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Gaylord announces Arizona project; will not slow Chula Vista plans

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As Gaylord Entertainment Co.’s proposed project in Chula Vista slugs along, the company is announcing a new convention hotel and resort in Mesa, Ariz.

The company announced this month that they entered into a land purchase agreement with DMB Mesa Proving Grounds LLC, an affiliate of DMB Associates, Inc. a nationwide diversified real estate investment and development firm.

Chula Vista officials are not worried this will delay the project in their city.

“They called us as they were making the announcement, basically just to reassure the city that just because they were adding the project in Mesa did not mean they were backing away from the Chula Vista project,” said City Manager David Garcia.

Arizona-based DMB specializes in master-planned communities across the Western United States. In San Diego, they are known for developing Santaluz, a golf community adjacent to Fairbanks Ranch and Rancho Santa Fe.

Gaylord (NYSE: GET), which owns the Grand Ole Opry and a network of meetings-focused resorts, said the project would not replace the one in Chula Vista, instead it will add to the chain of convention hotels.

“They’re really looking at that market as being distinct and fairly untapped,” said Gaylord Entertainment spokeswoman Leslie Wade. According to her company’s market research, the location is a market that was rated a top choice destination by meeting planners.

The Mesa project is 30 miles from downtown Phoenix, adjacent to the Phoenix-Mesa Gateway Airport and a 25-minute drive to Phoenix Sky Harbor International Airport.

“Much like Chula Vista, in Mesa the project will be the centerpiece of a large-scale redevelopment effort,” Wade said.

Gaylord approached Chula Vista in June 2005 about building the convention hotel and resort on the city’s bay front. The San Diego Unified Port District approved the company’s letter of intent a year later.

The project has been bogged down by labor disputes. Some organizations are calling for an agreement that makes the project use local jobs first.

The Gaylord project is estimated to have a $1.3 billion economic impact, with the possibility of helping the struggling construction industry with a payroll of $456 million. The project could create 9,981 jobs, directly and indirectly in construction, according to Bennett Westbrook, Gaylord senior vice president of development and design.

At one point the labor issue caused the Nashville-based company to stop discussion of the project completely with the Port and Chula Vista. Talks resumed in August 2007.

As for those not focused on local jobs, the project in Mesa could mean work for San Diegans -- or it might not, said George Hawkins, president and CEO of Associated Builders and Contractors of San Diego.

“If there were exactly the right number of jobs for local workers today, what would you do if there were one less job tomorrow?” he said. “Would they all go home and wait, or would one of them go to Mesa?”

Hawkins said that while everyone wants a job that is across the street -- it’s usually not possible. As construction jobs dwindle, workers may widen their job search to the next city and then to the next state.

It will be the same if the market is still sluggish when Gaylord starts construction in Chula Vista.

“The reality is, if you have 5,000 or 6,000 construction jobs that come onto a project -- even a thousand at a time -- they’ve got to come from somewhere,” said Hawkins. “There aren’t even a 1,000 out of work construction workers in Chula Vista.”

A draft environmental impact report for the entire Chula Vista bay front was released early this summer, and the comment period closed last month. Now, the Port of San Diego will review the bay front master plan again -- and if it receives approval it will move forward.

“We hope that the bay front master plan EIR will go to the port for consideration in early December for certification," Wade said.

Then the project will seek the state approvals in 2009 from the State Lands Commission and California Coastal Commission.

With those approvals, they can start moving dirt.

Of course, Chula Vista and the Port of San Diego must first build the infrastructure, costing an estimated $400 million, which they have promised to do. The money will be borrowed and paid back with the taxes generated from the convention hotel and resort.

The city must also finalize the lease agreement and the financing agreement, which Garcia said is in the final stages.

“The technical part of pricing all of that out has taken more detailed engineering and has been more time consuming than we thought,” he said.

Gaylord is seeking an infrastructure deal in Mesa as well. Wade said once the purchase agreement is finished, the company would meet with Mesa city officials to discuss an incentives package and conducting market research.

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