11 - Economic Development Agreement with Paris Hotel, LP for TownPlace & Fairfield Inn Development

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Item No. 11 TO: City Council Grayson Path, City Manager FROM: Stephanie H. Harris, City Attorney SUBJECT: Economic Development Agreement with Paris Hotel, LP for TownPlace Suites and Fairfield Inn Development DATE: June 13, 2022 BACKGROUND: On February 28,2022, City Council passed Resolution No. 2022-014 adopting a Chapter 380 Retail Economic Development Program (the "Program"). Paris Hotel, LP has made application for incentives under the Program in connection with their construction of a dual branded TownPlace Suites and Fairfield Inn hotel on property located at 3005 North Main in the city. Both hotel brands are by Marriott. STATUS OF ISSUE: The project qualifies for incentives under the program. The attached proposed economic development agreement provides the following incentives: Five Annual Property Tax Grants in an amount equal to 100% of the city's M & 0 property tax assessed in the incremental taxable value attributable to the project. The grants cover the years 2024, 2025, 2026, 2027, and 2028. Three Annual Sales Tax Grants in the arnount of 50% of the sales tax receipts in the applicable grant period. The grants cover the years 2024, 2025, and 2026. As consideration for these annual grants, Paris Flotel will invest $12,000,000.00 in construction of the project, and shall open the hotel no later than December 31, 2023. It will maintain the property as a TownPlace Suites and Fairfield Inn for the duration of the agr -cement. Each year for which a , I ,rant is sou4ht,, the com aaClull attached to the agreement as Exhibit B. Finally, the City will be entitled to ten room nights per year under the conditions set forth in the agreement. BUDGET: The city will obligate itself to pay three annual sales tax grants and five annual property tax grants. The grants function essentially as rebates so the city will not have to dip into existing property tax revenues to pay them. Regarding the sales tax grants, the budget impact is difficult to determine at this time. Hotels usually generate little in the way of sales taxes, but the company has plans to include a bar in the development, so that will impact sales tax revenues in a way yet to be determined. Of course, while hotel occupancy taxes are not strictly speaking a budgetary item wctmj,�= h imww�-t, hm project, once open, should be a welcome new generator of HOT.