Development agreement may be on horizon for Washington hotel

WASHINGTON — City officials opted to hold off on a development agreement with a new hotel in Washington after a public hearing Tuesday night, but planned to resume discussions in a few weeks.

The agreement, as worded in a draft presented to the Washington City Council Tuesday night, would arrange for the city to pay up to $1.8 million in tax rebates to the developer over the course of 10 years, using tax increment financing, or TIF.

In exchange, the city would be able to hold the developer, Washington Hotel Group LLC, to a construction timeline that would finish the 54-room, $8.5 million building by Nov. 1, 2024, as well as a handful of other stipulations about the building’s construction, operation, and compliance with various laws.

The development agreement also gives details about the hotel’s plans, saying it would include a pool, total about 30,000 square feet, and employ a monthly average of eight full-time equivalent employees. The building will be located on the city’s east side, in an “urban renewal area” which the city plans to annex. That land is nestled between Ace-N-More and Dollar Tree on Highway 92, taking up two lots which the city plans to annex from the county.

If approved, the project would likely increase Washington hotel/motel tax revenue substantially, and potentially attract other businesses that would benefit from the expected boost to local tourism as overnight rooms become easier to find.

“The Wellness Park will have multiday tournaments, since attendees can stay overnight,” City Administrator Deanna McCusker said in a memo shared with council members Tuesday night. “They will eat meals here and spend other money while in Washington. I would anticipate more restaurants coming once a hotel is built.”

McCusker’s memo pointed out a handful of private projects in the city’s past to benefit from TIF-funded economic development grants. The list includes rebates of $390,000 for construction at Bazooka Farmstar, $100,000 for a stormwater retention area at Iowa Renewable Energy, and $450,000 for development of the Oakwood subdivision, among others.

At $1.8 million, the proposed tax rebate in Washington Hotel Group’s development agreement would be the highest in recent memory. Council members said the sticker shock gave them pause.

“We just received this, I think we need to study before we can discuss,” Council Member Elaine Moore said. “To be fair to us and our constituents, we need to review it.”

The same sentiment was expressed by every member of the council, even as most voiced their personal enthusiasm about the potential economic boost of the proposed hotel.

“This should’ve happened years ago,” Council Member Fran Stigers said, before making a motion to table action on the development agreement until the Oct. 17 meeting. “We don’t have enough hotel space in this town to keep them people coming to town … I want to be behind it, but like you say, these numbers, I’m not sure I understand them all, yet.”

Dave Waite, a head of D.W. Developments and listed agent for Washington Hotel Group LLC by the Iowa Secretary of State’s office, said the business had conducted its own hotel needs study before proceeding.

“We needed three things, a group of investors for equity, financing, and the community’s support,” Waite said. “I’m here asking for community support.”

Comments: Kalen.McCain@southeastiowaunion.com