Friday, September 14, 2007
Council to vote on hotel incentives
The funding proposal is tied to the performance of a planned Cambria Suites in Roanoke.
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Roanoke officials have proposed giving $1 million to the developer of a Cambria Suites hotel.
But the developer won't receive the money all at once, and there's no guarantee that the funds will come at all.
On Monday, the city council will vote on whether to approve a $1 million funding agreement tied to the planned Cambria Suites' performance.
An agreement drafted by city officials and attorneys states that Telemark Hotel Group, the Wisconsin-based developer of the hotel, can receive half of the amount of real estate and occupancy tax revenue generated in a year if the hotel produces $275,000 or more.
If it does not generate this amount, Telemark receives no funding that year.
The grant would be in place for six years or until the developer earns $1 million, whichever comes first, said Brian Townsend, assistant city manager for community development for Roanoke.
Other performance measures include that this 127-room Cambria Suites, a Choice Hotels International brand, must open within two years of the date of the agreement. And Telemark also must spend at least $14.4 million on developing the facility, according to the agreement.
The city has handed out other incentives packages for retail developments, including Ivy Market, which houses Ukrop's Super Market, and the District of Valley View beside Valley View Mall.
In the case of Cambria Suites -- planned for the Riverside Centre on Reserve Avenue and estimated at $15 million -- the city chose the $275,000 benchmark after estimating occupancy and building assessments, Townsend said.
He called $275,000 a "conservative figure."
"With business growth and inflation, each year they should see an increase in total revenues," he said. "The development, from real estate and room tax, should generate more than $275,000."
Financial help from the city has been a bit of a struggle for Telemark.
The company, made up of several partners, announced last year its plans to build Cambria Suites at Riverside Centre. Carilion Clinic owns the Riverside Centre site, and last August, it sold 6 acres to a Telemark-related group for hotel and other commercial and retail development.
The city already has pumped $3.2 million into development of this area.
But Telemark still wanted financing help. The hotel parcel is in a flood plain, and because of that, the structure would have to be built on a raised platform. A parking garage would go underneath it.
Telemark initially asked Roanoke officials for $2 million, as previously reported.
But the city rejected Telemark's offer, saying it exceeded the developers' actual costs related to building in the flood plain, Townsend said in an interview last month.
Telemark went back to the drawing board. Several months ago, it approached the city with a new cost estimate -- $1 million. The city council and several Roanoke officials agreed to grant the funds to the developer in early July, although no performance measures were in place.
A Telemark partner, Ryan Eller, could not be reached for comment Thursday about the city's performance agreement. The Roanoke location would be the 49th Cambria Suites franchise nationwide, according to Choice Hotels International.
In an interview last month, Eller said city funding could determine whether the hotel would go up in Roanoke.
