Thursday, June 7, 2007

Deal Fluidity

Harrison Square money

"Details are being worked out, but city officials told members of the city Redevelopment Commission on Monday that they will very likely ask the Fort Wayne-Allen County Convention and Tourism Authority, which operates Grand Wayne Center, to contribute $250,000 a year for 10 years toward the new hotel. The money would come from innkeeper’s tax revenues the hotel would pay and not cost local residents and property owners."

"Still, Harrison Square organizers are well aware that each new financial curve raises more criticism among the naysayers and, of more concern, has potential to raise the level of skepticism even among supporters. Much of this is due to the nature of negotiating a complex business deal involving a hotel developer, a hotel operator, baseball team owners who are also developers, city government, the city Redevelopment Commission, the government Convention and Tourism Authority – and more."

"Because the new hotel will greatly benefit Grand Wayne Center, it’s not inappropriate for the center’s government operating board to return some of tax revenues the new hotel will generate back into the hotel. But city officials will serve the public and their own credibility best if they can get this deal done soon with minimal additional changes."

It’s OK for Grand Wayne to fund hotel
Convention center needs more rooms downtown to support its events.

"In a couple of weeks, Leatherman said, the city and the hotel’s developers, White Lodging Services of Merrillville and Michigan-based Acquest Realty Advisors Inc., will unveil a redesigned Marriott-brand hotel that will be both less expensive to build and more architecturally compatible with the Embassy Theatre and Harrison Square."

"In place of a the original design, the 250-room hotel will have a more “retro” appearance to blend in with the 80-year-old theater and the new baseball stadium, shops, condominiums and other features of the $125 million-to-$160 million Harrison Square project."

"Having just spent $42 million to more than double the convention center’s size, it would make no sense to deter visitors by failing to provide adequate hotel space – especially when tax revenue generated by the hotel would also pay off millions of dollars in Harrison Square debt."

"Leatherman knows some hotel owners won’t like the idea of collecting taxes that will subsidize a new competitor. But the hope is that the new hotel will increase business at the Grand Wayne, attracting more visitors who will pay more taxes at the new Marriott and other hotels, generating extra revenue for everybody."


John B. Kalb said...

Can anyone name even one hotel or motel owner who is in favor of the use of the lodging tax to fund the construction of a competitive owner? Again, only Hardball Capital is going to come out ahead on this boondoggle. White & Co. will, like the first owners of the Hilton, be in financial trouble within 6 years or less and I'll bet that Lincoln will not come to the city's help on this one. With two new motels being built in Fort Wayne before this unnecessary one is even started, where are the lodgers going to come from to enable holding the occupation rate at even 50%? When did common sense get replaced in our town by downright stupidity?
To sum it up, per Leatherman:
1) We can't afford a 300 room hotel
2) We can only afford a second-class hotel - therefore the downgrade
3) We can't get an agreement without tapping the Grand Wayne lodging tax revenue
4) With 66% of the grand Wayne Center's budgeted income coming from the Allen County hotel & motel lodging tax, they will have to dig into their $4 million cash reserve - 100% of which has been generated by the same lodging tax! And it is Allen County that will loose it's Memorial Stadium with this Harrison Square project. So a double wammy on Allen County taxpayers - hey that's all of us Fort Wayne property taxpayers isn't it ??
John B. Kalb