By BECKY KISER
Hays city commissioners are enthused about a proposed new hotel and convention center to be built west of Walmart.
The developer, Raju Sheth of Wichita, is requesting tax increment financing (TIF) on a pay-as-you-go basis for 20 years; a community improvement district (CID) of 2.0% CID sales tax reimbursed on a pay-as-you-go basis for 22 years; and a rebate of the city’s five percent transient guest tax (TGT) generated by the project for an initial term of 20 years, subject to early termination if the developer defaults under the related development agreements.
Commissioners heard from Kevin Wempe of Gilmore & Bell, the city’s bond counsel, Thursday night about the developer’s request for financial incentives. They asked about the city’s liability.
“Part of mitigating the city’s risk would be hammered out in the development agreement. You set forth terms and conditions under which the project’s built,” Wempe explained. “You can set milestones that have certain clawbacks or conditions to the eventual rebate of these incentives.
“The rebates of these incentives won’t be turned on until the project goes live and it’s fully built out. The developer will submit a statement of completion to the city saying ‘we’re done and in service’. At that point, they’ll start proving up costs and collecting.
“Another aspect is the ‘pay-go’ aspect. The city is not actually fronting money,” Wempe emphasized, “so any reimbursement is based on collections at the site.”
This would be the first time the city extends a rebate of the transient guest tax, the extra tax paid by people staying in Hays motels. It’s normally collected to fund the Convention and Visitors Bureau for marketing and promotion of Hays.
“They’re only going to collect what they’re able to generate themselves,” pointed out Vice-Mayor James Meier, “and same goes for the CID, so we’re not losing out here.
“This is really a best-case scenario for the city where we get a great facility the city doesn’t have to maintain. All we have to do is give up the transient guest tax for it, so it’s really the best of all worlds, I think.”
“I think it’s important to emphasize we still will capture the transient guest tax at other hotels,” Commissioner Lance Jones added.
Mayor Shaun Musil said other hotel operators are excited about the new development.
“I’ve talked to some managers of competing hotels out there and they think it will bring more people to Hays. They’re smart enough to know this is not only good for these guys but also for the surrounding hotels. I think it’s good for Hays.”
Commissioner Sandy Jacobs was pleased with the detailed information in the developer’s application for economic incentives and a supplemental questionnaire, along with related project and financial breakdowns.
“It was easy to read and easy to understand. I appreciate the work done by everyone, including staff,” she said. “This is really a significant investment in our community.”
Hays Hotel and Mitra Developers intend to build a new 500-seat, 8,400-square-foot conference center and hotel west of the Hays Walmart, which would necessitate extension of 43rd Street to the west.
The Hilton Garden Inn will have 100 beds and contain a small restaurant and bar. It would employ the equivalent of about 35 full-time employees.
Ground could be broken as soon as April on the new $12 million to $14 million facility with the center opening in 12 to 14 months, according to Sheth.
A possible second phase of the project includes construction of a new restaurant and/or other commercial retail. The financial incentive application information is available here.
Commissioners will vote on resolutions during their Dec. 28 meeting that would move the project forward.
Commissioner Henry Schwaller was absent from last night’s work session.