The proposed addition to The Broadway Columbia hotel will attract more visitors to downtown, Convention and Visitors Bureau Director Amy Schneider said Thursday night to the Tax Increment Financing Commission.
David Parmley, the owner of The Broadway hotel, wants to open a second tower on the lot behind the existing hotel at 1104 E. Walnut St., next to the Short Street Garage. A vacant office building and a parking lot are on the property now.
The commission met for the final time before a scheduled public hearing to discuss Parmley's proposal to receive Tax-increment financing, known as TIF, to help build the addition. The public hearing will be held at 6 p.m. on Oct. 4 at City Hall.
Parmley applied for tax-increment financing assistance in April. He is asking the city for a little over $2 million in assistance to defray some of the $20 million projected cost of building the second tower. The commission members were divided over whether Parmley needs the assistance to build the addition.
Parmley previously said building the second tower wouldn't be feasible even with $2 million in TIF help, according to Missourian reporting. He said he will seek additional financing before moving forward.
Former Assistant City Manager Tony St. Romaine is working as a consultant for the city through the TIF process. He said one option Parmley is considering is to set up a new Community Improvement District that only includes his hotel, which would allow him to impose an additional sales tax at his hotel. St. Romaine said Parmley could use that revenue to reimburse himself for construction costs.
The ground floor of the proposed eight-story tower will include meeting rooms, which Parmley said are in short supply in the existing tower and in Columbia as a whole, according to previous Missourian reporting.
The meeting rooms would be perfect for small-to-medium-sized meetings, Schneider said.
"Columbia is an expert in bringing in small to mid-size meetings," Schneider said. "I do not think this would take away business from other hotels. It will actually allow us to bring in other conventions, other trade shows that we may not have been able to bring in."
Katie Essing, the executive director of the Downtown Community Improvement District, said that she expects the proposed addition would bring more visitors downtown to shop and dine.
Parmley pushed back on the idea that he would be taking $2 million from the city, asserting that the money comes from tax revenue created entirely by his development.
TIF works by setting aside the difference between the taxes the developer would pay based on the new, higher property value, and what the developer would pay based on the original, lower property value. This money is designated payments in lieu of taxes, known as PILOTS, and is set aside in a designated fund.
The money in the fund either goes directly back to the developer or is used to pay off loans the developer has taken out. However the fund is managed, the developer will use that money to pay for construction costs. The fund can remain open for up to 23 years.
According to the cost-benefit analysis submitted to the city by Development Dynamics, LLC, a consulting firm working on Parmley's behalf, the payments in lieu of property taxes from the second tower will amount to over $4 million after 23 years.
Over that 23-year period, the proposed addition would bring around an additional $10 million in taxes to the city and county, Patrick Nasi of Development Dynamics said.
A developer must meet certain conditions to qualify for TIF assistance, according to the state's TIF Act. The developer must prove that his or her project is economically infeasible without assistance. The developer must also prove that the property he or she plans to develop fits at least one of three categories: “blighted area,” “conservation area” or “economic development area.”
Parmley said the property he hopes to develop can be classified as a conservation area, meaning the property is more than 35 years old and is in danger of becoming run down and posing a threat to public health or safety.
The office building on the property was built 56 years ago, Parmley said. It has been vacant for over a year, since Parmley ended his lease to use the building. He said he rented the building in 2012 to serve as temporary office space for The Broadway hotel.
He said he rented the space at a significant discount, $9 per square foot, because the owner of the property had such difficulty renting out the space. The building had been occupied for a total of 5 years between 2004 and 2012.
The assessed value of the property has stayed essentially the same since 2005, Nasi said, meaning the city is bringing in little revenue from it.
Maria Oropallo, a member of the TIF Commission, expressed skepticism that the property was as undesirable as Parmley said.
"You can't hold a property for five years and then say 'nothing's happened,'" Oropallo said. "If this is such a disaster, why hasn't the city inspected this building?"
Oropallo said she was concerned the commission would set a dangerous precedent if it approved Parmley's proposal.
"The message is, 'let your building go to rot, rent it to someone for five years,'" and then apply for TIF assistance because the property is not being developed, Oropallo said.
Andrew Beverly, another commission member, said the fact that Parmley could rent the property at such a discount indicates the property is in need of development.
"All the indicators are that it's a building and it's a property that's fallen on hard times, and relative to the area surrounding it, it's in need of redevelopment," Beverly said.
Referring to the commission approving Parmley's proposal, Ernie Wren, a member of the commission asked, "Is anybody really going to step up to the plate (and develop the property) if this doesn't happen?"
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