Downtown Mesa’s hotel inventory is gaining momentum after a planned five-story 150-room AC Hotel by Marriott cleared the City Council on July 27.
The council approved a development agreement and property tax break to make way for the 85,000-square-foot upscale hotel on a less-than-one-acre site on the northeast corner of Main Street and Centennial Way.
The Marriott-branded hotel will replace a mechanic car shop and an empty vacant lot to the east. Developers are expected to spend $39 million on construction costs, according to the city.
Jeff McVay, the city’s urban transformation director, said landing the AC Hotel is a “big win” for downtown that will make the district more of a destination.
The developers requested a Government Property Lease
Excise Tax Agreement, which gives them an eight-year property tax break amounting to $2.1 million. The developer will purchase the property, then deed it over to the city, so the city will technically own it. By doing this, the developer avoids paying property taxes and instead pays a lower-rate excise tax.
McVay said the GPLET was required to make the development come together.
“We are an unproven market from a hospitality perspective,” he said.
There was a gap that needed to be filled to make the hotel financially viable, and the tax break fills that, he said.
Currently, there are only two other hotels operating in the square mile that comprises downtown.
The Delta Hotel by Marriott has 274 rooms and 233 Suites Unscripted by Hyatt, which only opened in June, has 76 rooms. With the AC Hotel, Mesa’s total hotel room inventory will reach 500 rooms.
The city estimated the direct economic benefit over the eight-year tax break period to the city will be $4.9 million and indirectly it will bring in $51 million from visitor spending and labor income. The developer will also make a one-time payment of $17,000 to three local school districts to make up for the tax break, according to the agreement.
Mesa projects the hotel will generate 45,000 hotel room nights annually. It will create 50 permanent jobs when it opens, according to city documents.
It will also support the city’s convention center makeover it is planning, McVay said. In February, the city launched a bid to solicit ideas on how to revive the center and the Mesa Amphitheater.
The developer will also lease 100 parking spaces from the city’s Hibbert Parking Garage for 50 years because the hotel location will not have parking spots on site.
Additionally, the hotel will include a minimum of 1,500 square feet of meeting space, a bar and bistro restaurant with indoor and outdoor seating and an outdoor pool.
Developers are expected to break ground in December and spend 15 months constructing the hotel, according to the city.
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Reporter Maritza Dominguez, who covers Mesa, Gilbert and Queen Creek, can be reached at maritza.dominguez@arizonarepublic.com or 480-271-0646. Follow her on X, formerly Twitter: @maritzacdom.
This article originally appeared on Arizona Republic: Mesa approves 150-room AC Hotel by Marriott, boosting downtown revamp
