By John Martin
via – Evansville Courier-Press
EVANSVILLE — Evansville needs the commerce and jobs a Downtown convention hotel will bring, and the project must not be delayed any longer, Mayor Lloyd Winnecke told the City Council Monday.
The city is to provide $37.5 million of the development’s $70 million cost, according to a predevelopment agreement with HCW of Branson, Mo. Of the city’s share, $20 million is a direct contribution to construction of the 253-room Doubletree by Hilton, which will be owned and operated by HCW. The remaining $17.5 million is to be for a 330-space parking facility, connections between the hotel property and The Centre and Ford Center and storage for the Ford Center.
HCW also plans a tower with 78 upscale apartments, and a restaurant on the property. The hotel is to include 6,400 square feet of ballroom space.
Bonds issued by the city are to be retired using tax increment financing, Casino Aztar funds and food and beverage taxes, according to city officials. The City Council was told at Monday’s called informational meeting that those three funds generate nearly $18 million in net revenue in an average year, roughly $8 million of which is currently set aside to retire debt on the Ford Center.
Debt on the hotel development’s cost is projected to be about $2 million per year for about 25 years, city financial consultant Robert Swintz with the London Witte Group.
Winnecke said the city’s desire to have an Indiana University School of Medicine facility built Downtown in the next few years — a project that might also involve city incentives — should not prevent the hotel project from going forward.
Committees are currently studying potential locations, academic plans and costs associated with an IU facility. Winnecke said IU will request state funding, but that won’t occur until the next state budget comes up for consideration in 2015.
Winnecke said the project could be “transformative” for Evansville. “We’re very hopeful it will come through for the community. But there’s no guarantee of a medical school. We shouldn’t wait on the hotel for the outcome of the medical project … A convention hotel will be a great inducement to bring a medical facility Downtown.”
The hotel development will create both permanent and construction jobs. CEO Rick Huffman of HCW said a hotel with 253 rooms likely will create the same number of jobs. He said the conference center will bring 8-12 full-time and 35-45 part-time positions, and the restaurant and retail space will also have employees.
Public comment during the City Council meeting generally supported the hotel project and especially its promise of jobs.
“I have a strong belief Downtown is, was and will be worth the effort,” Bruce Griffin said.
“We need that hotel,” Jerome Stewart said. “There’s no doubt about it … When parents struggle for the lack of gainful employment, children suffer as well.”
Jim Braker said the community needs jobs, but he’s concerned about the revenue from Evansville’s casino holding steady in the next few years as competition for players increases.
Charlene Williamson praised the development’s plan for apartments, calling that aspect “an ingenious addition.” She and many others in the audience wore orange stickers which said “Build Them Both,” referring to the hotel project and IU facility.
The Rev. Adrian Brooks Sr. said he supports the hotel development, but he urged the city to attempt to negotiate down its subsidy and the saved revenue to demolish more Center City structures and upgrade parks and sidewalks. Brooks urged that 20 percent of business on the project be set aside for women- and minority-owned businesses and a third of its employment go to Center City residents.
Huffman vowed that women- and minority-owned businesses will be involved.
Most of the City Council’s questions dealt with financing. Conor O’Daniel, D-At-large, asked repeatedly if the city could afford incentives for both a hotel project and a medical school, which would require substantial Downtown real estate.
“Could we afford it based on the cash flows you show?” O’Daniel asked Swintz. Swintz replied that much depends on the pattern of interest rates in the next few years.
Dan Adams, D-At-large, and Finance Chair John Friend, D-5th Ward, urged that the project have an internal auditor who is independent of the developer.
The Evansville Hotel Lodging Association, consisting of owners and operators of 14 local hotels, does not object to the building of a convention hotel but it is “adamantly opposed” to the level of public funding, said Jacob Pendleton, immediate past president.
Pendleton said the association “is strongly in favor of increasing our tourism industry” but “we believe that subsidizing private development with too much public money will ultimately put our industry, and our city, at risk.”
Bob Warren, director of the Evansville Convention and Visitors Bureau, conceded that some “shifting” in hotel business will occur with a new Downtown hotel, but overall hotel business in the city will increase 30 to 40 percent if the property is built.
Hunden Strategic Partners, the city’s hotel project consultant, concluded that the city has a sizeable total number of rooms, but they aren’t in the right locations or the right quality to bring convention business.
Pendleton said Hunden’s report validates his association’s position. Rob Hunden with Hunden Strategic Partners argued the opposite, saying the convention hotel plan being considered “is designed to make the pie bigger” for the whole hotel market.
Officials with the city and HCW continue to negotiate a final development agreement, which is subject to Evansville Redevelopment Commission approval. Bonds for the public share must be approved by City Council. Winnecke said he’d like to break ground on the project in late summer.