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Wichita to take out-of-ordinary step on downtown hotel proposal

  • The Wichita Eagle
  • Published Sunday, August 7, 2011, at 12:08 a.m.
  • Updated Sunday, August 7, 2011, at 7:13 a.m.

The Wichita City Council will take the unusual step Tuesday of considering a letter of intent for a public-private downtown hotel partnership before it holds a public hearing on the proposal.

The council will be asked to approve a letter of intent to support the $30 million, 117-room Ambassador hotel project at Douglas Place on the southeast corner of Douglas and Broadway.

The building is the site of the historic 1958 sit-in at Dockum Rexall Drugs store's segregated lunch counter, the nation's first youth-led sit-in that produced widespread changes.

City Manager Robert Layton said the developers are seeking a nonbinding commitment from the council before a proposed Sept. 13 public hearing on tax increment financing.

"It's definitely not our normal order," Layton said. "The developers have an option on the property that expires in the near future."

The developers include Dave Burk's Marketplace Properties; Summit Holdings, which is made up of Key Construction management; and Tulsa developer Paul Coury's Coury Properties.

The proposed hotel incentives plan is the first under new public-private partnership guidelines in the Downtown Development Incentives Policy.

The city's evaluation team has recommended the incentives be approved, but Layton said Ambassador developers understand that any action Tuesday isn't final.

"They wanted some indication where the council is on the package. They understand the risk, that the council won't finalize this until after the public hearing," Layton said.

According to city documents, Ambassador developers are seeking:

* Tax increment financing and capital improvement program funding for a 250- to 300-space public parking structure and urban park, not to exceed $7.57 million.

* Industrial revenue bond financing and a sales tax exemption on renovation construction costs and furniture, fixtures and equipment, not to exceed $22 million.

* Special assessment financing for facade improvements and lead-based paint/asbestos remediation, $1.5 million.

* Reimbursement of 75 percent of the hotel guest tax generated by the Ambassador for 15 years.

* Pay-as-you-go pass-through of a 2 percent Community Improvement District sales tax.

According to city documents, the sources of funding for the city incentives are:

* $3.325 million in general obligation tax increment financing bonds to pay a portion of the parking garage costs.

* $4.245 million in general obligation bonds to pay a portion of the parking garage and urban park costs.

* An estimated $1.5 million in special assessment general obligation bonds to pay for the Douglas building facade improvements and asbestos/lead paint abatement.

* 2 percent Community Improvement District sales tax revenue. City officials say developers estimate the district will generate $60,000 in revenue annually over its 22-year life.

* 75 percent of the transient guest tax revenue generated by the hotel.

Reach Bill Wilson at 316-268-6290 or bwilson@wichitaeagle.com.

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