The Hutchinson City Council voted unanimously on Tuesday to end negotiations with the owner of the shuttered Atrium Hotel over the purchase of the property and then met briefly in executive session to discuss a way forward.
The decision to abandon the effort to buy the deteriorating property and clear the land for a new hotel came as Hutchinson plays host to the National Junior College men’s basketball tournament this week.
And for a second consecutive year, more than a third of the teams in the tournament are having to stay in hotels outside of Hutchinson because of not enough rooms locally.
No studies have been done locally to determine the economic impact of the tournament on Hutchinson, but some from other sites hosting NJCAA tournaments for other sports estimate their impact at anywhere from $1.5 million to $4 million.
Even at the low end, that means the impact of those teams not staying in Hutchinson is potentially a $500,000 to $750,000 loss for local businesses during tournament week.
Responding to the silence on Atrium Hotel
The issue was not on the council’s Tuesday agenda, but Mayor Jade Piros de Carvalho asked the council to consider a motion to take the city’s offer to purchase the Atrium “off the table and to cease negotiations with the owner.”
“I feel very strongly any investment in that property made sense two years ago when we were trying to save a hotel and convention center worth $4 million,” Piros de Carvalho said.
“In good conscience, I cannot invest $1.6 million in a structure that’s going to cost half a million in asbestos abatement and another half or a million in demoing it,” she said. “The owner has been unresponsive to Jeff (City Manager Jeff Cantrell), and today was the deadline we gave the owner.”
The council had previously agreed to the purchase price of $1.62 million, based on a presumption that removing asbestos in the building before its demolition would cost around $250,000. But a subsequent proposal for that work topped $540,000.
The city then reached out to the owner, Joshua Joseph of Dallas, to renegotiate the purchase price.
“That we have an unresponsive seller tells me everything,” Cantrell said. “We’ve made additional attempts the past two weeks to no avail. Not a single one. We’ve used the same prior methods of communication.”
Councilman Greg Fast seconded the motion, and it was unanimously approved.
Counting on market forces
The board then met in executive session to discuss “alternative options for another hotel” under the property acquisition exception for an executive session. No action followed the brief closed-door discussion.
“The next step is to look at alternative locations for a much-needed hotel, with the option to maybe build a convention center in the future,” Piros de Carvalho said after the meeting.
They believe the demand for hotel rooms is strong enough, the mayor said, that the city shouldn’t have to incentivize a company to build one here.
“Right now, there’s an immediate need for hotel rooms,” she said. “We really do have a shortage of quality hotel rooms, so the market should take care of itself. If the city does provide incentives, it should be very small compared to the investment we were prepared to make in terms of the Atrium.”
The city has struggled to recruit convention center development because such facilities often operate at a loss, which hotel revenues often offset.
“Especially post-pandemic, people are not quite ready to invest in a convention center,” Piros de Carvalho said. “But we really need a hotel. Market studies show we are definitely an underserved market for hotels.”
Before the closure of the Atrium in December 2019, that wasn’t true. But the Atrium was the city’s largest hotel, with 215 beds.
“I would say we have landowners that we’re in discussions with now for a potential location,” Piros de Carvalho said, though declining to identify the landowners or location.
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Lost hotel rooms carry a significant economic impact in Hutchinson
Leann Cox, director of Visit Hutch, the local visitor and convention bureau, agreed dollars the local community is missing out on “are fairly significant.”
“We had to place nine of our 24 teams out of town,” she said. “We used to place nine at the Atrium before it started going downhill. Since its closing, for the last two championships, we’ve had those teams stay out of town.”
“It may not sound like a lot to a lot of people, but typically where they’re staying is where they fill their gas tank, where they fill their buses with fuel, where they will eat their meals,” Cox said. “I don’t have any dollar figures, but nine times the average 15 players, plus coaches, who are staying at least four nights, if not up to seven or eight nights, we lose all that revenue.”
“From our perspective, we need to push as fast and hard as we can to see some improvement and some forward motion to get something going. It’s been a long almost three years now without the Atrium,” Cox said.
However, even if started now, it will likely be another two years before those beds are available, Cox said.
“Kind of the norm, once we ID a developer and they jump through all the hoops on the permit side, there’s an 18-month construction timeline,” she said. “And we’re not even close to being at that point yet. I’d love it if it was not going to be two years, but it will probably be closer to that than one year.”
Besides the Atrium, there is another Hutchinson hotel they’ve received complaints about, so no teams are currently staying there, Cox said.
She to identify it but said they are working with that business to make improvements declined so at least one team can return to Hutchinson next year.
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No hotel rooms available through mid-week
Even then, virtually all hotel rooms in the city are sold out at least through Wednesday.
“It’s hard for most people to understand, but for teams, you have to have 2-bedded rooms,” Cox noted. “For the typical basketball team, we hold 10 2-bed rooms for them. On top of that, there might be a few kings (rooms with king beds) or suites.”
Then there are the referees who “come in two different waves,” Cox said, and NJCAA staff.
“This year we have an added group,” she said. “With the 75th anniversary of the championship, they’ve brought in VIPs through the week, and we’re helping them with accommodations.”
In terms of the next steps on the Atrium, the city has the authority to enforce maintenance codes on it, like any other property. That means it could still end up with the city demolishing it, including abating asbestos, and then assessing those costs against the property.
But that appears, for now, also to be a ways off.