NICK GOSNELL
Hutch Post
HUTCHINSON, Kan. — A hotel proposal to address the city's needs for additional rooms to retain large events like the NJCAA Men's Basketball Tournament was approved by the Hutchinson City Council on Tuesday.
From the legal description of the land involved, it would be on parcels behind the Olive Garden and Mattress Firm where Waldron curves around between Aldi and 23rd.
"The developer will have a 100 room hotel, 15,000 square feet for a conference center and it will have a restaurant as well," said City Attorney Paul Brown. "There are timelines within the development agreement for the design, for the construction of all those things."
Amber Hotel, LLC, a local developer from Wichita that Hutchinson has worked with before, will make an initial investment of at least Eighteen Million Dollars ($18,000,000.00) to construct an upper mid-scale hotel, most likely a Hilton Garden Inn.
"There's very little risk for the city here," Brown said. "We don't pay until the hotel is built. The council will be asked to approve a letter of intent to issue Industrial Revenue Bonds. We don't give the money for that. We are just a financing conduit for Industrial Revenue Bonds. That will be the primary commitment. The responsibilities that we have will occur after the hotel is actually built and readt and has a Certificate of Occupancy."
It's at that time that the city will pay the developer $1 million from the transient guest tax that has been collected and saved by the city since the Atrium was sold and not kept up to the level that allowed it to receive a portion of that tax. That tax is paid by people that stay at the hotels, so almost entirely by out of town guests. The City will also approve a Community Improvement District for the hotel project of two percent, but that CID is going to be limited.
"They are very common in hotels," said Mayor Jade Piros de Carvalho. "I think all of our nicer hotels have a two percent CID, again because locals aren't paying that, unless you are spending a night in the hotel instead of your home. Those are paid by out of town guests."
With that said, the restaurant and conference center will be included in the CID, so practically, locals may pay that additional tax if they eat in the attached restaurant, but it won't extend beyond the developer's property. The city is also going to pay $50,000 to the developer, again from transient guest tax. This is because conference centers do not make money and the city asked the developer to build the additional space. This is to pay back for that, as the developer wanted it to just be a hotel at first.
The developer also has to keep up the hotel to get their transient guest tax portion, which is 3% of any stay, back.
"They have to maintain that standard in order to continue to receive the transient guest taxes," Brown said. "Basically what we're doing is reimbursing the developer for the cost of the conference center. If they want to continue to receive those transient guest taxes in the future, the flag has to be maintained. The upper mid scale hotel must be maintained. It can't change over to something else, a lower flag, otherwise the transient guest taxes stop."
The 100 room hotel gets not quite half of the space back that the Atrium had, as at its peak it had over 200 rooms, so local officials are still looking for additional developers for another hotel project.
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