Reaching for the Sky
Businessman proposes 8-story hotel for Gallup

Show is an artist rendering of what an eight-story hotel near Applebee's in Gallup might look like. Businessman Tom Sundaram is proposing to build the hotel with the help of tax breaks from the City of Gallup. [Courtesy Image]

By Zsombor Peter
Staff Writer

GALLUP — Tom Sundaram is thinking big. Eight stories big.

That's how tall the local businessman, who owns hotels from Gallup to Beaumont, Texas, is planning to build a new hotel and convention center near the Muñoz overpass, easily the tallest building in Gallup if it comes to pass. The city is giving him a $2 million tax break to see that it does.

The City Council, in the absence of Councilman Frank Gonzales, had a special session inside City Hall Thursday morning to approve the necessary industrial revenue bond. In so doing, City Manager Eric Honeyfield said, the city is essentially loaning Sundaram its tax-free status for the next 20 years. He figures that should end up saving Sundaram close to $2 million in property tax.

But the city isn't giving industrial revenue bonds away for nothing. In return, the city is asking for at least 125 rooms, a three-diamond quality facility, an on-site pool, lounge and restaurant, and insisted that Sundaram break ground in one year and be finished in two.

But the best part of the deal, Honeyfield said, from the city's end at least, is getting a private developer to pay for 10,000 square feet of new convention space "so that the public doesn't have to."

City officials hope the extra capacity will help it capture more of the conventions that now go to neighbors such as Flagstaff, Farmington and Albuquerque.

'Sucking sounds'
Cities that try to build that much convention space with their own tax dollars, Honeyfield said, "they all have very big sucking sounds on their ... budgets."

Sundaram has agreed to build all that and more. Although the 10,000 square feet of convention space took some negotiating, his proposal to the city calls for not a three-diamond, but a four-diamond, hotel, with 150 rooms, retail space, and shuttle service to and from downtown Gallup. Preliminary designs envision an eight-story glass tower jutting prominently from the front of the main building and a glass pyramid enclosing the pool and spa.

While the site just north of Applebee's won't change, the look might.

"This is the first concept, not the final one," Sundaram said, eyeing an enlarged rendering of the hotel inside his office at Budget Sales, the American Indian jewelry store he owns on West Highway 66. "It's just some view of what I'm envisioning at this time."

116 employees
But at those dimensions, his proposal states, the hotel and accompanying facilities would need 116 employees. And while the city would lose about a quarter of the $2 million tax break on the property, according to Honeyfield, the facility, according to Sundaram, would generate $3.4 million in gross receipts tax and $4.1 million in lodgers tax the city wouldn't enjoy otherwise.

Although city officials could not confirm the last two figures, they do expect attractive returns. And it's not the first time they've gone after a deal like this, either.

The first time the city offered the bond two years ago, Sundaram and local contractor Rick Murphy handed in proposals. The council approved both, but neither businessman took action, and the offer expired.

Murphy has never returned any of The Independent's messages requesting comment on this issue. Sundaram said he didn't follow through the first time because he felt slighted. He thought his proposal was better, but received only a 15-year bond from the city while Murphy got 20. And according to Sundaram, the bond-for-a-hotel was his idea to begin with.

"I felt like I was treated like a second-class citizen, and I proposed the idea; so, I wasn't excited about that," he said.

Maintaining focus
But Sundaram didn't panic. Considering the hard time the city was having making the convention facilities at Red Rock Park pay off, he didn't think Murphy's choice of a site on the east end of town would go far and decided to wait it out.

"I kept my cool, I didn't get mad at anybody, and here I am," he said.

This time, Sundaram was the only one to apply for the bond, and he got the 20-year term he was looking for. The city is also giving him a little extra incentive to follow through this time. When the city officially signs over the bond, which Honeyfield expects to happen in the next few weeks, Sundaram will have to put up a $25,000 performance bond of his own. If he doesn't have a hotel up within the two years, he loses the money.

But like a true businessman, Sundaram said, "everything is negotiable."

In Sundaram's mind, there are a few things that need to happen for the hotel to succeed. The state needs to build a new overpass across Interstate 40 somewhere nearby. It needs to widen the road that runs in front of the site from two lanes to four. He needs to attract a major franchise like a Hilton or Marriot. And the tribes in the area, the Navajo Nation especially, need to offer some guarantee that they'll be regular customers.

All that will surely take more than two years to arrange, and although Sundaram says he's aiming to meet the city's timetable, he's hoping it's ready to be at least a little flexible.

Sundaram believes it would be well worth it. He sees in the project nothing short of a chance for Gallup to take back both its reputation and its place in the regional economy.

"(Gallup) has been the trade center for the Navajo Nation for years and years," he said. "Now we are losing it to Farmington."

"The last 20 years this city has been beaten to death with 'Drunk Town USA,' " he added. "So we need to get our market back and turn our reputation around."

He believes his hotel and the city's bond can help do that.