By BECKY KISER
Hays city commissioners will vote on two resolutions tonight regarding a proposed new $19.375 million hotel and convention center west of Walmart in an undeveloped section of the Ottley Addition.
The Wichita developer, Hays Hotel and Mitra Developers, is asking for a financial incentives package from the city. It includes tax increment financing (TIF), a community improvement district (CID), and a rebate of the city’s 5% transient guest tax (TGT) generated by the project.
Phase One of the project involves construction of a full-service four-story Hilton Garden Inn, with 100 rooms, a 8,400 square foot conference center/event space, and a restaurant and lounge. Infrastructure improvements required to serve the site include water, sewer, street, utilities, and pedestrian infrastructure. The developer, Raju Sheth, will also finance costs of those improvements to 43rd Street.
Phase Two of the project involves construction of a new restaurant and/or other commercial retail to be located on the two outparcels of the site. There is no specific time frame for Phase Two.
City Manager Toby Dougherty says the city would benefit with public infrastructure, increased sales tax revenue, a new convention center and the addition of badly-needed hotel rooms if the project is approved and built.
The first resolution to be considered during tonight’s city commission meeting would set a public hearing for Thu., February 8, 2018, for the establishment of a TIF District. The second resolution would approve the execution of a TGT agreement.
The TGT agreement provides for the city to rebate to the developer the 5% TGT generated by the project for an initial term of 20 years.
“This is a straight rebate of five percent of the funds collected just on this site, generated at the hotel,” explained Kevin Wempe, of the city’s bond counsel Gilmore & Bell, Kansas City. “It would be effective upon approval of the entire project as a whole, expected to be at the end of April 2018.”
The rebated TGT funds would be used for “upkeep, capital improvements, and general running of the convention center and hotel,” Wempe added.
During the Dec. 21 work session Mayor Shaun Musil asked if the TGT agreement addressed a guarantee the property would be kept in good repair.
“Yes,” replied Dougherty. “They have to open their books up and show us they’re making the necessary investments. If they’re not doing that, the city commission can terminate (the agreement.) It’s a 20-year term and it can be renewed if the city commission chooses to renew it.”
“The conditions to the rebate include the continuing operation of a hotel and convention center under a Hilton flag. If the flag were to change were to change for a pending sale down the road, that would be subject to city approval whether the TGT would continue,” Wempe said.
The developer estimates a little more than $4 million would be collected over the term of the TIF.
“Currently this is a green field site and generates relatively low property taxes. When the improvements are made and the project is constructed, the TIF would capture all incremental property tax revenues within the TIF District,” said Wempe. “The TIF revenues would be used to reimburse the developer for TIF-eligible expenses on a pay-as-you-go basis. Approximately $3.9 million of the total project costs are TIF-eligible expenses under Kansas law and the Hays economic development policy.”
Wempe pointed out the developer is not requesting the city issue any bonds in connection with the TIF.
The commission will also vote on a proposal to donate funds from the Commission Capital Reserve to finish the 40&8 Boxcar project.
The complete Dec. 28 agenda can be seen here.
The meeting starts at 6:30 p.m. in Hays City Hall, 1507 Main.