The Isanti-Cambridge area currently is under served by one
hotel and that is located in the City of Cambridge. Isanti Hotel Partners, LLC
has been working with the City of Isanti as well as a local contractor to bring
a hotel to the City of Isanti to meet the demand of the region. The City of
Isanti approved the Site Plan for a 33 unit hotel with a pool and has strong
public support by the City of Isanti. Work
on the project began in 2011 and a Development Agreement between Isanti Hotel
Partners, LLC and the City of Isanti providing $600,000 in public investment to
the Developer was executed in June 2012 paving the way for the project to
commence. A permit was pulled for the
project shortly after in June of 2012 and preliminary work was completed on the
site. Special Tax Increment Financing
legislation gave the City of Isanti the ability to provide the initial
significant public investment and the City supported it due to the high
priority and demand of the hotel for the City and the region. The project appears to have stalled when the
“contractor” and majority investor backed out in October 2012. There is still
time to complete the necessary work in 2012 to move the project forward and to
open in 2013 but committed investors are needed.
Isanti Hotel Partners, LLC has not given up on this project
as it certainly is needed in the area. However,
with the present economic environment many investors appear to be balking at
this type of investment regardless of the illustration of need and positive pro
forma income statements. Isanti Hotel Partners, LLC has hired a
prominent hotel organizer, Troy Hoekstra, to lead the project. Troy has organized and financed a number of
these projects across the Midwest and is well thought of in the hotel community. However, Troy has not been able to attract
enough local investors to bring the investment to the point of being
underwritten by a local bank and its partners that have successfully financed
similar projects. Only a few more investors are needed to complete
the investment group and to re-commence construction of the project.
9 comments:
I personally don't think Isanti can support the occupancy rates it would need to be profitable. Why not build a community pool, rec center instead? Maybe some outdoor water features also. That you could charge a fee and the city would use.
The market study that was done shows at least one Hotel is needed if not more ... a pool or rec center never generates enough revenue and communities have to subsidize in the $10,000s of thousands of dollars range
The arguement against the pool/rec center has always been the need for public subsidy in this area. I completely understand that, and agree that it wouldn't generate the revenue needed to operate on its own.
However, I do in theory agree that a hotel is needed in this area and would be a great addition to Isanti. But I am now reading that it is taking a $600,000 subsidy to get the hotel going? Albeit through tax increment financing, but still that is $600k that would be coming into the city if not for the financing.
That is not quite accurate ... if the hotel is not built there is no $600,000 in taxes. right now the land is vacant and only generates a few hundred dollars in taxes. if the land is developed with a 2.3 million hotel then over a 9 year period or so it will generate that amount in property taxes .... those taxes would be refunded back only during that time and then when the district expires the full taxes would be collected by the county, school district and city ... no hotel and we would continue to see just a few hundred dollars per year
I agree that no hotel equates to the $600,000 in taxes never materializing. However, it is still taking a $600,000 subsidy to convince investors that the market can sustain a hotel? Meanwhile a pool/rec center would cost the city $10,000s per year to subsidize?
How many years could we support the pool/rec center and be considered equivalent to the tax increment for the hotel?
Jeff we would have the up front cost of building it plus subsidizing a community pool ....
Jeff - How in the world is the city going to have the money to subsidize a pool or rec center when it can't afford the expenses of the Community Center that we already have?
I don't believe I ever said the City could afford a pool/rec center. I was asking questions to equate/relate the tax increment financing being offered to the hotel, to the potential subsidy that a pool/rec center would require.
I see the pool/rec center idea quickly dismissed because it could cost the city $10,000s per year to subsidize. I agree with that, probably not a good idea then.
On the other hand I see all kinds of local support for a hotel in the area. Then on the blog I find out that the hotel is struggling to find investors even with a $600,000 tax subsidy. That's just plain crazy. Yet, I don't see anyone else questioning this.
Again its $600,000 we would not have if there is no Hotel ... but either way there is no local investor support unfortunately and the project seems doomed because no one locally believes in the project ... it saddens me greatly that no local money wishes to help Isanti grow
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