The Planning and Zoning Commission has recommended the Town Council deny a Special Use Permit application that would convert a downtown hotel to apartments.
Roy Brown, who is in the process of purchasing the 104-room Fountain Lake Hotel at Saguaro Boulevard and Paul Nordin Parkway told the commissioners that the property is not viable as a hotel.
The proposed plan would include 29 studio and 61 one-bedroom units. There would be four units on the first floor where the hotel restaurant operated. Three of those are planned as two-bedroom. Brown said the plan is to market those units as Airbnb rentals.
Commissioner Patrick Dapaah focused his questions on air circulation in the building. It was noted that the hotel windows do not open. Brown said the existing mechanical system would remain essentially intact. Dapaah said he was concerned about adequate ventilation, infection control and life safety systems for those living in the building.
Commission members also seemed skeptical of Brown’s claim the property is not viable as a hotel.
Commissioner Susan Dempster asked why it was not successful as a hotel. It opened in 2006 as a Holiday Inn Express and has had six owners since that time.
“It can’t overcome a 30% annual occupancy rate,” Brown said. “The challenge is this is a sleepy community in the summer months.”
Dempster noted that there are in town two other hotels and several restaurants that survive through the summer months in Fountain Hills.
“I think it can be viable as a hotel and it is needed downtown,” Dempster said.
Resident Crystal Cavanagh spoke to the commission saying she thinks maybe the property wasn’t being marketed correctly, saying she believes most people in town don’t even know the name of the hotel.
“I don’t think they have done their due diligence and are now looking for help getting out of it,” Cavanagh said.
Resident Larry Meyers said it should be kept as a hotel. He agreed that the buyer made the wrong investment and is looking for the Town to bail them out.
Brown said he has yet to close on the property and is able to back away from the deal.
“It has always been my plan to convert this to rentals,” Brown said. “I’ve been working on this 10 months and believe it would be a solid success.
“I think this would be an upgrade for the town. An underperforming hotel is very vulnerable to the unknown.”
A resident in the Villages at Town Center, a condo complex just south of the hotel, said residents in her complex do not want the Airbnb options and potential noise associated with that.
The SUP application was used to allow residential use on the commercially zoned (C-2) property because a zoning change to multi-family residential would have been inconsistent with the number of units for the parcel size. R-5 zoning would allow for only 80 units on the parcel.
Commissioner Clayton Corey said he would like to see if it is possible to make this feasible, including the restaurant, before making the change.
Commission Chairman Peter Gray agreed but said he can appreciate the effort Brown has already put into the project.
Dempster moved to recommend the council deny. The vote was 5-1 with Vice Chairman Scott Schlossberg dissenting. Commissioner Dan Kovacevic was absent.
The Town Council is scheduled to consider the request for the SUP at its regular session on Tuesday, June 6.