Navajo move to buy off-rez business
Plan to purchase Inn of Gallup and renovate facility

Legislation is moving ahead to allow the Navajo Nation to purchase the Inn of Gallup. [photo by Daniel Zollinger / Independent]

By Kathy Helms
Diné Bureau

WINDOW ROCK — In follow-up to a resolution which stated that it was proper for Resources Committee to evaluate the purchase of The Inn of Gallup, the committee this week approved a new resolution which would clear the way for purchase upon approval of the Navajo Nation Council.

Committee Chairman George Arthur said that by approving the previous resolution, the committee agreed that the findings of facts were in order and that the procedures and policies were followed in the format that the committee had established to buy property for the Nation.

“Based on that, as the sponsor, I proceeded with going to the level of developing a legislation to acquire what is now known as The Inn of Gallup.” The property would be purchased from current owner Hans Pircher for the negotiated price of $6.6 million. Renovations are estimated at an additional $2.6 million.

“The Land Acquisition Trust Fund has been geared toward purchasing ranches,” Arthur said, but added, “it’s time to take it in a new direction. ... Let’s think outside the box. This is what’s before you. It’s not the general, normal, historical land acquisition. We’re going into buying real estate and a business.”

Once purchased, the Nation would lease the facility to Navajo Hospitality Enterprise. “It’s a business transaction,” Arthur said. “There’s a big difference between this one and the one that we dealt with the casino.” In that deal, the Navajo Gaming Enterprise borrowed $35 million from the land acquisition fund “as an investment initiative” to get gaming off the ground.

“In both cases, they’re obligated to put money back into the land trust fund,” Arthur said.

Resources member Harry Williams informed the committee that the proposed legislation is really asking for $9.2 million. “What if the renovation starts and we find out later that it’s going to cost $3.6 million to renovate — what do we do then? How do we know it’s only going to be $2.6 million? Who is going to do the renovation?”

Arthur said the legislation includes $2.6 million for renovations, but in actuality, it’s estimated at $2.2 million with $400,000 as a cushion for cost overruns. Hospitality Enterprise will be responsible for bidding out the renovation.
“We could have gone with the legislation the last time. It would have been OK. But we all know there is not $2.6 million available for capital improvements. You walk into the Council chambers and you see that big orange circle on that sign,” he said, referring to the dry-erase board that keeps count of the Unreserved Undesignated Fund Balance, which is now at $0.

“While the opportunity is here and it’s appropriate to include it ($2.6 million) as part of the process, I ask that it be included,” Arthur said. “If renovation costs exceed that amount, it would be Hospitality’s burden. Once we buy it, Hospitality is going to go into a management agreement with the Nation. The rest is going to be their problem.”

In response to a question by Resources’ Norman John II regarding the cost of property tax and whether it can be expected to escalate, Arthur said, “Because this is in the city of Gallup, there are taxes that we don’t deal with as a Nation.” He referred the question to Pircher.

“The property tax is about $76,000 a year – that includes everything. As far as the liquor tax, the renewal of the liquor license is, $1,300 every year and $250 per year to the city of Gallup,” Pircher said. Any increase in taxes would be paid by the Hospitality Enterprise.

Arthur said that with renovation, the value of the property is going to rise at least $1 million. The life expectancy of the Inn is another 40 years, according to the appraisal.

Resources’ Cecil Eriacho said the building was appraised by “casual inspection,” adding, “I don’t know what’s behind the walls or underneath the floor. There might be asbestos.”

Pircher said there is no asbestos and that the building has been inspected both inside and out. “The actual age of the main building is 22 years old,” though some of the rooms are 40 years old but are built of concrete and steel and made to last. The piping was replaced 20 years ago.

Eriacho also asked, “Why does the current owner want to sell?” to which Pircher responded, “I have been in business 30 years. My kids are in Phoenix and my health is not as good as it used to be. I need to slow down. I had cancer several years ago, but I’m OK.”

The committee approved the resolution 5-1, with Eriacho casting the dissenting vote.