Finance Committee likes idea of boutique hotel in downtown
The Stevens Point Finance Committee unanimously recommended approval of a developer’s agreement Monday, April 11, with Cobblestone Hotels, a national chain of boutique-style hotels, to build a four-story, 60-unit hotel in the downtown area of Stevens Point on Center Point Drive.
The agreement includes a developer’s incentive in the downtown tax incremental district 6 (TID 6), which is currently in dire straits and being supported directly by the city’s taxpayers, of $850,000, all of which is expected to be paid back in full in 11 years. After that time, all tax increment revenue from the development will go toward paying down the downtown district’s debt.
“The developer’s incentive is really structured to be beneficial for the developer as well as the city. So, the developer would be getting an $850,000 upfront incentive, plus they would also be getting the land for $1 – we estimate the value of the land at about $150,000 – so, the total incentive package is right around a million dollars,” said Corey Ladick, Stevens Point comptroller/treasurer.
“That money will be recouped over 11 years and well also recoup that with interest at an interest rate of about 4.2 percent. So, that is actually significantly better than what we can get keeping our money in the bank or investing it in other places,” Ladick said.
The city benefits from the agreement on the back side of the agreement after the 11 years. At that time, there will be five years left on the life of TID 6. Meaning the city will have five years to pay down its downtown district’s debts, otherwise the taxpayers will have to foot the rest of the bill.
“Then for the remaining five years, we’ll have five years of pure increment into TID 6. Which certainly will really help that (district) out quite a bit. Hopefully, that can help TID 6 repay the city general fund some of the money it’s owed,” Ladick said. “As far as the numbers, or benefit to the city, the last five years of increment I’ve estimated at $525,000, and the interest amount we’d get off of that would be about $265,000. So, you’re looking at about $790,000. That’s what I’m talking about when I say, ‘there’s benefits to the developer, but there’s also benefits to the city, benefits to the (district) and hopefully help us to shore up TID 6.’”
Another benefit the city will receive from having another hotel in the city limits will be an increase to the room tax, a taxing mechanism on room rentals that goes to fund capital improvements that seek to boost tourism, as well as fund Stevens Point Area Convention and Visitors Bureau programs.
“The other main benefit we have with this development is because it is a hotel, there will also be room tax involved. The initial estimates (say) that we will collect about $89,000 a year in room tax. That, of course, depends on room rates and occupancy. Of that amount, the city keeps 53 percent and then 47 percent goes to the Convention and Visitors Bureau, which also serves a public good as far as promoting the community and bring tourists and visitors to the area,” Ladick said.
“I got very excited when I saw the proposal for both the Centerpoint site and the Lullabye site. I think it looks like a wonderful project and would certainly be beneficial to the city and I think that any progress in a positive way is good for the community. That space has been empty for far too long,” said Mary Doudna, a longtime resident of Stevens Point.
Denise Mrozek, District 2, said she pulled some hotel occupancy statistics through Smith’s Traveler’s Report, a comprehensive syndicated survey and report examining the factors, perceptions, trends and conditions of tourism, to gather data on Stevens Point’s hotel occupancy rates.
“One of my first questions was, ‘is there a need?’” said Mrozek. “It’s a great project and I think everyone looks at the revitalization of downtown as a great thing, but to me it also has to be the right fit and I do not believe another hotel (is needed).”
According to the occupancy figures she found, “going back to 2010, we’re looking at an average of about 40 percent. Yes it does pick up into June and July, with June at 60-percent occupancy and some at 56 percent. But then we (see) 52 percent, 49 percent, 44 percent, 36 percent.”
She said she is concerned about investing taxpayer dollars into a hotel that might not do well and thinks a hotel would just transfer business from other hotels rather than bring new business to the area.
“I’m opposed to this, this is unnecessary and an unfair competition with existing local motels,” said Reid Rocheleau, Whiting.
Rocheleau said he thinks, because Cobblestone would get tax incentives, they could lower their rates and turn it into a “flophouse” and hotels in downtown areas aren’t a good idea. He also said if they shut down, the building could be used as a rooming house.
“If hotels, motels are such a great idea downtown, the Whiting Hotel would still be in business,” Rocheleau said.
“First of all, I speak not only as an alderperson who cares about my city, but also as a downtown business owner who’s been down there for about eight years,” said Mary McComb, District 9, owner of Sugar Doll. “So, some people may want to argue that I’m simply thinking of my own business, but I’m in touch with a lot of downtown business people, and we’ve been talking for as long as I’ve been down there about the need and the desire for a small hotel downtown. This is something the ADB (Association of Downtown Businesses) has been discussing as a group and people have been discussing it informally.
“It strikes me that this sort of development is what we’ve been looking for in (TID 6). We’ve had a lot of things proposed for that area that have not turned out for various reasons, but this – when those of us downtown heard about it – we were like, ‘wow, finally,’” said McComb.
“I’m not sure, as I’ve heard discussion about this proposal, the people of Stevens Point exactly understand the synergy and critical mass that can come from increased competition. Frankly, bring on another candy store. I’d be happy for it,” she said. “I get a sense that people in Stevens Point are really afraid of competition, and I know from living in larger cities, competition is a good thing. Critical mass is a good thing.
“Second of all, I’ve done some research into Cobblestone. Cobblestone is a firm headquartered in Wisconsin and their emphasis is on smaller hotels in small cities,” McComb said. “I checked out their reviews on the most popular online review sites and the reviews are, without exception, very, very positive. They get great reviews from people. This is not some shady outfit to make a lot of money and close down and turn into a rooming house. This appears to be a quality hotel chain and a group that’s concerned about its image.”
McComb said granting Cobblestone the developer’s agreement is a good investment for the city and will have a rippling effect through the downtown.
“We’ve been involved in over 80 hotel projects. So, this is all we do, this is all I’ve done since I was 20 years old. We have never turned one into a flophouse, we have never given one back to a bank,” said Brian Wogernese, CEO of Cobblestone Hotels.
“We currently have about 15 under construction in several different states and one that’s very (similar) to this is in Chippewa Falls,” he said. “We currently franchise 79 of the Cobblestone brand, we own the franchise, but we also operate 67 hotels in 12 different states with eight different brands. So, we have a lot of experience, this is not our first go-around with this.
“The one thing you have to look at is that this product doesn’t exist here. What we want to do is something that’s closer to the Jefferson Street Inn in Wausau, more of a boutique,” he said.
“I’ll answer the earlier question, ‘if it’s such a good idea, why hasn’t anybody done it?’ If you’re in the hotel business and you want to buy a franchise – be it from Hilton, Holiday Inn or whoever it is – they don’t want to be (in downtown areas). They want to be where the traffic is. So, the franchises dictate more where these hotels go than even the franchisee,” he said.
“In this case, this is our thing. This is our model – small town, downtown – and we really don’t have a lot of competition in this market. So, it’s a niche. We started the brand in 2008 and we’re now at 79 open or under construction. We’ve been really busy under radar and the big brands aren’t really paying attention to us too much because they just want ‘bigger, better,’ they want traffic counts, the highway locations and things like that,” he said.
“Usually when we have developers come in, they come in and tell us how great they are and how successful they’ve been around the state or the county and I always question, ‘then why do you need money from the city?’” Tony Patton, District 8, asked of Wogernese.
“Well, I can tell you that out of the 15 projects we have going now, they all have some type of incentive. We have a back log of about 50 projects, and I can tell you which one’s go to the top of the list,” Wogernese said.
Wogernese said the company recently had a project ready to go in northern Minnesota but the city refused any and all incentives, and they took the project to the next on the list of potential build locations.
“There’s more small towns for us than larger communities, everybody’s competing in the big markets. We kind of get to pick and choose which one we go with. That being said, this is close to home. It only takes me an hour to get here and I also don’t want to get into a project that close to my back yard that doesn’t make sense,” Wogernese said.
Patton moved to recommend approval of the developer’s agreement, and the Finance Committee voted unanimously in its favor.
The Stevens Point Common Council will discuss and possibly take formal action on the agreement at its regular monthly meeting at 7 p.m. Monday, April 18.