HOT SPRINGS -- A $2.17 million offer for the Majestic Hotel site was tendered Monday, less than 36 hours before the Hot Springs Board of Directors meets to consider a $2,163,128 offer to buy the property and redevelop it into an outdoor entertainment venue.
City Manager Bill Burrough said VIPA Hospitality Management's offer came shortly after he and Mayor Pat McCabe concluded a conference call Monday morning with Rick Wilson, president and CEO of R.A. Wilson, and with Peter Lane, president and CEO of the Walton Arts Center. R.A. Wilson's $2.16 million offer is on the city board's agenda for tonight.
VIPA's proposal was delivered to City Hall on Monday, but Burrough said the company indicated in an email he received Sunday night that it would be making an offer.
The real estate contract the board will consider tonight stipulates that R.A. Wilson would purchase the property for the sole purpose of constructing and developing an outdoor entertainment venue. The company has to provide a memorandum of agreement with the venue operator before the sale can close, according to the contract.
The Walton Arts Center, which operates the Walmart Arkansas Music Pavilion in Rogers, has been in discussions with R.A. Wilson to operate the 6,000-capacity venue proposed for the 5 acres the city of Hot Springs owns on Park Avenue.
Vijay Patel, VIPA's board chairman and president, said the city has been aware of his company's interest in the property for more than two years. An email he sent to Burrough in August 2019 indicated VIPA's interest in buying the property at the value set by the appraisal firm with which the Garland County assessor's office contracts.
The $2.17 million offer is part of the Falling Water Resort at the Majestic proposal, which VIPA presented during public planning sessions in April 2019. A VIPA-affiliated company acquired the Medical Arts building earlier this year. Parth Patel, VIPA's president of development and Vijay Patel's son, has told The Sentinel-Record that he plans to build a Marriott Aloft-branded hotel in the 16-story Art Deco building.
"I made the offer to purchase way before, in August of 2019," said Vijay Patel, whose company has developed or acquired more than half a dozen hotels in the Hot Springs area, including the Home2Suites by Hilton Hot Springs on Lake Hamilton. "I was in the game way before the amphitheater guys were in the game. My offer was not even acknowledged. No response from the city manager, city mayor or city board.
"All I want is some recognition that I would like to buy it just like anybody else wants to buy it. It's public land. I have assets in Hot Springs. I'm interested in our state. I have a vision of what to do, which was publicly presented."
Burrough said Monday that Patel's August 2019 email came at a time when the city was weighing the feasibility of ideas presented during public planning sessions that the University of Arkansas, Fayetteville's Fay Jones School of Architecture facilitated at the Hot Springs Convention Center.
"At that time, we were not in the market to sell the property," he said. "We wanted some type of long-term lease potentially, but we didn't know what the market would hold for that site. We heard great ideas [during the public planning sessions], which was everything from a hot-air balloon ride to a resort hotel."
VIPA didn't respond to the two requests for proposals the city issued last year. Grand Point Investment Group and Cienda Partners' submission for a $110 million thermal water resort was the only proposal that the city said was responsive to its two solicitations. The Dallas-based group and DHM Design of Colorado, which proposed designing a thermal pool complex the city would have to find investors for, were the only respondents to both requests.
The board moved on from Grand Point and Cienda's proposal in March after questioning the Dallas group's wherewithal to execute its proposal. R.A. Wilson made its offer public the following month.
"With all due respect to Mr. Patel, they didn't submit a project in either one of those proposals," said Burrough, referring to the two solicitations. "There was no proposal to consider. Here we are today in these negotiations with R.A. Wilson, and we receive another offer that I would consider to be at the eleventh hour.
"I think as a board, it has to consider what's in front of them today before we can consider another offer. My recommendation is they move forward with whatever decision they're going to make with Mr. Wilson prior to entertaining any other offers."
Patel said the timing wasn't right for VIPA to submit a proposal. Lenders were reluctant to finance hospitality projects amid the economic uncertainty brought on by the pandemic, he said, adding that many hoteliers were defaulting on loans as occupancy rates plummeted because of changing consumer patterns and public health directives limiting travel.
The Patels said they asked the city in March 2020 to postpone the request-for-proposal process by a year.
"It would've been impossible to get financing last year," Vijay Patel said. "There were no banks that were willing to finance a dime for anything that has to do with tourism."
He said his offer should be considered even if it was delivered on the eve of the board meeting.
"It's not the timing that I wanted, submitting it at the last minute, but this was the last day," Patel said. "If I didn't act, it would be done forever. I wanted to have at least one shot at purchasing the lot before the city actually sells it. The city should be respectful to look at my offer and give me a chance. I happened to be here and found out the city is meeting [today]. This is the only day I could act, so I chose to submit the offer."
Wilson questioned the timing, noting that the contract the city received Monday doesn't stipulate what would be built on the site.
"I think the timing of the offer is very suspect," he said. "Mr. Patel has had an abundance of time to develop his hotel plan, which include parking, traffic, mobility, daytime traffic and disturbances, and submit it to the city along with his offer, yet chose not to do that or provide any of that supporting detail. It suggests it's meant to be nothing but a roadblock for some personal aggrandizement.
"For this to get any credence after the detail and the planning our professional team has created and provided to the city board, and the vetting the board has done, is very skeptical," Wilson said. "I think the board will realize the same, that it's unrealistic."
Wilson expressed skepticism about VIPA's intent to build two upmarket hotels close to each other.
"How much sense does it make to build two high-end hotels within one block of each other?" he said. "Now they're going to build a high-end hotel at the Majestic. It would be the same as me deciding I was going to buy the Arlington Hotel, tear it down and build a second amphitheater."
Burrough said he'll recommend that the board weigh Wilson's offer before it considers subsequent offers.
"I have a lot of respect for Vijay and Parth Patel, and I'm very appreciative of what they're doing in our community and their recent purchase of the Medical Arts building," he said. "It's nice to know that they have an interest in doing even more in the city of Hot Springs."