Allen County commissioners opened the door Tuesday morning for construction of a new hotel at the east edge of Iola.
Commissioners voted unanimously to underwrite 50 percent of the cost of land for the facility, with the provision the $167,500 be repaid through a 2 percent Community Improvement District tax that will be assessed to hotel guests.
Bill Michaud, the hotel developer, predicted the CID income would repay the county’s investment — terminology Commissioner Tom Williams referred to as “a loan” — in three to four years. While the tax is imposed, half will go to the county and the other half to the developer until each recoups their investment. State law permits CID designation for up to 22 years. After the loans are satisfied the tax will be rescinded.
Michaud said land cost would be $335,000, far above the county’s appraised value, but inflated by soil remediation costs borne earlier by owner Bill McAdam, as well as its auspicious location at the intersection of two U.S. highways.
Initially, Michaud, president of BAJA Land Management and a resident of Fort Scott, had requested the purchase of the land be split three ways — between himself, the city of Iola and the county, with each fronting about $111,000 for the approximate 2.23 acres.
Commissioner Williams proposed the county front two-thirds of the cost, but neither commissioners Jerry Daniels or Jim Talkington seconded his motion.
Lengthy discussions followed, with it obvious that all three commissioners favored the hotel’s construction.
Eventually Talkington proposed to commit to one-half of the land purchase to which his compatriots agreed.
Michaud accepted, making it abundantly clear the CID tax would permit the county to regain, and in fact profit, on its investment.
With the county taking the lead, the City of Iola will be off the hook for any land purchase agreement but will be asked to approve the CID component of financing as well as issue industrial revenue bonds that will give BAJA low-interest financing for the $4.5 million project. The city issued such bonds in two occasions in recent memory — to Kneisley Manufacturing and Sonic Equipment on Miller Road and The Family Physicians and Iola Pharmacy when they built on East Street. The city also gave both entities 10-year property tax abatements.
Construction for the hotel is planned to begin this fall.
IOLA STANDS to receive more than $2 million in direct benefits over the first 10 years the hotel is in operation. Michaud cited transient guest and sales tax income of $1.4 million; $540,000 in new property taxes (also a benefit for the county, along with sales tax revenue); and $81,000 in utility income and franchise fees.
Those numbers held sway with the commissioners.
A restaurant and bar, Sharkey’s, is expected to be adjacent to the hotel — Iola Sleep Inn & Suites — Michaud added. He said such a combination in Fort Scott has proved a successful marriage. Michaud is also wrapping up a Holiday Inn Express in Atchison.
