New loan for Hotel Thompson project in the works
City staff looking into request for $200,000 in revolving loan funds
WORTHINGTON — City staff will continue to review the best way to potentially lend $200,000 in revolving loan funds for the ongoing Hotel Thompson renovation project.
Worthington Economic Development Authority staff was contacted by Clark-Vinroot Properties with a request for $200,000 in revolving loan funds for its redevelopment work, Assistant City Administrator/Director of Economic Development Jason Brisson reported during a brief EDA meeting Tuesday. Brisson explained that the developer found between $50,000 and $75,000 in unforeseen fire safety requirements, and hopes to use the remaining $125,000 of the loan request for storefront improvements on the building’s exterior.
The city and EDA approved in 2020 a tax increment financing (TIF) district for Clark-Vinroot to help fund renovation of the Hotel Thompson, Brisson reminded EDA members. After reviewing development costs, the city’s market rate for rents and the project’s identified funding gap, it was determined that 25 years of pay-as-you-go TIF was required to achieve a reasonable rate of return for the developer based on the risk associated with the project.
“During the later negotiations for the project, EDA staff and the developer had discussed future additional funding options but determined it was best to finalize the TIF district first to avoid complicating the TIF negotiations,” Brisson explained.
The new funding request exceeds the EDA’s Revolving Loan Fund unrestricted cash balance of $120,289.10, he added. There is a balance of $342,933.33 in restricted cash.
Brisson said restricted money has “strings attached” because those funds were provided from an outside (typically federal) source. When restricted funds are lent out and subsequently paid back, they lose their restricted designation and the requirements that come with using them.
“Given that the EDA’s RLF fund currently has less than the requested amount, and staff would
prefer to lend restricted funds before the unrestricted funds, EDA staff will determine if this
project meets the requirements of its restricted RLF funds,” Brisson reported.
Additional options for funding the project include moving some funds from the EDA’s 2% Loan Program back to the RLF, or offering a lesser loan amount to the applicant, Brisson stated. Since the EDA’s RLF guidelines require job creation for each loan, the RLF guidelines would need to be updated to accommodate this request.
In noting the available alternatives for completing the potential loan, Brisson said he wishes to gauge EDA members’ interest before moving forward. The board, following a discussion of roughly 25 minutes, encouraged Brisson to do so.
“They have a number of interested parties that have expressed interest,” said member Chad Cummings, who presided over the meeting in Mayor Mike Kuhle’s interest, of potential Hotel Thompson tenants. “It’s just a matter of finding a way to make things work.”
Brisson said the storefront improvements would likely come after other renovations are concluded and include such items as large glass windows, new signage and new lighting.
“They really want to recreate the old look … and want to do something a little more restorative,” he said.
EDA members noted the potential benefits to the downtown business district as a whole when considering granting the loan request.