Below is a review of the proposed hotel project for Prairie Lakes and obligations by the Developer and the City.
Developer Obligations:
• Construct a $24 million, 124-room Hilton Garden Inn, with a Johnny’s Italian Steakhouse and approximately 9,500 s.f. of meeting space to be open by the end of 2018.
• Provide a guaranteed assessed valuation of $17 million on real property (building and improvements—excludes personal property) by January 1, 2019, and the associated property tax payment on that valuation.
• Maintain a minimum employment level of 50 FTE at competitive wages and benefits.
• Provide 30 hours a year of meeting space for events hosted by the City or approved non-profit groups in Sun Prairie.
• Provide a satisfactory loan guarantee on any public financing associated with the project.
• Be subject to penalties for failure to maintain employment criteria, and clawback provisions for any shortfall in valuation.
• Any changes in flag or hotel brand must be approved by the City.
• Restricted from sale of the property or any vacant land without City approval.
City Obligations:
• Provide an incentive of $4.1 million upon opening of the project.
• No room tax revenue is obligated as part of this agreement.
Additional Incentive:
• An additional incentive can be earned by the developer if additional new assessed valuation is realized in TID #9 on qualified properties of at least $5 million on real property (buildings and improvements—excludes personal property) in assessed value by 2022. The maximum additional incentive available is $850,000.
• City of Sun Prairie will pay the eligible incentive to the developer over time during this same period, as additional taxes are paid on new projects after other obligations are paid.
Staff Recommendation:
I am recommending approval of the development agreement as drafted, subject to final review by the City’s legal counsel.
This recommendation is based on several factors including but not limited to:
• A quality hotel project with an upscale restaurant and meeting space was an objective established by the City Council as part of the City’s Hotel Feasibility Study done in 2013.
• The desirability of the brands involved, namely a Hilton Garden Inn and a Johnny’s Italian Steakhouse.
• A positive review by the City’s hospitality consultant, Hunden Strategic Partners, of the proposed project and assistance request.
• Confirmation of the financial viability by the City’s financial consultant of funding this project in TID #9.
• A positive review of Heart of America as a Developer, as well as their recent projects, including the quality of other developments already completed by the Developer.
• The addition of substantial tax base to the City that would exceed other hospitality related uses without having to create or extend another TIF district.
• The addition of meeting space for local receptions and meetings for residents and local businesses, as well as making Sun Prairie more attractive for events at facilities such as the Sun Prairie Ice Arena.
• The project is likely to be a catalyst for additional development in TID #9 and the Westside Neighborhood area.
• Immediate revenue to the City through collection of room tax.
• Anticipated to create substantial positive economic impact during construction as well as to the Westside Neighborhood area once the facility is open.
• Maintains the expectation of the City and the Developer for quality architecture in this area.
• It is consistent with the City’s Comprehensive Plan as well as the Developer’s plans for this area.
Renderings of Project - http://www.cityofsunprairie.com/DocumentCenter/View/4331