Revised Eisenhower Airport hotel lease will bring more money to city. But questions remain
The city of Wichita stands to make about $195,000 more than it would have if a flawed lease contract for an airport hotel hadn’t been intercepted at the last minute last week, according to the latest version of the document.
In fact, the city will make $64,000 more than it would have in the original deal, apart from the amount affected by errors.
City officials have not fully explained the changes the contract has gone through.
Airport Director Victor White was out of the office Friday and Monday and inquiries to the city manager’s office were directed to city spokeswoman Elyse Mohler.
She said she had spoken with staff employees who revised the contract and the numbers “will not ever reconcile because they are two different deals using two different methodologies.”
At issue is the lease agreement with Wichita Eisenhower Hotel LLC, run by hotel developer Mitesh Patel.
Patel is seeking to build a 90-room hotel on about six acres of airport property just north of the 125-room Hampton Inn, which he developed and later sold. Patel also developed and sold the Springhill Suites by Marriott hotel at the airport.
Patel said he can’t finalize the branding on the proposed new hotel until the lease is completed, but he’ll be contractually obligated to provide a nationally recognized premium chain hotel.
The hotel deal originally appeared on the council’s consent agenda, where the panel approves routine business items in bulk with a single vote and with no discussion.
Council members delayed it for a week after questions were raised by an Eagle reporter and internally, city officials have said.
In the original deal, Patel would have gotten the use of the land rent-free for the first year of the lease while his hotel was under construction.
Years two and three, he’d have paid $130,944 rent.
An error in the dates in the contract could have given him a second year free of rent, in the fourth year of the agreement.
The latest draft of the contract released by the city corrected the errant dates and eliminated both free-rent years.
It also lowered the annual lease payment to $108,715 for the first three years of the contract.
In years four and five, the city would get either 1 percent of the hotel’s gross revenue or a minimum annual guaranteed payment of $130,944.
The city hasn’t explained why the figure of $130,944 cropped up in years four and five of the lease when the rent has been lowered from that amount in years one through three.
After year five, the city’s share of the hotel revenue would rise in steps over time until it reaches 5.5 percent The minimum annual guarantee also would rise based on a complex formula and would never go below $130,9444.
The contract runs through September 2069.
The new contract proposal should bring the city a total of at least $457,089 in the first four years, according to figures derived from the document.
That compares to $261,888 in the original contract as it was written. If the dates in the original contract had been correct, it would have brought the city $392,832.
The new contract also excludes a second parcel of land that had been included in the original document.
The original contract provided for that parcel to be leased for 50 years, but it only specified that an annual rent of $100,000 be paid for two of those years.
The council is scheduled to consider the new contract at its meeting at 9 a.m. Tuesday at City Hall, 455 N. Main, Wichita.
