Plan Commission recommends granting permit for new hotel in downtown
The Stevens Point Plan Commission recommended approval of a conditional-use permit for Cobblestone Hotels to build a four-story, 61-unit boutique hotel in the downtown area at its Monday, July 5, meeting.
Cobblestone Hotels, a national chain of boutique-style hotels, seeks to build an upscale hotel on a lot, currently a parking lot, on Centerpoint Drive next to the Great Lakes Educational Loan Services call center.
“This is the development pad that was identified (for construction) when the mall reconstruction project got underway. It’s between Great Lakes and Shopko where Third Avenue extended,” said Michael Ostrowski, director of Community Development.
“The request is for a four-story, 61-room hotel; hotels are a conditional-use in every zoning district. The property is currently owned by the (Stevens Point) Redevelopment Authority and will be transferred to Cobblestone Hotels,” said Ostrowski.
“Probably two-thirds of the building will be made up of masonry material – brick mainly – and some block on the lower portion of the building,” he said. “Then on the top they were going to utilize EIFS (exterior insulation and finishing system) along the top. It’s a fairly streamlined building, very modern looking which is fitting for the era of construction in the downtown.”
In April, the Common Council voted 10-1 to approve an approximate $1 million developer’s agreement package with Cobblestone to build the hotel. The agreement included a developer’s incentive in the downtown tax incremental district 6 (TID 6) of $850,000, all of which is expected to be paid back in full in 11 years through tax increment.
According to the developer’s agreement, Cobblestone will receive an $850,000 upfront incentive and be able to purchase the land – valued at about $150,000 – for $1, said Corey Ladick, Stevens Point comptroller/treasurer.
“The total incentive package is right around a million dollars,” he said. “That money will be recouped over 11 years, and we’ll 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.”
“After the hotel is completed and it’s ready for occupancy, we (the city) would provide the $850,000 incentive and then the way that money is recovered is through the property taxes that are paid on the property,” said Ladick. “Basically, with it being in a TIF district, those property taxes would be going to the TIF District. That’s how it would be paid back over the 11 years, plus interest.
“So, it’s not that they are paying taxes then paying something else on some other sort of city loan, but the way the city gets the return on its investment, or recovers that money, would be through the additional property taxes it generates,” Ladick said.
“Then also, as part of the developer’s agreement, Cobblestone has agreed to have a guaranteed minimum tax payment,” he said. “If, for instance, the assessment would go down or even if property tax rates went down, you would still have them making up the difference. So, the city is guaranteed to get at least $102,500 in property taxes for the first 11 years.
“Then, over the 11 years, that’s what repays that. After the 11 years, that money has been recovered with interest and at that point we have about five years left on TID 6 and the money can be used to help repay some of the money the city has had to lend it,” Ladick said.
While it is true Cobblestone will pay back the developer’s incentive package through the taxes, it would normally be paying the city if no package had been offered, that’s Cobblestone’s benefit to a mutually-beneficial developer’s agreement.
“I would say that the developer’s agreement and the arrangement is beneficial to both the developer and to the city, and there have been developer’s agreements in the past that we’ve done where really all the benefit … goes to the developer,” Ladick said. “(A developer’s agreement) should be beneficial to both parties.”
City officials also said without the developer’s agreement perks, Cobblestone wouldn’t have chosen Stevens Point to build their next hotel because there is a long list of other communities who would.
“Would it be more beneficial (for the city) if they were to build it and not ask for any TIF money? From the city’s standpoint, if the development were to still go through, then yes. However, realistically, if we wouldn’t have been able to provide anything, then that development wouldn’t happen,” Ladick said.
The Common Council will vote on the conditional-use permit at its next regular monthly meeting at 7 p.m. Monday, July 18.