City preparing deal for hotel developer

by Marianne Gasaway

Clear Lake City Administrator Scott Flory outlined a prospective economic development project and a preliminary draft of a Letter of Intent related to a hotel and conference center project at Monday night’s City Council meeting.  It is anticipated the Council will take formal action on the Letter of Intent at its next meeting, scheduled for Aug. 5.

“The purpose of the Letter of Intent is to serve as a good faith gesture by the City and prospective developer to enable both parties to proceed with the necessary due diligence and legal steps required to formally consider a Development Agreement at some point in the near future,” explained Flory.

The proposed location is the future Lot 4 in the Courtway Park Subdivision, which is roughly 5.8 acres.

The final plat of the Courtway Park Subdivision was approved Thursday by the City’s Planning and Zoning Commission.  It encompasses 64 acres just east of Interstate 35, extending to North 32nd Street, north of Highway 122.  The six lots closest to Highway 122 are zoned as highway commercial, while the northern five lots are zoned light industrial.

The proposed hotel and conference center development would be on a 5.8 acre piece of land on the far southwestern part of the subdivision. While not ready to name the franchise, Flory said the hotel would be not less than a mid-scale brand hotel with not less than 70 rooms.  The accompanying 9,000 square foot conference center would be a 600 person

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venue, and a 5,000 square foot restaurant would bring the estimated cost of the development to between $16 and $18 million.

The City would rely on the new anticipated property and sales taxes generated from the development, as well as other future developments within the subdivision; current and future anticipated new property tax-increment financing revenues in the Northeast Urban Renewal Area; and available revenues from the Clear Lake Consolidated Urban Renewal Area to meet its annual debt service obligations on a subsequent City bond issuance.

Flory said the City may consider a $3.75 to $4 million forgivable loan over 10 to 12 years.  However, he added that he would expect the bond the city would use for the funding to be paid off in approximately seven years.

There would be no transferring of city funds until after the project is completed and no taxpayer revenue would be used.  The city would rely on the new anticipated property and sales taxes generated from the hotel and conference center development, as well as other future developments in the subdivision, to help offset a city economic development contribution to the project.

When asked by the Council if there would be any implication to taxpayers, Flory responded, “I cannot envision a scenario where there are any.”

“The project and Courtway Park Subdivision are a great example of how tax-increment financing can benefit the entire community by facilitating the creation of economic impact generating opportunities that can bring outside dollars into the community without creating new costs for the taxpayers.  While the project and process  are complicated, it is important to concentrate on opportunities that are realistic for our area,” said Flory.

Construction on the hotel and conference center could begin in October, with a scheduled completion date of October 2020.

Flory added that the unnamed developer has experience, an excellent track record and is bankable.  He speculated the prospective project would be the most significant of its kind between Ames, Iowa and Owatonna, Minn. on Interstate 35.

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