HANFORD — With a developer proposing an ambitious hotel, conference center and restaurant on a Glendale Avenue vacant lot in Hanford, members of the City Council are getting on board with the concept.
The council voted 3-1 Tuesday night to move forward with the idea of giving the developer 50 percent of all transient occupancy taxes collected during the first 10 years of the development's operation.
City staff is expected to come back with a final proposal to be voted on at a future council meeting.
The 8 percent tax, which goes to the city, is assessed on hotel/motel stays ranging from one night to 29 nights.
Mayor Justin Mendes, Vice Mayor Francisco Ramirez and Councilman Gary Pannett voted in favor of the idea of returning 50 percent of the tax generated by the development to Anil Chagan.
Councilman David Ayers voted against it. Councilman Russ Curry was absent.
Visalia developer and hotel operator Chagan, who is behind the project, was elated.
He estimates the assistance from the city will amount to approximately $100,000 a year for 10 years — extra cash flow he says is necessary to secure a bank loan large enough to build both the conference center and the hotel.
"I think it's a bold move forward," he said. "This has to be a win-win for everybody."
Chagan's proposal is to build a hotel, an 8,000 square-foot conference center and upscale restaurant on a vacant lot immediately west of the Hyundai dealership on Glendale.
Chagan has been eyeing the property as far back as 2008, but was prevented from locating a full-service hotel facility there because of city rules restricting full-service hotels to the downtown area.
The council changed the rule last year to allow full-service hotels to be located outside downtown.
Chagan said he looked into locating downtown, but concluded that it would be "cost prohibitive."
Chagan said he would have had to tear down buildings and cobble together several parcels of land to create a space big enough to build the project on.
"That's why we purchased this piece of land [on Glendale]," Chagan said.
He also said downtown Hanford lacks the direct access from Highway 198. He said the Comfort Suites, the hotel he operates across the street from the Visalia Convention Center, has better freeway access.
Chagan said an improved economy and the rule change caused him to resurrect the idea this year for the Glendale site. He said he has submitted a site plan but hasn't pulled building permits yet.
Chagan said the conference center would draw in more hotel clients and out-of-town groups and help increase incremental sales for other businesses in Hanford, including in downtown.
Critics who spoke out Tuesday against the idea included former Hanford Mayor Dan Chin.
Chin instead suggested that the council raise the transient occupancy tax from 8 percent to 13 percent for existing hotels/motels and devote the additional 5 percent to downtown revitalization efforts.
Though the council ultimately rejected Chin's argument against helping Chagan, council members were sympathetic to his idea of using the tax to assist downtown.
As part of their direction to staff to move forward with the tax sharing proposal, the council also directed staff to come back with a proposal to raise the occupancy tax and devote some of it to downtown renewal.
"I think it's a win-win," said Pannett. "I think we move forward."