Micro or not, converting Richland motel to apartments could ease Tri-Cities rental woes

The 97 rooms of Richland’s Days Inn may soon become the new home of young professionals in the Tri-Cities’ tight rental market.

The Richland City Council votes Tuesday on clearing a roadblock for a Beaverton, Ore.-real estate holding company, that will remake the fading downtown motel into a block of apartments.

While supporters see it as a way of adding new rentals to a city desperately in need of more places to live, others worry about the loss of motel rooms.

It’s a conversion that Ziad Elsahili, Fortify Holidings’s president has done before in other cities across Washington and Oregon. Right now, he’s working on turning a Spokane Days Inn into a similar apartment complex.

The company owns more than 3,000 rentals across 26 properties.

“Our products are nice clean housing products whether they are micro or not,” Elsahili told the city’s planning commission. “We have a keen interest in Richland. It’s a community that wants more housing supply.”

The 97 rooms at the Days Inn would be converted into an equal number of 260-square-foot apartments. Each of the loft apartments will have a full-size refrigerator and stove.

The project falls in line with Richland’s plans to add apartments within walking distance of what many consider the city’s downtown, The Richland Parkway area, Elsahili said.

Rental market

The Tri-Cities vacancy rate is less than 2 percent, making it one of the most competitive rental markets in the nation.

The Tri-Cities ranked 16th in the U.S. for toughest markets out of 125 markets surveyed, according to the apartment listing service, RentCafe.com.

For the first three months of the year, of the few apartments available, there were 18 potential renters for each one.

In Richland, Elsahili said employees starting their careers at Kadlec Regional Medical Center, Washington State University Tri-Cities and Pacific Northwest National Laboratory are looking for those types of small apartments.

Apartment sizes

The owner of the Days Inn is ready to sell, but Fortify Holdings needs the city to change its regulation on home sizes.

The city’s central business district requires apartments to be at least 500 square feet. While the limitation has been in place since the district was created in the late 2000s, current city officials didn’t recall why that limitation was kept on that district.

While five other business districts in Richland allow for smaller apartments, the limit was put in place in three of the city’s commercial areas.

A majority of the city council appears ready to eliminate the requirement. An initial vote on the ordinance passed 5-2 earlier this month. The council is scheduled to take a final vote Tuesday, June 15.

Council members Bob Thompson, Phil Lemley, Sandra Kent, Michael Alvarez and Mayor Ryan Lukson sided with removing the requirement.

Thompson said the move is in line with the city’s plans to increase the number of people living in the downtown area west of George Washington Way from just south of the The Parkway to the Uptown Shopping Center.

While he didn’t feel all of the questions have been answered, he felt it fit with the city’s goals.

“You can always find a reason to be afraid,” he said. “You’ve got to take a chance to move forward.”

While most of the council saw the change as a way to get more people living in that area, Marianne Boring and Terry Christensen were concerned about the long-term effects.

Boring, a former planning commission member, said she felt that goal could be achieved without reducing the size of apartments.

While she didn’t have an issue with converting the Days Inn, she felt they should keep the 500-square-foot size. She pointed out that other sections of the city allow for smaller apartments, they didn’t need to be in the central business district.

However, Johnson has said to make the motel rooms twice as large would not make the conversion profitable.

Christensen was concerned the conversion will cut dangerously into the stock of low-rent rooms needed to house families for sports tournaments.

He also was concerned it cuts into the city’s hotel and motel tax funds which go to help promote tourism.

“It may not be highly occupied all of the time, but it is extremely popular with the sports groups,” he said.

Motel struggles

Robert Johnson, a consultant with Fortify Holdings, told the planning commission that the Richland’s Days Inn was struggling even before COVID hit.

“This is just an economical way to repurpose a high-density property that is just economically distressed,” he said. “We don’t anticipate any adverse impacts on tourism. Only poorly performing hotels and motels can ever be candidates for conversion.”

A profitable hotel or motel would make more profit than apartments, so companies aren’t going to convert them just because they can, he said.

Johnson told the planning commission there are plenty of hotel rooms in Tri-Cities to pick up the slack once these are converted.

Once the city lifts the requirement, it’s unclear when the project would start.

Development Services Director Kerwin Jensen said they haven’t been able to submit formal plans until the change is made.

This story was originally published June 14, 2021 at 11:46 AM.