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Council Discusses Motel Development for Lamar

 

Since the City of Lamar helped fund a feasibility study with SECED last year for building a motel within the city limits, the council has been speaking with potential developers on the cost and what type of financial incentives could be brought into play. The council expanded on that note this past Monday, January 7th during a scheduled work session for an upscale motel considered by Cobblestone Hotel and Suites.

Any agreement is still in the planning stage, but Lamar City Administrator, John Sutherland, told councilmembers Cobblestone representatives would like some form of commitment from the city. “In this situation, the motel developer is attempting to secure local partners to help fund the construction,” he explained, adding that current financing shows the return on investment to be around 10 to 11%, “which is positive but kind of thin,” he stated.  If the city were to offer economic assistance, around $1.3 to $1.5 million, the ROI would be more acceptable at 15%.

Sutherland explained that the city could contribute post performance monies and not have to commit a dollar up front. “We don’t have to pay anything until the motel is built and running, when it will begin to contribute to local sales and property taxes and our contribution would be in the form of rebates as we have done with the Quality Inn,” he said, adding, “If we don’t get any money, then they don’t get any money.”

Tim Shefchik of BriMark Builders has been meeting with city officials since December 2017 at which time he explained that Cobblestone works with local financing partners and host towns which can provide their buy-in from property tax rebates, cash flow options, utility rebates or some relief from sales or bed taxes, per state guidelines. A base commitment from local contributors would be in the neighborhood of $250,000 each.  The city’s return would be through TIF, Tax Incremental Funding levied on building and property improvements in Lamar’s Urban Renewal District.  In this case, 15% of revenue generated from the TIF from the motel’s development.  The proposed site is along North Main Street, but a specific address was not mentioned at the work session.  The estimated cost of the project is near $6 million.

The council was informed that the new motel, designed as more upscale to local offerings, would help generate new dollars into the city by bringing a new and higher income bracket customer to the community who would be more prone to spend more money during a visit. Sutherland suggested Lamar has benefitted indirectly through the construction of the Flying Pilot truck stop.  “Investors such as Cobblestone and others notice that there’s development in a community and see that as a sign of economic growth.”  He added, “You end up with development you wouldn’t have had if you hadn’t made the investment.”

The council took no action during the work session, but did develop a sense of what it would take to pursue negotiations prior to any written agreement.
By Russ Baldwin

 

Filed Under: City of LamarConsumer IssuesEconomyFeaturedTourismTransportationUtilities

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