Event center project moving along
WORTHINGTON -- Things are starting to look up for the event center project, as city council members approved a memorandum of understanding with Lexington Hotel Development Group from Greendale, Wis., during the council meeting Monday -- to exclusively discuss parameters of an agreement drafted by the city.
When voters approved the half-cent sales tax in 2008, two city projects were on the table -- renovations to Memorial Auditorium and construction of an event center. While the latter project was completed earlier this year, plans for the event center was moved back and forth primarily due to the economic downturn.
"Lending practices started to change, from (needing) 10 - to - 20 percent equity to 50 percent equity to move forward with any type of commercial development, in particular, hotel development," said the city's Director Community/Economic Development Brad Chapulis about bank loan procedures that followed after the downturn.
In an attempt to keep the project moving, city officials solicited numerous hospitality and development companies to secure a public-private partnership.
Chapulis explained while the city recognized the desire in the community for an event center, council members did not pursue the idea of a stand-alone facility because of the original intent of a public-private venture was pitched to the public as well as the city council's reluctance in incurring annual operations expenditure.
"It (public-private partnership) reduced the amount of risk the city would have in a day-to-day operation," he added. "They also wanted to create a synergy where there is a private investment of about $9 million with the hotel."
Prior to the MOU with Lexington, the city engaged with two other development companies -- Ruhr Development and more recently, Cornerstone Construction.
"The proposal that was brought forward by Lexington is the closest to what the council's wishes and desires are in regards to management obligations the city would have," he said.
The city council's intent for management and financial obligations were reflected in an operations agreement drafted by Chapulis and City Administrator Craig Clark with the help of the event center design committee led by Ken Moser.
"The main part of the operations, as mandated by council, was to limit or eliminate subsidy for operating the center," Moser said.
The five-year agreement states the hotel developer, Lexington, would be responsible for the operating costs of the event center.
The city will commit $25,000 to the opening costs of the facility and will receive 10 percent of the gross revenue generated from the event center.
Chapulis said the returns received will be funneled into reserves for long-term maintenance of the facility.
"The agreement is only one part of the whole project," he added, noting Lexington had requested development assistance by means of tax increment financing -- of approximately $400,000. "We have to go through that due process and get into a development agreement. That's what we'll be working on this winter along with getting environmental tests done, and professional services to start designs. If all the stars align, we're hoping to begin construction late spring."
Design-wise, Moser explained the intent of providing a large meeting room which can be divided into smaller gathering spaces, a catering kitchen and effective audio and visual amenities for presentations.
"We have an idea but the design isn't finished," Chapulis said.
The $3.5 million-event center, based on a feasibility study conducted by city, is estimated to range from 10,000 - to 12,000 - square feet to accommodate about 400 to 600 people.