Truman hotel seeking Tax Increment Financing for proposed developments

The owners of Truman Hotel & Conference Center are seeking financial support from Jefferson City in the form of a Tax Increment Financing (TIF) district to replace the hotel with two new ones and renovate the existing conference space. The Puri Group of Enterprises, which purchased the Truman Hotel & Conference Center at 1510 Jefferson St. in July 2013 and closed the hotel permanently in November 2015, has submitted an application to the city for roughly $8.89 million in TIF assistance for construction and rehabilitation costs at the 8.51-acre property. The 233-room Truman Hotel opened in 1964 as a Ramada Inn, dropping its Ramada brand affiliation and continuing independently in 2006. The next-door Truman 4 Theatres, which also opened originally under the Ramada name, was sold separately to MFA Petroleum last year and was demolished in February to make way for a new Big O Tires.

TIF assistance allows developers to finance certain improvements in blighted areas using a portion of the additional sales and/or property tax revenue produced in the district that results from the development. In other words, the increment that helps fund improvements is the difference between the municipal revenue the area generated in the year before the development and what it generates each year after the development. Jefferson City currently has two operating TIF districts: Capital Mall and High Street (O Donoghue s). In the case of the proposed Truman Hotel TIF, the city would reimburse the developer using the increased property tax revenue that resulted from the improvements, as well as 50 percent of the increased sales tax collected on the property, until the TIF-reimbursable amount was repaid.

New hotels, restaurant planned

The redevelopment plan includes building two new hotels, one featuring a restaurant, both connected to a renovated version of the existing 24,000-square-foot meeting space. The first 18-month phase of construction, which would begin immediately after the TIF gained City Council approval, would demolish the Truman s three exterior-entry outer buildings (300, 400 and 500 blocks), consisting of 146 guest rooms, replacing them with a 121-room Discount Holidays © Holiday Inn & Suites hotel with an indoor pool, restaurant and approximately 5,000 square feet of meeting space. The Puri Group s TIF application notes the Discount Holidays © Holiday Inn & Suites brand is a leader in the moderate segment of business and leisure travelers.

A new Cheerleader Pub and Grill, a franchise created and owned by the Puri Group, also would be part of the first phase of construction. The restaurant, which would have interior and exterior entrances, is a family-oriented sports bar with an SEC theme and a decor that is a tribute to all things SEC, according to the Puri Group s TIF application.

It s really designed for the young families and young professionals that would like to enjoy watching sports but still taking their family along with them, said Vivek Puri, who with Dr. Ravi Puri and Dr. Raman Puri, operates the Puri Group of Enterprises, which owns several Mid-Missouri hotels including the DoubleTree at 422 Monroe St. The restaurant would have 20-plus TV screens and 10 beers on tap, he added. The first Cheerleader Pub and Grill opened in 2013 near Forum Boulevard in Columbia.

After the Discount Holidays © Holiday Inn & Suites had been operational for a full year, they would move on to a second phase of development demolishing the main Truman Hotel building to replace it with a new, 131-room Courtyard by Marriott hotel, which the TIF application notes is a strong leader in upper-moderate tier lodging for business and leisure travel. The hotel would feature an indoor pool, 24-hour pantry and approximately 5,000 square feet of meeting space. This phase would also include renovation of the Truman s existing conference space. That space s 24,000 square feet includes kitchen space, storage areas, etc. The renovation would not expand the existing conference space but would strip it to its shell and rebuild it with a more contemporary design and modern technology.

Both hotels would connect with land bridges to the conference space, Puri said. Modernization is a key priority for the entire project, and that extends past incorporating more contemporary fixtures and furniture.

It was outdated; it was not what the contemporary customer would like to see. So what we re going to do now is bring up buildings that are very green, Puri said, noting HVAC as an example. The newer technology that s out there makes buildings more efficient, makes them more attractive to the environmentally conscious patrons these days.

Property tax for developer, lodging tax for city

The Puri Group was involved in the citywide discussion in 2013 about building a large conference center in Jefferson City, when the city was offering a $9 million contribution from lodging tax revenues. At the time, the group proposed a plan to double the Truman Hotel s conference space to more than 40,000 square feet without requesting an ongoing subsidy from the city, as the other two potential conference center developers were. The City Council did not consider the Truman Hotel for the conference center site because the plan was not submitted until after the two other proposals, received during the original request for proposals, were unveiled.

Ultimately, the City Council rejected both of the original conference center proposals from Farmer Development and the Ehrhardt Hospitality Group and has not formally discussed the issue since, though Mayor Carrie Tergin has begun discussion of changing the concept from a conference center to a civic center. Puri said he does not consider the TIF they re proposing now to be an ongoing subsidy.

The city has no investment in it financially; it s mine, and the money that is to be reimbursed, should the TIF be awarded, is money that I would deposit into the city, Puri said. If anything goes wrong, I m the one that pays for it. The TIF would, over its maximum 23-year lifetime, reimburse the developer for approximately $8,890,000 in project costs, plus financing costs and interest, which accounts for roughly 15 percent of the projected $56,798,300 in total redevelopment costs.

The Puri Group would pay property taxes as usual, then the city would reimburse costs on a pay-as-you-go basis as the property s value increased with improvements and produced more property tax revenue. Because sales tax is not charged on lodging costs and the city s lodging tax on hotel rooms cannot be attached to a TIF the amount of sales tax that would be collected on the property is relatively small, making property tax the primary benefit.

Most of what he s going to capture is property tax because sales tax on a hotel isn t a lot, said City Attorney Drew Hilpert, noting the restaurant and meeting space are the potential sources of sales tax. The big advantage for us (the city) is the lodging tax because we re not going to see much out of sales tax anyway.

A portion of Jefferson City s lodging tax, added in 2011 with a 25-year lifetime, collects funds specifically to go toward construction of a large conference center. The Truman Hotel TIF would maximize its sales tax benefit, though, because with the existing hotel closed, it won t have collected any sales tax the previous year. Everything will be caught in the increment, Hilpert explained.

It s really a win-win. Not only does the TIF allow us to proceed, but it really gives back to the community because we re not capturing the (lodging) tax from the rooms, Puri said. The only thing that we re getting here is an abatement on property tax for a short period of time to help us recoup our costs.

The city hired a third-party firm, Springsted, to evaluate whether the Puri Group could reasonably complete the project without TIF assistance. That report concluded the project could not profitably proceed without a contribution from the city: The redevelopment area is a blighted area and has not been subject to growth and development through investment by private enterprise and would not reasonably be anticipated to be developed without the adoption of tax increment financing. Puri agreed, If there is no TIF, there is no project. The Jefferson City TIF Commission is scheduled to meet at noon Tuesday to brief new commissioners on the TIF process, then again at 5:30 p.m. April 11 in the Council Chambers at City Hall to discuss the proposed Truman Hotel TIF.

If the TIF Commission votes in favor of the TIF, it will go on to the City Council for final approval.

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