Developers demand tax refunds and fee waivers to proceed with new hotel
The fate of a new hotel in the de facto McFarland Boulevard accommodation district is now in limbo.
Ascent Hospitality, the local company behind several of the city’s hotels, has officially withdrawn its request for economic aid from the town hall after weeks of negotiations without a deal.
The developers were seeking property tax refunds and a license fee waiver totaling $ 386,295 to help build a new $ 12 million Avid hotel.
But on Friday, Tuscaloosa attorney Bryan Winter, who represents Ascent Hospitality and Ajit Kher and Ajay Kher’s father-son team, confirmed to The Tuscaloosa News that the Khers withdrew their request after leaders of the town refused to take action during the July 13 Council.
Planned for a now empty lot adjacent to the La Quinta Inn & Suites on McFarland Boulevard – a hotel also developed and operated by Ascent Hospitality – the Avid Hotel, if eventually built, would bring 87 additional rooms to the area, as well as a Peloton fitness center and charging stations for electric vehicles.
It would also bring 120 construction jobs, around 17 new full-time jobs once it opens, and would only be the fifth Avid hotel, a brand controlled by InterContinental Hotels Group (IHG), to open in the state.
“Time is running out here,” Winter told the board. “We have to either go ahead with this or not.”
Winter said IHG was pushing Ascent Hospitality to develop the hotel or risk losing the rights to build what is now a relatively new brand in the Alabama market.
The economic incentive request was to obtain property tax refunds for the next 10 years or a total of approximately $ 260,000, whichever comes first, as well as a one-time exemption of $ 126,273 in construction costs.
It was a modified and scaled-down version of Ascent Hospitality’s original claim, which was originally offered in March and included similar discounts for lodging taxes.
But city staff and Mayor Walt Maddox, after reviewing Ascent’s first proposal, determined that the global coronavirus pandemic – along with previously approved incentive deals for other upscale and luxury hotels in the downtown Tuscaloosa – eliminated the city’s ability to reimburse accommodation taxes and that any agreement including them would not be considered.
“It is the mayor’s position that the city’s lodging tax revenues have not recovered significantly from the economic consequences of COVID-19,” Tuscaloosa City Attorney Scott Holmes said in a statement. June 2 letter to Winter. âThis, combined with its overuse as an incentive for economic development in recent years, makes it economically impossible for the town of Tuscaloosa (to encourage) development through the use of tax revenue from accommodation. “
So, in the spirit of “some are better than nothing,” Ascent Hospitality opted for a smaller economic break in order to expand the hotel and help rejuvenate what Winter called the economically depressed part of the city.
But now that plan is officially in limbo, Winter said.
âI think you can see this is a hard burnt area, and the burn is helping to be opportunities for crime,â Winter said. “Someone has to start economic development here and these people are the first people to really invest in the region.”
Another type of guest
To help justify the now-withdrawn request for economic aid, Winter said Ascent Hospitality is targeting its new project at a different customer than those targeted by previous developers of budget-incentive hotels.
Not only did Khers and Ascent Hospitality build the $ 10 million, 101-room La Quinta Inn & Suites which opened in 2017, but they also developed the nearby Comfort Suites on McFarland Boulevard in 2006.
Outside of the McFarland Boulevard area, the company also built the 89-room Comfort Inn & Suites on Jack Warner Parkway and funded the redevelopment and conversion of a run-down Skyland Boulevard hotel to Red Roof Plus +, located at next to the Howard Johnson by Wyndham hotel which the company also operates.
The Avid hotel, the company said, would be aimed at a similar clientele and was planned as what the company called an “upper-middle-range” option.
âOur hotel is going to introduce (to customers) a new premium product,â Ajay Kher said.
Although Winter said Khers’ deadline with IHG to start the hotel expired “yesterday,” the city council’s finance committee declined to make a decision, saying it needed at least a week, if not two. , to be comfortable acting.
And while the committee didn’t seem openly opposed to the request, first-term city councilor Matthew Wilson asked why Ascent was seeking help with this hotel when he hadn’t in the past.
âWhat motivated the desire to be encouraged on this project? Said Wilson, who represents District 1.
Winter offered a multi-faceted response, ranging from rising material costs to offering private investors a reason to spend capital in District 7.
âI think we have to tell people that we want them to be in this region and develop this region,â Winter said.
Asking and generally receiving
Before the request was withdrawn, tax and fee rebates for the Avid would have been around $ 13,800 per room, the lowest per room rate of incentives being considered by City Hall.
In contrast, the city’s first budget hotel incentive package has been extended to the $ 31 million Embassy Suites, located downtown at the corner of University Boulevard and Greensboro Avenue.
After overhauling its economic incentive policy to be in line with the new state law, the city opted to offer tax refunds and developer rebates over time. This not only tied the ability of development to function directly to getting aid, but also set a time limit for exactly how long it would maintain the tax breaks it had approved, determined on a case-by-case basis.
At 154 rooms for the Embassy Suites, the city reimbursed a percentage of the lodging and property tax generated by the new development which was capped at $ 4.89 million, or about $ 31,724 per room.
While the Embassy Suites package is set to expire in April 2025, its performance since opening means the discount total will likely be reached before that, allowing all future lodging and property taxes to remain in the vaults. from the city.
A $ 1.7 million incentive program was approved for the 91-room, $ 17 million Indigo Hotel on the Black Warrior River which opened in 2016. These incentives equate to approximately $ 18,727 per room and should end in October 2026 if this ceiling is not reached.
The $ 2.2 million in approved discounts for the 114-room, $ 19.7 million Homewood Suites by Hilton at the corner of Jack Warner Parkway and Greensboro Avenue is about $ 18,803 per room. They have been approved for nine years off or until the cash limit is reached.
A $ 3.5 million package has been awarded to the $ 27 million, 120-room AC Marriott which is nearing completion at the site of the former No.1 Fire Hall on Lurleen B. Wallace Boulevard . That works out to about $ 29,166 per room, and those discounts shouldn’t last more than seven years if the cap isn’t hit.
And last year, when council approved the economic incentive deal for the 112-room, $ 30 million upscale hotel called “The Alamite,” currently under construction downtown, those discounts equaled approximately $ 31,959 per room.
While the Alamite deal was the most expensive per-room economy incentive package for a hotel that city council has approved to date, the city’s finance team then warned that continuing to offer Accommodation tax reductions would eventually exceed the responsible limits.
“We want developers to make a profit,” Maddox said in March 2020, “but we want taxpayers to make a profit as well.”
Contact Jason Morton at [email protected] or 205-722-0200.