There’s been no activity at the Majestic Hotel site since excavators scrapped it bare in late 2016. Prospects for redevelopment dimmed when the city’s 90 days of exclusive negotiations with a Dallas-based group imparted no momentum.
Last month, the Hot Springs Board of Directors declined to continue negotiations with the Grand Point Investment Group and Cienda Partners-led team, prompting the board to consider issuing a third round of solicitations for the 100 Park Ave. site that’s sat idle since 2006.
But a new suitor has emerged, one that’s been studying the site’s potential to host an outdoor entertainment venue for more than a year. R.A. Wilson Enterprises, a locally-based, vertically integrated development company, made its intentions known Thursday, submitting a $2,163,128 offer for the 5 acres the city acquired in 2015.
Company President/CEO Rick Wilson said the offer matches what the city borrowed from its solid waste fund to acquire the property, demolish its condemned structures and mitigate environmental hazards.
He said his company began discussions with city administrators and elected officials last month. It had been waiting for the city to move on from Grand Point and Cienda’s proposal for a $110 million thermal water-centric resort, a concept he said was doomed from the start.
“We were sad to see the city do that, because within that agreement the city got nothing,” he said Thursday at the company’s Harmony Park Circle office. “They got a nice, grandiose, big high-rise hotel with thermal pools around it as an idea. But a $110 million investment will not ever happen on that property.
“I knew it was just a matter of time, that the city would get nothing from that agreement. And they got exactly what they paid for, they got nothing. So we waited our turn.”
While they were biding their time, a team headed by Matthew Wilson, Rick Wilson’s son and the company’s vice president of real estate and construction, examined the prospects for an outdoor entertainment venue in the vein of the Walmart Arkansas Music Pavilion in Rogers, First Security Amphitheater in the Little Rock River Market and the Murphy Arts District Amphitheater in El Dorado.
“The end result of our investigation was they are enormously popular,” Rick Wilson, a Hot Springs native and 1972 graduate of Hot Springs High School, said. “We had discussions with executive management of the Walmart AMP. They’re assisting us in both our design, construction and potentially the operation of the business once it’s completed. They operate the Walmart AMP, and it’s an enormous success.”
The Hot Springs Majestic Entertainment Pavilion, which Wilson estimated will cost $12 million to $15 million, would operate from March to October, hosting a wide variety of musical acts. It won’t be a public space but could be used for events such as high school or National Park College graduations, he said.
A rendering of the preliminary concept can be viewed on the company’s website, http://www.wilent.net. Wilson said the rendering had almost 2,000 views less than an hour after it had been posted. He said the company’s engineer and architect began developing the concept after the city expressed interest.
City Manager Bill Burrough confirmed the company submitted an offer.
“It’s exciting,” he said Thursday. “I’m glad there’s interest. I’m glad to get something in front of the board. It’s the first true offer I think we’ve received.”
Burrough said the offer has been added to the agenda of the board’s special called meeting Tuesday. Prior to the special called meeting, which was initially scheduled to consider appointments to city commissions and advisory committees, the board will set the agenda for the April 20 business meeting.
Directors were expected to put an action item on the April 20 agenda authorizing city staff to issue a third request for development proposals, but Burrough said Tuesday’s special called meeting will determine how the city proceeds.
Wilson has asked the city to postpone the RFP, sign the purchase contract and negotiate its involvement in the operation. Those negotiations could last up to 90 days, Wilson said. At the end of negotiations, a memorandum of understanding will be completed and a six-month due diligence period will commence.
Earnest money of $100,000 will be deposited with a local title company. The deposit will be forfeited if the transaction isn’t closed within 15 days of the expiration of the due diligence period.
“The city wanted us to give them some time to determine the involvement they want,” Wilson said. “I don’t anticipate it taking 90 days to get the memorandum of understanding. I’ll be surprised if it takes 30. At the end of the up to 90-day period, our due diligence will start.”
He plans to ask the Hot Springs Advertising and Promotion Commission if it’s interested in operating the venue.
“They may want to operate it,” he said. “They may not. We have an operation arm, and it’s in northwest Arkansas. But we’re going to give the city the opportunity, if that’s what they want to do.”
Wilson said surveying and soil examination will be done during the six-month due diligence period. Those investigations will reveal more than studies the city commissioned to secure an environmental clearance from the state, he said, explaining that the city’s reports aren’t useful for building purposes.
“We have to examine what we’re going to do with that bluff back there and how we’re going to remove that and how we’re going to cut into those rocks,” he said. “This is going to be a green development. We have extensive time in surveying and studying from a civil design perspective on how to design it to be green and maintain green activity.”
The city has said any proposal has to be self-sustaining and not require an ongoing subsidy. Wilson said an outdoor music venue fits that bill, as music’s digital revolution has made touring the industry’s primary income source.
“Entertainers have to be on the road,” he said. “They have to perform to make their money. We know this is going to be enormously popular. We’re not asking the city to support this financially in any way, nor do we need them to. We don’t need money. We have plenty.”
The city’s preference to lease the property, with the tenant paying back the city’s more than $2 million investment during the first few years of the lease and paying a nominal rent in subsequent years, is a nonstarter, Wilson said.
“A big front-loaded ground lease, where they collect a couple of million in advance, that will not happen,” he said. “I know that’s what they want in their RFP, and that will not happen.
“I’ve been in business for 38 years. I invest between $50 million and $100 million a year in real estate all over America. I know when people will invest money in real estate they don’t own, and it’s not that one. No one will pay $2 million on a front-loaded lease. I offered to buy the property and make the city whole.”
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