The Wichita City Council on Tuesday signed a petition establishing a community development district for the historic Broadview Hotel.
Council members voted without comment to sign the city's name to a petition in favor of a community improvement district that would let Drury Southwest add 2 percent in sales tax to all transactions at the Broadview for 22 years.
A public hearing date on the CID has not been scheduled.
The CID tax would generate additional revenue for the hotel, which is undergoing a $29 million renovation that began earlier this year. The hotel is scheduled to reopen in 2011.
Never miss a local story.
The city owns hotel property that it leases to Drury, making its signature essential for creation of the district.
Dennis Vollink, president of Broadview owner Drury Southwest, said the CID will help the company expand the Broadview renovation and compete in what he believes will be a tight downtown market.
"It's a good option that wasn't available to us when we initiated the project," Vollink said.
Workers have discovered more structural work than the company expected, Vollink said. Plus, Drury has added almost $2 million to its restaurant plans, to be operated by Wichita restaurateurs Jeremy Wade and Ben Arnold.
The CID revenue will be used to handle debt service on some of the expanded work, Vollink said.
And it will help the hotel remain competitive, Vollink said, in a slowly recovering Wichita economy.
"Can you really get the extra 2 percent in your price structure in the market?" Vollink asked.
"The nature of the hotel market is very competitive like all the rest. The CID revenue will help cover the restaurant and hotel that are both in very competitive markets.
"I think you are limited in the maximum charges for rooms and in your restaurants by the market. This is definitely a 2 percent pass-through to the customer, through a different mechanism."
Vollink said that room, lobby and restaurant renovations are on schedule at the hotel.
However, the structural improvements are about a month behind, thanks to the discovery of some unexpected footings in the building.
Community improvement districts are a revenue-raising device for businesses that want to publicly hold the line on base prices, according to Ed Flentje, a professor at Wichita State's Hugo Wall School of Urban and Public Affairs and the former interim Wichita city manager.
"I guess if you're a developer it's an attractive revenue stream and you can say 'Our rates are $100 a night plus taxes,' " Flentje said.
"... You would think free marketers would think this is government intrusion, but it's government intrusion at the request of the free market."