What you need to know
Hyatt’s requested FY 2025-26 budget is $14.54 million in revenue and $12.17 million in expenditures, according to city documents.
City staff said the budget was submitted by Hyatt and reviewed by Garfield Asset Management and RevPAR and includes reimbursable expenses, professional services and property insurance.
During the discussion, Walter Peseski, senior vice president at Garfield Asset Management, told the council the proposed FY 2025-26 plan assumes modest year-over-year gains, including an occupancy increase and higher average daily rates. He said those assumptions translate into an 8.6% year-over-year increase in budgeted total revenue and an 8.2% increase in operating expenses, with gross operating profit projected up 9.7%.
He also told council the proposal assumes higher performance year over year, including a 6% increase in occupancy and a 1% bump in average daily rate, driving a 7% increase in rooms revenue and 8.6% growth in total budgeted revenue.
However, Peseski told council members, “You’re significantly short of your debt service.”
Council members said that even with those gains, the hotel’s projected finances still fall well short of what’s needed to cover annual debt payments tied to the project.
Council member Shana Arthur said that under the current debt structure, they could not foresee occupancy reaching a level that would satisfy debt service requirements and said the hotel was “not self-sustaining under current financing.”
Council member Marsha Porter, pressing for a plain-language explanation of what the budget means for taxpayers, said, “Hyatt is making money. Garfield [Asset Management] is making money.”
She said that the city could spend “about $32 million in four years” and “not make $1” and described the situation as “a disaster.”
Diving in deeper
Later, city staff broke down the FY 2025-26 debt-service payments discussed in the meeting:
- First lien: $1.6 million
- Second lien: $1.8 million
- Third lien: $903,600
- Total: $4.3 million
Staff also outlined the payment structure and said principal for the first and second lien was paid Oct. 1, and an interest payment for all three liens is due April 1, 2026. The third lien is “interest only until October 1, 2028.”
Council members then questioned the capital outlook, including a $16 million restoration figure referenced for 2029.
Council member David Hairel tied concerns to budget capacity and voter requirements since Proposition O passed during the Nov. 4 election. He noted that a $32 million multiyear figure is "almost 10%” of the city’s budget and pointed to Proposition O language that “anything over 10% ... has to go to people to vote,” raising the prospect of a bond election tied to the $16 million note.
Peseski said the long-range capital plan amounts are real in the sense that renovations will be necessary over the hotel’s life cycle, but said the timing shown is not accurate and could be pushed out years.
“I will work on behalf of you ... to only do what needs to be done,” Peseski said
Also of note
After approving the budget, council moved through additional hotel items on the same joint agenda, including:
- Additional insurance for the CIDC and CLGC boards handled through Dean & Draper
- A resolution authorizing up to $250,000 to McCall Parkhurst & Horton for continued financial consulting and legal services tied to the convention center/hotel contract documents
- A resolution authorizing up to $40,000 to Jorge Rodriguez Financial Consulting LLC for continued financial consulting tied to the same contract-document work
