20 - Economic Development Agreement with Emerald Hospitality LLC Home 2 Suites by Hilton

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Item No. 20 TO: Mayor, Mayor Pro Tem, and City Council Grayson Path, City Manager FROM: Stephanie H. Harris, City Attorney SUBJECT: Economic Development Agreement with Emerald Hospitality, LLC Home2 Suites by Hilton Development DATE: June 27, 2022 BACKGROUND: On February 28, 2022, City Council passed Resolution No. 2022-014 adopting a Chapter 380 Retail Economic Development Program (the "Program"). Emerald Hospitality, LLC has made application for incentives under the Program in connection with its construction of a Home2 Suites by Hilton hotel with event space on property located at 3143 NE Loop 286 in the city. NOTE: Emerald Hospitality is owned by Council Member Pankaj. He has filed a conflict of interest affidavit and will recuse himself from discussion and voting on this item. 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 & O 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 amount 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, Emerald Hospitality will invest $14,750,000.00 in construction of the project, and shall open the hotel no later than December 31, 2023. It will maintain the property as a Home2 Suites for the duration of the agreement. Each year for which a grant is sought, the company will furnish requests for payment on forms provided by the city and attached to the agreement as Exhibit B. The City will be entitled to ten room nights per year under the conditions set forth in the agreement as well as five days per year use of the event space. NOTE: The agreement is virtually identical to the agreement City Council approved on June 13, 2022 between the city and Paris Hotels, LP for the construction of a Marriott dual branded hotel on North Main St. save for the addition of language regarding the event space. The incentives contained herein are the same.