A Kennewick hospitality company took its name from a roadside inn in southern Oregon.
But A-1 Hospitality Group, led by Mita and Vijay Patel and their son, Taran, is building its reputation as a hotel developer and operator here in the Tri-Cities.
It’s made some splashy moves, like constructing a hotel connected to the former TRAC center in Pasco and instigating the first hotel at the convention center in Kennewick.
Now it’s taking its biggest step ever with an $85 million partnership that could transform the Three Rivers complex into the next level — a meeting venue that’s also a commercial and residential hub.
A-1 and the city of Kennewick entered into a public-private partnership in September when the city council voted 6-0 to sell 3.6 acres to A-1 Pearl LLC, an arm of A-1 Hospitality. The price was about $486,000.
A-1 will build an upscale hotel and other amenities. The city will dramatically expand the convention center with new space, parking and a theater.
The agreement includes a 24-month due diligence period to study the venture. The city has a year to identify how it will pay for its $35 million share of the undertaking.
If it works, the partnership will give the city an elegant solution to its Three Rivers problem — the convention complex is aging and being overtaken by competition, but local voters haven’t wanted to foot the bill for the update or expansion.
Kennewick voters rejected three separate proposals, mostly recently in 2017, to update Three Rivers by raising the local sales tax.
Without an update, business leaders fear losing out to other cities that do invest in their meeting spots. Visitor spending was worth nearly $500 million to the local economy in 2018, according to Visit Tri-Cities.
This month alone, 18 conventions will generate a combined $2 million in local activity, the tourism agency said.
Generate, not raise taxes
Taran Patel, managing principal, said his family watched the Three Rivers conversation unfold for several years, most recently in 2017, when the last ballot proposal failed.
When voters made it clear they aren’t willing to raise taxes to support upgrades, A-1 offered a alternative — let a private entity develop on a slice of land.
The plan would generate taxes instead of raising them.
The partnership deal calls for the city to add a 2,000-seat theater, 33,000 square feet of exhibition space, 11,000 square feet of lobby space, additional parking and 13,850 square feet of back-of-house space.
The city would use existing tax revenue to pay for its commitment. It has pledged not to raise taxes for the project.
The Patels committed to raising $50 million in private funds to build a seven-story top tier hotel with parking, a restaurant, spa, outdoor swimming pool and other amenities, as well as 40,000 square feet of retail space.
A future phase could add $160 million of residential and commercial space and underground parking at Three Rivers.
A-1 has several options to raise $50 million.
It hopes to leverage the federal EB-5 immigrant investor program — a first for the Tri-Cities.
“EB-5” is the common term used for Employment-Based Immigration Fifth Preference.
Administered by the U.S. Citizenship and Immigration Services, EB-5 awards green cards to foreigners who invest in projects that create new jobs in distressed zones.
Kennewick qualifies because the convention center area is considered a federal Targeted Employment Area, with a minimum EB-5 investment of “only” $500,000. It is double that amount in non-distressed areas and the minimum increases dramatically after Nov. 21.
Patel is confident the Kennewick project will be approved before the minimum goes up next month.
A-1 is working with an EB-5 broker in Florida to pursue investors in India, South America and Central America. Investors expect to be repaid, with interest, as well as green cards for themselves and their families.
Patel is confident the Tri-City project will be attractive to investors.
“They want the minimum (investment amount) and an area that is growing,” he said.
Its investors probably won’t live in the Tri-Cities.
“You can invest anywhere. You can live anywhere,” Patel said.
A-1 has backup plans to pursue traditional financing, such as a bank loan, if the immigrant investor approach isn’t fruitful.
Mita and Vijay Patel are both from Indian families who lived in Uganda in east Africa until Idi Amin expelled Asians in the early 1970s. The couple met, married and started a family in England.
Their son, Taran, was born in England and retains dual citizenship. The family moved to the U.S. when he was just 1.
The Patels were drawn by an opportunity to manage a “rundown” hotel on Highway 97 at the entrance to Klamath Falls, near the California border. The couple moved their family into an apartment connected to the A-1 Budget Hotel.
They went to work running and reviving the property.
They moved to Pendleton for a similar opportunity to turn around a rundown property when they took on The Longhorn Hotel.
They revived the 36-room property and converted it to a Travelodge.
“We like going into properties that are neglected,” said Patel, who grew up helping out and never considered not joining the family business.
Their first Tri-City project was an AmeriSuites Hotel, connected to TRAC (now HAPO Center) by way of a covered breezeway.
Franklin County, which owns the event center, sold the property to A-1, still based in Pendleton at that point, in 2002 for $153,000.
As in Kennewick, Franklin County officials were looking to build business there by recruiting a hotel operator to the property.
AmeriSuites became a Holiday Inn Express shortly after it opened.
The AmeriSuites brand was purchased and the new owners wanted the newly-built hotel remodeled to their specifications. The Patels opted to rebrand.
Taran Patel said the Pasco hotel was slow to take off. Road 68 was sparsely developed at the time.
But his parents could see development taking hold and held out.
In time, they saw the Tri-Cities as their future.
They moved the company to Kennewick and bought a home in 2003, though Mita and Vijay Patel wouldn’t fully move in for another three years.
Today, the Pasco Holiday Inn is neighbors to a Hampton Inn and MyPlace Hotel.
It welcomes the competition, Patel said.
“Often, new supply generates new demand,” he said.
TRAC isn’t A-1’s lone public venue project.
The company developed plans and secured permits for SpringHills Suites, the hotel attached to the Three Rivers Convention Center. They sold it before construction began.
They’re currently building a 99-room Courtyard by Marriott on land leased from the Port of Pasco near the entrance to the Tri-Cities Airport.
The $10 million project will open in early 2020. A-1 previously owns a neighboring property, which it expects to develop as a restaurant and retail complex in the future.
Taran Patel’s to-do list also includes an 80-room addition to the iconic Columbia Gorge Hotel in Hood River, Ore.
A-1 purchased the distressed hotel in 2009 after it went into foreclosure and closed for nearly a year during the Great Recession. Other prospective buyers toured the property and took a pass.
The Patels looked past the overgrown landscape to see seven acres on the Columbia River. It was too good an opportunity to pass up even if the 41-room configuration was challenging economically.
They renovated the property and hauled off countless dump trucks worth of landscape debris before reopening.
Patel said they have the permits permits for the 80-room expansion and are weighing financing packages but hope to break ground next year.
A-1 Hospitality employs more than 250 people at its six properties. The portfolio includes about 460 rooms, including the unopened Courtyard project.
The convention hotel would add another 144. A-1 hasn’t selected a hotel brand yet, Patel said.
Patel serves as managing partner for the firm, but said his parents are firmly involved.
“I don’t think they will ever retire,” he said.