Washington hotel development agreement passes

WASHINGTON — City council members voted unanimously Tuesday night to approve a development agreement with Washington Hotel Group LLC after weeks of debate.

The vote came after two attempted amendments — one of them successful — to the document, which tees up the developer for a municipal tax rebate of up to $1.5 million over the next 10 years.

“I’m very gracious to all the work that’s been done by the city council and some of the people behind the scenes,” Washington Hotel Group co-founder Andy Drahota said. “We’re excited for the project to come through.”

The first proposed amendment would have lowered that maximum to $1.2 million, in a bid for the middle ground between project investors and budget-mindful constituents. Proposed by Council Member Elaine Moore and seconded by Bethany Glinsmann, the motion failed on a 2-4 tally with no other votes in favor.

While developers have previously argued $1.5 million were required to make the finances pencil out, Moore said she felt the compromise was worth a shot.

“I was voted in by people at-large in this city, and I have had a lot of people that say ($1.5 million is) more than it should be,” she said. “I am 100% for the hotel, and the people that came to me, they are as well. They just feel the $1.5 (million) is a lot … I am their voice, I am voicing that.”

A second amendment motion, which passed unanimously, clarified that the city would rebate no more than $150,000 to the developer per year, rather than assuring a 100% tax rebate until hitting the maximum.

City Administrator Deanna McCusker recommended the change. She said it set the city up to receive roughly $20,000 a year from the property’s taxes after rebates, whereas a 100% level would bring in $0, but stop rebates after eight or nine years, rather than 10. Either approach would max the tax breaks out at $1.5 million, but the first option would net the city more money overall, according to McCusker.

“The city will end up with more money at the end of 10 years, doing it that way,” she said. “If it was 100%, at the end of 10 years, we would have had almost $116,000. With (the) $150,000 annually, we would keep that 20 thousand-plus, and have $206,000 at the end of 10 years.”

Once complete, the hotel’s annual taxes due to the city will come in around $79,419, according to municipal memos. The current, undeveloped property only pays around $399.

With the green light given, developers plan to start construction work after signing an amended development agreement. Once the hotel opens, municipal and business leaders say it’ll be an economic windfall for Washington.

Directly, the 54-room, three-story hotel would have its own labor budget of around $360,000. Indirectly, a study conducted by the hotel group found the business would add around $500,000 worth of traffic to the community’s restaurant scene, coupled with another half-million in local entertainment revenue.

“This could attract more visitors to our area, which will increase our tourism revenues through things like weddings and sports events and overflow from the Iowa City and casino markets,” Washington Economic Development Group Director Mary Audia said at a council meeting last month. “We just need more nice places for people to stay.”

Comments: Kalen.McCain@southeastiowaunion.com