Developer that’s turning Tri-Cities motels into apartments is buying yet another one

The city of Pasco cleared the way last week for an Oregon company’s purchase of another Tri-Cities motel to turn into tiny apartments.

The Loyalty Inn on Lewis Street will soon be converted into about 160 micro units — making it the fifth property bought by Fortify Holdings in the Mid-Columbia.

Though all the sales have yet to be official, records so far show the company will have spent more than $30 million on the aging complexes.

While the conversions will remove nearly 700 motel rooms from the Tri-Cities, it’s not immediately known how many apartments will replace them.

Plans submitted to city planners show that many of the apartments will be the same size at the former motel rooms. But plans are not yet available to the public for all the properties.

That includes the biggest hotel is the Best Western Plus in Richland. The 197-room hotel sold for $15 million to the limited liability company, “The Franklin LLC.”

Fortify also bought the Quality Inn in Kennewick for $7.1 million under the name “The Q,” and the Rodeway Inn in Pasco for $3.8 million as “The Alegre.”

The company also is in the process of buying the Days Inn in Richland.

The newest project, the Loyalty Inn in Pasco was built in 1966. It sits on about three acres and is currently owned by Sohal Development’s husband and wife, Mohinder and Gurdish Sohal of Maple Valley.

Last week, Pasco’s hearing examiner signed off on a special use permit submitted by Fortify’s president Ziad Elsahili to convert it to apartments, a city official confirmed.

Mohinder Sohal declined to talk about the specifics of the sale, but confirmed Fortify is under contract to buy the motel, with a closing date in about a month.

Sohal, who told the Herald he still owns property in Eltopia and Benton City, as well as a home in Kennewick, said he’s found the motel business riddled with challenges and had been hoping to sell the Pasco site for some time.

“I was fed up with the motel,” he said. “ I bought a very nice (200-acre) orchard on the Columbia River with all kinds of apples.”

City documents shows Fortify doesn’t plan on exterior or structural modifications of the Loyalty Inn, and will maintain the layout of current rooms to create the micro apartments.

E. Washington projects

Rob Jacobs, who was born and raised in the Tri-Cities, was hired by Fortify several months ago to be a regional manager amid the company’s expansion to the eastern side of Washington, as well as into Idaho.

He couldn’t talk about specific plans for the motels the company is buying, but said Fortify has multiple motels and hotels in its portfolio that have been converted into studio and one bedroom apartment units, as well as traditional apartment complexes.

Fortify Holdings has been a multi-family housing developer for 20 years and owns 17 properties, according to its website. All but a few are in the greater Vancouver/Portland metropolitan areas.

The company’s first two properties in Eastern Washington are in Spokane.

Fortify bought the former Lindell Court Apartments in Spokane three years ago for $10.5 million and turned it into GoGo West with units from 719 to 1,200 square feet.

It also runs GoGo Heights with three-bedroom, two-bathroom, 1,250-square-foot apartments starting at $1,760 a month.

However, unlike those larger spaces, city documents from Pasco, Richland and Kennewick point to most — if not all — of the Tri-Cities properties becoming micro apartments.

“Tri-Cities region is one of the fastest growing communities in our state,” Jacobs said. “This market is one of the most competitive in the entire country to find an apartment.”

Living in Tri-Cities, Jacobs said he knows the lack of availability of both houses and apartments here is creating a housing crisis.

“The properties we have acquired, once converted, will alleviate some of the strain on the housing market here by offering residents new, diverse housing options,” he said.

Fortify Holdings also is working to buy a motel in Moscow, Idaho, to convert to studio apartments targeted at University of Idaho students and offer mixed commercial space, the Moscow-Pullman Daily News reported.

What’s next

In the Tri-Cities, the Best Western, Quality Inn and Rodeway Inn properties already have closed for business and fencing surrounds them.

The Days Inn on Jadwin Avenue still is taking hotel guests. It will close for business in late August or early September, an employee told the Herald.

Fortify explored buying the recently closed Economy Inn on Jadwin Avenue in Richland, but after consideration the company decided against buying it, Jacobs said.

The Rodeway Inn on Oregon Avenue in Pasco was built in 1979, and has operated as a Budget Inn and a Motel 6. It will be the first significant housing complex in an area that is largely commercial. It sits just off Highway 395 and across the street from Agri-Service.

The motel also has been the scene of multiple police responses over the years resulting in arrests of suspected criminals including a now-convicted killer.

The rooms are about 200 square feet and documents show that Fortify plans on converting them into micro units and creating what will be the first development of a “new neighborhood.”

In Kennewick, plans are not clear for the Quality Inn on Quinault Avenue, but permits approved by Kennewick officials show that will be a mix of residential units with 20 percent of the building maintaining a commercial use.

It was built in 1993 and at one time operated as the Silver Cloud. The hotel has 110 rooms and sits on three acres.

Richland hotels

In June, the Richland City Council cleared the way for the Days Inn to become micro apartments after council members voted to remove the minimum apartment size in the city’s central business district.

It’s expected to have 97 loft apartments, measuring 260 square feet, with full-size fridges and stoves.

Though they are small, the units are expected to fill a need.

“We have seen a wide range of demographics attracted to our studio units in other markets,” Jacobs said. “Specifically in the Tri-Cities, we have received positive feedback from major local employers who struggle to assist their employees find housing.”

The Days Inn and the Best Western are along George Washington Way — one of the busiest roads in the Tri-Cities linking commuters to the largest employers in Tri-Cities, including Hanford and Pacific Northwest National Laboratories. Other major employers on the route are Washington State University Tri-Cities and Kadlec Regional Medical Center.

The six-floor Best Western Plus, previously known as the M Hotel and the Tower Inn, was rebranded as the Best Western Plus Columbia River Hotel and Conference Center in recent years years and underwent an extensive renovation and reopening in late 2019.

The hotel with its large indoor pool had been a family favorite and was popular among those who traveled to Tri-Cities for sporting events and tournaments.

And when the hotel was closed suddenly by the new owners, several people commented on social media that they were disappointed when their reservations unexpectedly canceled.

There was some concern rasied at a Richland council meeting earlier this summer about losing motel rooms in the city, but some in the hotel industry say it could benefit the area.

Michael Novakovich, president and CEO of Visit Tri-Cities, told the Herald that the construction of new hotels has added rooms but demand hasn’t been growing.

In particular, the lodging industry took a huge hit and had nearly non-existent occupancy during COVID shutdowns in 2020.

And Fortify tends to focus on buying older properties that are considered poor performing.

Of the Tri-Cities motels, the Rodeway Inn and Loyalty Inn, in particular, had scathing reviews online for being dilapidated.

This story was originally published August 23, 2021 at 5:00 AM with the headline "Developer that’s turning Tri-Cities motels into apartments is buying yet another one."