Hotel incentives draw questions

A vote by the full Fairfield City Council is now all that stands between the would-be developer of an AmericInn hotel and roughly $700,000 in property tax incentives.

?We want this hotel,? but the city has to be able to justify the incentives, councilman Ron Adam said Tuesday during a meeting of the council?s economic development committee. Based on figures provided by city administrator Jeff Clawson, the committee agreed property taxes and hotel and motel tax generated by the new hotel would offset the additional incentives over 10 years.

According to Clawson?s data, the 10-year property tax rebate requested by David Harchanko of Apollo Development LLC would cost the city $702,000. That assumes the hotel?s property taxes will be $90,000 per year with 90 percent returned the first seven years, 75 percent returned the eighth year, 50 percent returned the ninth year and 25 percent returned the 10th year.

Under normal circumstances, the city could expect to invest $405,000 in the project ? $270,000 in the form of an automatic three-year tax abatement on commercial property and $135,000 in the form of extending water and sewer mains to the site.

The difference of $297,000 would likely be balanced by an estimated $250,000 in hotel and motel tax and $198,000 in property taxes paid by the hotel during the life of the incentive package.

Current property taxes on the land at the southwest corner of the Highway 34/Highway 1 interchange are $132 per year.

?Between those two [taxes] it?s actually a black number for the city with the $700,000 incentive package,? Clawson said. ?That doesn?t factor in the intangibles of what they do for the business community and the restaurants and all of those things.?

?I think it?s as safe an incentive proposal as a community is going to see,? said Fairfield Economic Development Association Executive Director Brent Willett, who has been working with Harchanko.

Ross Walker, owner of Best Western Fairfield Inn, however, felt financial and occupancy projections for the AmericInn are off the mark.

In 2009, Walker said Best Western?s average occupancy rate was 66 percent, meaning 18 rooms were still empty. AmericInn?s developer anticipates occupancy in the 63-room hotel to increase from 52 percent in the first year to 63 percent by the fifth year.

?We can?t fill our [rooms], and they can?t either,? Ross said. ?Where are those people going to come from??

For the complete article, see the Wednesday, July 21, 2010, printed edition of The Fairfield Ledger.