Monday, September 6, 2010

Gaylord, DMB seek 3-year extension for Mesa projects

Gaylord Entertainment Co. and DMB Associates are asking Mesa for another three years to get rolling on a planned tourism and convention destination in the far southeast Valley.

Karrin Taylor, a vice president with Scottsdale-based DMB, told The Arizona Republic on Thursday that the economy, plus a destructive flood at Gaylord's flagship resort in Nashville, made it impossible to meet deadlines.

It was exactly two years ago today that DMB and Gaylord told a festive crowd at the Mesa Arts Center that they were partnering to build a massive resort and conference center on the northern end of what used to be the General Motors Desert Proving Ground.

Gaylord planned a resort that would be Arizona's largest, with at least 1,200 rooms. DMB paid $265 million for 5 square miles of the GM property in late 2006.

DMB also promised to lure another large upscale resort to complement the Gaylord, although that prospective partner never has been identified. A Tom Fazio-designed championship golf course and high-end retail stores developed by Macerich Co. would round out the project.

For DMB, it was to be the sizzling beginning of a master-planned community just east of Phoenix-Mesa Gateway Airport, a community that DMB views as a decades-long project that eventually will be home to high-rise, world-class business centers.

For Gaylord, it was to be the perfect complement for its business model of rotating large conventions among its signature resorts, the westernmost of which is in Grapevine, Texas.

And for Mesa, the deal was confirmation of its long-held belief that the Gateway area represents one of the most potentially rich economic-development opportunities in the country, as well as a chance to shed its milquetoast civic image.

But within days of the gala at the Arts Center, Wall Street was in meltdown.

By the time Mesa voters approved the Gaylord project in March 2009, the economy remained in freefall; and even as they celebrated their 84 percent victory at the polls, Gaylord executives were waving a yellow flag on the Mesa project.

Subsequent Gaylord earnings reports have indicated Mesa is on the back burner as the company deals with the global slowdown in business travel.

Mesa officials have said that if Gaylord were to meet its Dec. 31, 2011, deadline for groundbreaking, City Hall should be inundated by now with plans and permit applications.

Taylor said the companies have asked Mesa to extend their development agreements for three years. DMB also has asked Mesa for permission to create two "community facilities districts" that would issue bonds to help finance construction.

If the Mesa City Council agrees to the extension, groundbreaking would now be no later than Dec. 31, 2014, with construction to wrap up by Dec. 31, 2017.

"The world is just in a place that none of us anticipated (when the project was announced)," Taylor said.

Not only was Gaylord hammered by the economy, Taylor said, its Opryland resort in Nashville suffered tens of millions of dollars in damage on May 3 when the Cumberland River roared through a ruptured levee.

The 2,881 guest rooms were spared, but the basement, full of vital electrical and mechanical components, and the resort's public areas were destroyed.

Gaylord is focusing on reopening the Opryland by Nov. 15.

Taylor said the City Council is likely to consider the extension within the next six weeks.

The news came as no surprise to Mayor Scott Smith.

"We've been talking with both DMB and Gaylord for several months, stating the obvious," Smith said. "We lost several months, if not years, to the economy and to the lack of viable funding sources."

Smith said the extension would be merely a setback, not a finale.

"We recognize that we still have a legacy developer in DMB who is committed to the Mesa Proving Grounds; we still have a Gaylord who is committed to east Mesa; and we still have an economy that is making it tough for both of them," Smith said. "These things don't happen overnight."

Smith said Gaylord and DMB are different from a project that has struggled to get off the ground in the exact opposite corner of Mesa.

Waveyard Development LLC of Scottsdale, which has been trying for three years to finance a resort and sports park near loops 101 and 202, got the city to extend its deadline last year.

But Mesa has grown increasingly skeptical of Waveyard's chances and is talking about giving the Chicago Cubs dibs on the Riverview Golf Course for a spring-training facility should Waveyard not come through by next July.

"Waveyard is a dream project," Smith said. "It just doesn't have the pedigree of the other two (DMB and Gaylord)."

A Gaylord spokesman did not immediately respond to The Republic's requests for comment.

by Gary Nelson The Arizona Republic Sept. 3, 2010 12:00 AM

Gaylord, DMB seek 3-year extension for Mesa projects

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