By Howard Greninger, The Tribune-Star
TERRE HAUTE - A financial incentive for a private developer to build an extended-stay hotel in downtown Terre Haute received approval from the City Council on Thursday in an 8-1 vote.
Earlier Thursday, the city's Economic Development Commission unanimously recommended the City Council approve a revenue bond as an incentive to build Candlewood Suites, at the former Tribune-Star building on the southwest corner of Eighth Street and Wabash Avenue.
The commission conducted a public hearing before its vote, however no public comment was given. Councilman Ryan Cummins, R-2nd, was the lone dissenter on the issue.
Under the agreement, the city of Terre Haute agrees to allow taxes generated from the Hilton Garden Inn, currently under construction, and the proposed Candlewood Suites in the city's downtown tax increment finance or TIF district, be used to make bond payments.
City taxpayers would not be responsible for payment of the bonds, under the agreement.
The bond issue would not exceed $1.38 million. It will likely be around $1.37 million, said Gary Malone of H.J. Umbaugh & Associates, an Indianapolis accounting firm.
Of that, $1 million would be paid to Wabash Valley Hotel Partners LLC, owner of Candlewood Suites. The principle partner is Dora Brothers Hospitality Corp., which is building the Hilton Garden Inn.
A separate account containing $212,864 from the bond would be established to pay interest costs through Feb. 1, 2009 while the Candlewood Suites is built.
Any TIF payments for the Candlewood Suites project, under the agreement, would be secondary to TIF payments for a 1998 bond that funded the city's existing downtown parking garage and a bond for the construction of the city's second garage/bus transfer center now under construction on the campus of, and in cooperation with, Indiana State University.
If TIF funding is not enough to make a bond payment, Wabash Valley Hotel Partners LLC would have to pay the difference. The annual bond payment is projected at $180,000.
The maximum interest rate anticipated for the bond is 8.5 percent, over a maximum of 15 years. The bond essentially allows Wabash Valley Hotel Partners to use its property taxes to pay off the bond.
Candlewood Suites is projected to generate $80,000 in taxes and the Hilton $153,000, both in 2009, according H.J. Umbaugh & Associates.
An estimate for taxes in 2010 was based on a 2 percent circuit breaker law taking effect, which would reduce Candlewood Suites property taxes to $65,000 and the Hilton to $124,000 in 2010, enough to cover bond payments.
The extended-stay hotel, with 99 rooms, is expected to create 15 full-time jobs and one part-time job, with the company paying $358,000 annually in payroll and benefits.
In other business, the council amended its city ordinance on standards for the location of adult-oriented businesses to conform to constitutional requirements imposed by state and federal court decisions.
The council unanimously voted to reduce the distance between such a business and a residential area to 500 feet instead of 1,000.