WORTHINGTON — City council members are willing to participate in renovations of the Hotel Thompson, they agreed during a Wednesday afternoon work session.
Worthington Director of Community Development, Planning, Zoning and Building Services Jason Brisson reminded council members that a decision still remains about whether or not to pay to re-roof the building. He added that a potential buyer is asking for tax increment financing (TIF), a program that requires no money upfront from the city but diverts property tax over a period of 26 years in order to alleviate costs for the developer.
Worthington City Administrator Steve Robinson added that if the council proceeds to authorize replacement of the roof, the city's total investment in the Thompson would come to about $300,000.
"City council should have no false hope that any of that money will be recovered," he said.
The city has already purchased the material to replace the roof of the Thompson, but Robinson said there are two municipally owned buildings that also need new roofs, and the materials could be used on one of those buildings.
"Do we want to proceed with re-roofing without a firm contract from one of the private parties?" he asked the council.
Mayor Mike Kuhle reiterated the sense of urgency he feels about the roof.
"If we wait, the building will fall further into disrepair," he said.
Council member Alan Oberloh pointed out that it's important to know exactly what the developer is asking the city to do.
The council heard from Jorge Lopez, a representative of developer APX Construction Group of Mankato. APX has signed a purchase agreement with receiver Lighthouse Management Group that is conditional on securing financial aid from the city.
Lopez explained that APX is asking for TIF, but it also has other requests. It would like the city to provide gap lending, which would cover the difference between what APX is offered by the mortgage company and what it actually needs to finance the project.
Additionally, APX plans to build a parking structure behind the Thompson, on the site currently occupied by a city parking lot. It is asking the city to donate the parcel toward the project.
"We see (the Thompson) as an investment for the city and the developer," Lopez said.
The proposed parking structure would be two stories — the second story reserved for Thompson residents and the first floor available for the public. It would include an elevator and a secure entrance to the building.
APX intends to gut the second and third floors of the Thompson and convert the existing 39 units into 26. Each unit would have two bedrooms and two bathrooms, granite counter tops and upscale finishes. Rent is projected to be around $1,300 per month.
"If you're going to be charging that type of rent, you need to have some amenities," Lopez said.
To meet that need, APX also plans to move the Lupazo Mexican Grill (the restaurant on the first floor of the Thompson) to the location currently occupied by El Mexicano #3, which is on the same block of 10th Street. El Mexicano, in turn, would be moved to a new location. The space vacated by Lupazo would be turned into a communal space for Thompson residents.
"We believe people will want to live here," Lopez continued, citing the proximity to the lake and the upcoming opening of Forbidden Barrel Brewing.
City council members agreed that they were open to offering all of those benefits, but couldn’t come to an agreement on replacing the roof. There was some consensus that rather than financing roof repair, the city could use the materials on another building and reimburse the developer for the cost of materials ($91,390) after the roof is repaired.
Council member Mike Harmon said he is fine with offering TIF, gap lending and parking space, but he doesn't feel the roof is the city's responsibility.
"If we're not going to put a roof on it, we need to act fast so APX can get their deal done (with the receiver)," Oberloh said.
Robinson pointed out that there is some degree of concern about working with Lighthouse Management Group. When he spoke to Lighthouse representatives Wednesday, they gave him a list of purchase conditions that was different from the lists they gave to either of the proposed buyers.
The discussion did not result in action. The council will vote during its regular meeting on June 24.