The Hilton Garden Inn received preliminary approval Monday night for up to $4 million in industrial revenue bonds.
The property at 520 Minnesota Ave. will transfer ownership to the Unified Government for six months to a year during the IRB process, if the proposal is approved, according to the UG’s interim economic development director, Katherine Carttar.
Under the proposal, PHVIF Kansas City (Peachtree Hotel Group), the owner of Hilton Garden Inn, would use sales taxes received by the hotel to pay for construction materials, furniture, fixtures and equipment for renovations. The IRBs would use only the sales taxes that the hotel is generating. PHVIF acquired the Hilton Garden Inn in May 2018.
UG commissioners at the Economic Development and Finance Committee meeting Monday night asked a lot of questions once they heard the property would go back to UG ownership during this process. The UG had spent a lengthy time previously to sell the hotel to private owners.
The commissioners were told by their legal counsel that this lease arrangement happens in all of the IRB processes, and has been done many times before. All the related costs would be paid by the company, commissioners heard.
The transfer of ownership to the UG and lease back to the hotel company was a legal technicality required by the statute, according to the UG attorney. The UG attorney said that the time period involved in the transfer of ownership should not be enough to affect property taxes on the hotel. The IRB deal does not include property tax, only sales tax.
According to UG records, property taxes on the Hilton Garden Inn are about $291,008 for 2018, an increase of almost $100,000 since 2017. In Wyandotte County, the first half of property taxes is due on Dec. 20 and the second half is due in May.
Carttar said the UG economic development department was in support of renovations and investment into the hotel as it fits in with the other projects being developed in the downtown area.
The new downtown grocery store will be across the street from the Hilton Garden Inn, and the University of Kansas Health Systems is opening its new Strawberry Hill behavioral health campus in August of 2019, she said. She believes there will be an increased need for hotel rooms in the downtown area.
According to Cartarr, the benefit for the UG would be a much nicer hotel downtown, more investment in downtown KCK to bring people to stay there and shop more. It would result in more people coming downtown and spending money, she said.
The hotel currently is in the planning stage of renovation and hopes to start work in the first quarter of 2019. The hotel’s public spaces, rooms, bathrooms, food and beverage space, restaurant and exterior would be renovated under the plans.
In answer to a question from Commissioner Ann Brandau Murguia, a representative of the hotel said there would be about $250,000 to $300,000 in sales tax revenues affected in this plan. The commissioner asked about the worst-case scenario, and was concerned about a possibility the UG could be the owner of the hotel indefinitely, although the hotel’s representative and the UG’s economic development department did not think that was likely.
The vote to approve it was 5-1, with Commissioner Murguia voting no. The Hilton Garden Inn project next goes to the full UG Commission meeting at 7 p.m. Dec. 13.