across the land, we are ready and equipped to collaborate with the city of Hot Springs immediately and deliver a positive catalyst. We continue to lose time when we could be working together. Our team is one of the most formidable the state has ever seen tackle a project like this, and we expect to make adjustments to the concept, including architecturally if need be, with the city’s input to their satisfaction.

“We view the city as our teammate. An iconic, unprecedented project like this will take a while so we need to get to work. We would be happy to engage with the city at our cost over the next several months while the country sorts out the effects of this awful pandemic.”

Cienda’s cover letter said in 2015 it considered buying the Arlington Resort Hotel and Spa and investing $75 million in its renovation. The downtown environment at that time, shaped by vacant and neglected buildings, caused it to reconsider.

Since then, Cienda said the number of new businesses that have opened downtown, the expansion underway at Oaklawn Racing Casino Resort and the city being named an emerging travel destination have improved the prospects of a luxury resort succeeding downtown.

Renderings included in the proposal showed the hotel would be built on a podium. A waterfall would cascade from the podium, down a rock wall and into a public park and civic space at the southern end of the property. A resort-style swimming pool for hotel guests is envisioned for the podium center. A smaller pool for property residents and a dining terrace would be on the west end of the podium.

Guests and residents would enter the resort from Park Avenue, on the east side of the property. They could turn left to enter the multilevel parking garage inside the podium or proceed to the arrival drive and courtyard. A spa featuring pools, villas, bar and thermal spring stream would anchor the north end of the property. Local on 05/16/2020