Today's Wichita City Council vote on $12 million in industrial revenue bonds for a new downtown hotel is a formality or a lesson, depending on the players.
It's another step in the process to Jim Korroch, developer of the Marriott Fairfield Inn at WaterWalk. The hotel will host its first guests on June 17.
"All tomorrow is is a formality," Korroch said Monday. "There's no new negotiations, nothing along with the projects. The IRBs have been approved."
Through letters of intent from the council, hotel developer Four-G LLC, owned by Jim Korroch, would get $2.5 million from the city to help pay for construction. It would be paid back by the guest tax generated at the new hotel over up to 20 years.
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The IRB letter of intent, for up to $12 million in financing, also allows the construction, furnishings and other purchases to be exempt from sales tax. That's worth $328,945, city reports show.
The vote is a teaching moment for Wichita City Council member Jeff Longwell, who raised the possibility Friday during a city budget study session that the IRB vote might go against Korroch today.
"Do I think it will? No," Longwell said Monday. "My guess is just one no vote.
"But I want people to understand what it means when they vote no just to make a statement."
That likely no vote is from new council member Michael O'Donnell, who said Monday he favors IRBs for industrial recruits, but not hotels.
He dismissed downtown as a City Hall "pet project."
"I don't think a hotel is classified as an industry," O'Donnell said. "My problem with the deal is that they went ahead and built the hotel without getting these IRBs approved.
"Now if we don't vote for it, they have to find financing. Of course, the developer feels confident he'll get four votes, so it's not that big of a deal because of the atmosphere City Hall has created when approving anything for downtown.
"We set different precedents down here if it's a pet project or not, and I think anybody would admit downtown is a pet. Things that don't pass in other areas of town pass downtown."
Korroch said Monday the hotel will retire the IRBs in a year. And Longwell said the property tax revenue from the hotel — an estimated $270,000 in the first year — will elevate the WaterWalk tax increment financing district to break-even status.
"When developers are generally looking for IRBs, they're looking for a property tax exemption," Korroch said. "The only incentive we get is purely a matter of sales tax exemption.
"The other part of this is the IRBs are going to be satisfied in a very short amount of time. They're not going on ad infinitum."
Longwell praised the project as essential to the retail and entertainment district the city is developing downtown.
"It's an absolutely fantastic project that really helps jump-start that development," he said.
And a boon for the WaterWalk TIF district, Longwell said, which has allowed revenue from new property taxes generated at the development to be plowed back into the project.
"Any additional development helps us get to a surplus in a hurry. We've done it with a couple of TIFs, but we don't get too much of this."
Korroch's hotel joins Jack DeBoer's renovated Hotel at WaterWalk downtown, an 88-suite boutique hotel.
The improvements are part of a move by downtown redevelopers to add up to 400 new hotel rooms to help Wichita recruit more conventions and major sporting events, such as NCAA men's regional basketball.
"This is a truly great project," Longwell said, "but there will be a no vote only because... I don't know what he's trying to say."
"They need to have their ducks in a row out in front of the project, just like we'd expect anyone in our own private lives," O'Donnell said.