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TO: Mayor Thomas J. Weisner
FROM: Bill Wiet, Chief Development Services officer
DATE: September 3, 2015
SUBJECT:
To recommend approval of a Hotel Occupancy Tax Rebate Agreement for the property at 111 North Broadway. It is also recommends the previous tax rebate agreement (R14-321) be rescinded.
PURPOSE:
Since the time of the original request, the project is now estimated to be $750,000 over budget as a result of unexpected costs. Midwest's bank has agreed to refinance the project and Midwest has requested revising the structure of a reimbursement agreement to monetize the project up front.
BACKGROUND:
Pursuant to Resolution R14-321, Midwest Management II, Inc., which operates the Comfort Suites Hotel at 111 North Broadway Street, previously requested economic assistance, through a Hotel Occupancy Tax agreement, from the city for a $2 million renovation project at the hotel that would include rebranding the hotel as a Holiday Inn Express and Suites. The original request included the city providing a reimbursement of the Hotel Occupancy Taxes for up to $500,000 to Midwest to assist with the costs associated with this project. The structure of this assistance was to be as a "pay-as-you-go" type reimbursement
DISCUSSION:
The revised Hotel Occupancy Tax Incentive Agreement will provide Midwest with $250,000 up front on the condition that Midwest has obtained financing. The city will further provide Midwest with an additional $250,000 with the condition that construction has begun and that Midwest is actively pursuing completion by the agreed upon date. As each above referenced payment is made, Midwest is required to execute a mortgage and promissory note and the city will record the mortgage against the property in the amount of the payment made to Midwest with an annual interest rate of 4.5%.
IMPACT STATEMENT:
The execution of the revised development agreement will have a positive impact on the city as a whole and the downtown a...
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