The fate of a proposed hotel on the east edge of Iola may be settled in August, when City Council members decide a request to help a developer purchase land for the site.
Bill Michaud of Baja Development Group, who owns a Sleep Inn & Suites franchise in Fort Scott, is seeking to build a similar facility in Iola, on a long-vacant parcel of land on the northwest corner of the U.S. 169-U.S. 54 bypass.
Michaud is approaching the Iola City Council and Allen County Commission to go in with him on the purchase of the land.
Splitting the cost three ways amounts to $111,666.66 for each.
The county has not been formally approached. However, the proposed agreement that will be presented to Council members Aug. 14 notes Baja Development intends to seek financial assistance from the county as well.
Michaud said both entities would quickly be recompensed for their investments through additional transient guest and sales taxes, utility payments, as well as through revenue generated as part of a “Community Improvement District” plan, a 2 percent excise tax paid by Sleep Inn & Suites customers over the next 22 years, or until the city and county are fully repaid.
Michaud wants to build a $4.5 million, 32,000-square-foot facility. The structure would hold between 55 and 60 guest rooms, depending on the architecture.
“It’s important for the public to understand that this is not a ‘giveaway’ of tax dollars, but is instead a short-term investment in the community, with long-term benefits,” said Bill Maness, the city and county’s economic development director through Thrive Allen County.
An economic impact report performed by Municipal Consulting LLC, owned and operated by former Iolan Steve Robb, which projects the city would receive an annual 25 percent return on investment, with a benefit-to-cost ratio of 3.59. The county would receive a 7 percent return on investment annually with a 1.70 benefit-to-cost ratio. If the ratio is above 1.0, then the benefits exceed the costs, and if it is less than 1.0, the costs exceed the benefits. Generally, a public entity would like to have a benefitâtoâcost ratio of 1.3 or better in order to grant a tax abatement and/or other incentives.
Robb’s report said a business such as Sleep Inn would bring in $2 million in added benefits to Iola within a 10-year period, $540,000 in new property taxes, $1.4 million in transient guest and sales taxes and $81,000 in utilities and franchise fees. The report indicates Iola would make back its money by the end of the first full year of operation.
THERE are other factors to consider, Maness said.
The asking price for the land is high not only because of its advantageous location of being at the cross section of two highways but also because the current owner, Bill McAdam, paid to have its lead-tainted soil removed. The site is where smelters of the early 20th century contaminated the soil with toxic waste.
“Opportunities to develop east Iola have been missed in the past, due in large part to the cost to mitigate the land and make it suitable for commercial development,” Maness said.
Several parties have expressed an interest in the land, Maness noted, but have chosen not to build there because of the prohibitive cost.
