Why has Strategic Advisory Group been convened?

By Ned Seaton

Q: I read about the two additional hotels not being allowed on Lot 9, and the Strategic Advisory Group determining that they would have a negative financial impact on the Hilton Garden Inn and Conference Center. I have to wonder, why was this group formed and given this authority? I don’t remember there being any such group to determine whether Menard’s would harm Home Depot, or whether Hy Vee would reduce business at the other local grocery stores. Is this the first time such a group has been convened?

A: Let’s start from the top: Actually, as you now probably know, the two hotels ARE being allowed.

One will be a Candlewood Inn and Suites; the other, a Holiday Inn Express. They’ll be built on what the bureaucrats call Lot 9, which is a piece of dirt on the north side of Fort Riley Boulevard, just south of the big parking garage that’s currently under construction along Third Street.

The history of that piece of ground is tortured. It was owned by Manhattan Meats, the longstanding local family business, for many years. The city condemned that property as part of the big project to redevelop Third and Fourth streets, from Fort Riley Boulevard over to Bluemont Avenue. The city paid $4.4 million for the Manhattan Meats property in 2009 after a court case. (That total included some other ground that’s not part of what’s now Lot 9.)

The plan was for Dial Realty, the firm that has done the redevelopment project with the city, to develop it as part of an “entertainment district” anchoring the south end of the project. Specifically, the idea initially was for it to be a movie theater; Warren Theaters, the Wichita company that does upscale movie houses, had expressed an interest and was believed to be moving toward a deal. But they backed out in 2009.

Mayor Jim Sherow then led the charge on the City Commission to give Dial the boot as the developer of that property, which left the city government itself in the position of trying to find something to put there.

That led to a proposal from an outfit called Flint Hills Square, LLC — local businessmen Colin Noble and Gwyn Riffel — to put the two hotels and a commercial building there. Noble had gone through another torturous process to get the two hotels approved on Stagg Hill, despite neighborhood opposition. He offered to ditch that plan and put them on “Lot 9,” and pay $525,000 for the ground.

The idea of two more hotels at that location did not sit well with the owners of the new Hilton Garden Inn, which is currently being built with a conference center right next door. The Fairfield Inn, also in the same block, was also not exactly jumping for joy.

So the city hired a consulting firm from Atlanta called the Strategic Advisory Group to study whether the first proposed hotel (Candlewood Inn and Suites) would hurt the ones here and already being built. The city paid that firm $20,000; then, when the firm told them that the proposal would hurt the Hilton to the tune of $365,000 to $426,000 annually from 2012 through 2016, commissioners did the deal to allow the new hotels anyway.

Assistant city manager Jason Hilgers points out that whether the new hotels will actually hurt the others is debatable, and a study done for Flint Hills Square showed that there would be no such negative effect. He also notes that city administrators had recommended that the city issue a “request for proposals” to see whether other firms wanted to propose something other than hotels. “We didn’t have anything else to compare (the hotel proposal) to,” he said.

Commissioners, though, said that it was time to get something done, and they liked the fact that the proposal came from locals. They approved the deal earlier this month.

So, now, back to your remaining questions:

• The “Strategic Advisory Group” was not a committee given authority to decide whether the hotels would be allowed. It is a consulting firm hired to do an analysis. The implications of their findings, as we just pointed out, were more or less ignored.

• There was no such analysis done to determine whether Menard’s would harm Home Depot because Menards’ move into the Manhattan market was entirely a private business deal. Yes, some road work had to be done, but it’s not the city government’s job to determine whether a proposed development is going to hurt some other business.

• There was, however, a similar analysis conducted when Hy Vee came in. Why? Well, because the city government was up to its eyeballs as a partner in the redevelopment project that brought Hy Vee here. As such, the City Commission really did have the final say over whether Hy Vee ought to be let into the market at that location. Hilgers said the study showed that there was a shortage of grocery services in the market, and indicated that Dillons and Ray’s would take a dip when Hy Vee entered but then come back up.

Hilgers said that’s what has, in fact, happened.

“There was more demand than was being supplied,” he said.

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