Mesa Council hears details on proposed AC Hotel by Marriott, including 8-year tax abatement and long-term parking license

Mesa city staff on Tuesday detailed the terms of a proposed AC Hotel by Marriott for downtown Mesa, presenting the project’s development, tax-abatement and parking arrangements and answering council questions about financing, timelines and neighborhood impacts.

Urban Transformation Manager Jeff McVey and project manager Stephanie M told the City Council the Breakwell Group (formerly Oakland Capital) is proposing a five-story, roughly 85,000-square-foot AC Hotel that would deliver a minimum of 150 rooms, meeting space available for public use, a pool for guests and a ground-floor restaurant (a “beastro”) oriented toward Main Street. “To make this project happen, we are currently finalizing the terms of three agreements: a 35-year development agreement, a giplet agreement with an 8-year abatement period, and a 50-year parking agreement,” McVey said during the study session.

Why it matters: Staff said the project is intended to activate a partially vacant block, complement the arts and innovation district, and add hotel capacity needed to support larger events at the convention center. An economic analysis prepared by Applied Economics projects roughly $4.9 million in direct economic benefits to the city during the eight-year abatement period from lease payments, parking revenue and hotel- and sales-tax receipts; presenters also estimated guest off-site spending averaging $45 per day could generate up to $138 million over 35 years.

Deal terms and city commitments: Under the terms described by staff, the city would provide an eight-year giplet tax abatement valued at about $2.11 million and reimburse eligible public-infrastructure costs related to electrical and streetscape work (staff estimated eligible reimbursement at approximately $226,000). The city also would enter a 50-year parking license for 100 spaces in the Hibbert garage; during the eight-year giplet term, the developer would pay $10 per space per month (projected to yield $96,000 in that period), with the rate reverting in years nine through 50 to the council-adopted parking rate. McVey summarized those parking projections as roughly $5.2 million in total parking revenue over the license term.

Developer obligations: The Breakwell Group would perform trenching and backfilling for electrical service, dedicate public-utility easements free of charge, construct sidewalk and right-of-way improvements, and maintain nonstandard improvements in the right-of-way for the term of the agreement. The developer will reimburse the city for the economic-benefit analysis and make a one-time lump-sum payment to the local taxing school districts totaling about $17,000 (later described in the meeting as roughly $16,700).

Timing and contingencies: Staff said the developer must pull a permit within 18 months of council approval, complete construction within two years of permit issuance and begin operations within six months of completing construction. The developer intends to begin construction in December and start operations by the second quarter of 2028, staff said. Staff also noted the city will construct portions of electrical conduit/pulling work the developer does not complete and estimated the city’s work at roughly $245,000, of which about $181,000 would be offset through recently approved RDA toolkit funding.

Council questions and context: Council members praised the proposed brand and its fit with downtown goals. Council Member Adams cited figures from Visit Mesa on visitor volumes (the transcript records the number unclearly) and argued the city needs more rooms to keep visitors downtown. Council Member Heredia asked about Hibbert garage capacity; staff said the garage has 875 spaces, the city reserves a minimum of 600 spaces and could license up to 275 spaces to support redevelopment. Council Member Goforth pressed staff to explain the school-district payment; staff clarified the roughly $16,700 figure represents an estimate of what the parcels would have paid in property taxes over the abatement term, using a 5% escalator assumption and identifying Mesa Public Schools, Maricopa County Community College District and EVIT as the taxing entities.

Next steps: Staff said they will return to council on July 27 with final agreements for council consideration and that the developer has begun planning and zoning entitlement work. “We are scheduled to come back to council on July 27th with the agreements for your consideration,” McVey said. If the council approves, the developer must meet the permit and construction timelines to receive reimbursements and abatement benefits.

Sources: Quotes and figures are drawn from staff presentations and council Q&A during the Mesa City Council study session on June 8, 2026.