HOW IS THE MIKE HERNANDEZ III HOTEL PROJECT COMING ALONG?

 

Mike Hernandez III

Two years ago the City of Brownsville entered into an agreement with Mike Hernandez III and the Hernandez Foundation to build a "National Franchise" hotel, i.e., Hyatt, Marriot, Omni or Hilton.

The completion date for that project was set for 12/31/2021, about six months from now.

Below is our report from two years ago, announcing the project:

Texas Tax Code 351 authorizes the collection of a Hotel Occupancy Tax on rooms rented, an addition of 7% to the room rate.

According to the code, the monies collected can be spent on:

"Revenue from the municipal hotel occupancy tax may be used only to promote tourism and the convention and hotel industry, and that use is limited to the following:

(1) the acquisition of sites for and the construction, improvement, enlarging, equipping, repairing, operation, and maintenance of convention center facilities or visitor information centers, or both;"

That's pretty much the language used in the agreement between the city and the Hernandez Foundation, a 501(c)(3), that his foundation will promote tourism and a conference facility.

The City of Brownsville agrees to convey to the foundation up to 100% of the Hotel Occupancy Tax generated the hotel on the premises up to $6,000,000 over 20 years, called a Hyatt, but the actual agreement specifies simply a "national franchise" including Hyatt, Marriot, Omni or Hilton.

An additional $3,000,000 to the Hernandez Foundation can be "justified" under the agreement, but also $2,000,000 in infrastructure, landscaping, roads, etc. for a grand total of $11,000,000 on an estimated $37,100,000 project.

The anticipated completion date is 12/31/2021.

Article 4 of the document calls for the City of Brownsville to "compensate" the Hernandez Foundation "for Conference Center Operations and marketing."

An intriguing statement in the document is that the city "finds that the Owner(Mike Hernandez III) possesses expertise in the development and operation of hotel conference facilities."(Does anyone know if Hernandez has ever actually developed or managed hotel and/or hotel conference facilities?)

Hernandez, with 90 days notice, can change the franchise of the hotel, but is limited to one of the national franchises mentioned above.

Since the city's website included no packet with supporting documents concerning the June 13, 2019 Special Meeting agreement with the Hernandez Foundation for a new hotel, we contacted City Manager Noel Bernal for more information receiving that today via Helen Ramirez.

The proposed project to be built on a 28 acre tract at 4555 N. Expressway 77/83(roughly between the Courtyard by Marriot and La Quinta Inn and Suites) would include a 138 room, 4-story Hyatt Hotel, an 8,000 sq.ft. event center and a hospitality, tourism and management teaching facility by UT-RGV.

Total investment for the project is estimated at $37,100,000 with the City of Brownsville committing no more than $11,000,000.(The city's participation includes $2,000,000 for infrastructure, roads, landscaping, etc., but also another $6,000,000 from the city's Hotel Occupancy Tax over 20 years.  An additional $3,000,000 in Hotel Occupancy Tax could be included, "if justified," thus the $11,000,000 total.)

The agreement, between the City of Brownsville and the Hernandez Foundation(Mike Hernandez III) is contingent  upon UT-RGV "choosing the site for their new teaching facility."

A dual enrollment high school program is included with a projected 60 students in the fall of 2020, 250 by 2023.

Just for comparison, an 8,000 sq. ft. event center would provide less than half the space of the current Brownsville Event Center's 17,000 sq. ft. facility at 1 Event Center and 1/20 of the McAllen Convention Center's 174,000 sq. ft.

The 4-story, 138 room hotel will total 84,284 sq. ft.