Conference center contractors want similar incentives
Sun, 22 Dec 2013 23:36:20 GMT —
Millions of dollars in incentives are at stake as officials compare requests from two contractors competing to build a conference center.
City officials say Jefferson City-based Farmer Holding Company and Hannibal-based Ehrhardt Hospitality Group had both provided information on the incentives they wanted by the end of last week. Farmer wants to build the conference center as part of the existing Capital Mall, which the company owns, while Ehrhardt wants to build a freestanding structure on a parking lot across the street from the Truman building downtown.
Interim city administrator Drew Hilpert told KRCG 13 the two companies are taking a slightly different angle in discussing the incentives they want.
Both proposals involve building a Courtyard by Marriott with a conference wing. The hotel portion itself would be paid for entirely by the contractor building it. The city's 4 percent lodging tax would provide about $9 million toward building the conference wing. Farmer is asking for an additional $9 million in incentives for the center. Ehrhardt told the city it can build a conference center using just the city's lodging tax revenue, but a more elaborate center would require financial incentives. Hilpert explained Farmer is proposing a top-of-the-line conference center and is willing to negotiate down while Ehrhardt is using a bare-bones design which can be improved and expanded at the city's discretion.
Hilpert said the discussion has centered around three types of incentives:
Tax increment financing
Under a TIF, a portion of the new tax revenue stemming from a new development would help pay for the project for a period up to 23 years. Farmer has asked for a 100 percent TIF, meaning all of the additional revenue generated by the conference center would help pay for its construction. Ehrhardt has expressed interest in a TIF if the city wants to go with more than just a basic design.
Community improvement districts
CIDs are used to finance new or improved public facilities and provide some services. Farmer has asked for a one-cent CID tax as part of its proposal. Hilpert notes this and the company's TIF proposal would only provide about $15 million of the $18 million its conference center design would cost. The company and the city would have to decide who would provide the additional $3 million. Ehrhardt has expressed interest in a CID.
Transportation development districts
These are districts dedicated to transportation-related improvement projects ranging from signage and shelters to major infrastructure projects. Farmer has not said anything about a TDD, but Ehrhardt has brought it up as another incentive it could use for its design.
Hilpert said the construction costs are the same either way, so the city has to decide how big and elaborate it wants the conference center to be.
"Do we want to have a higher quality than $9 million or a lower quality than $18 million?" he said. "The costs per square foot don't change, so we need to settle on what the right size is."