County gives tentative approval for project request

5/18/2013

By SCOTT AUST

By SCOTT AUST

saust@gctelegram.com

The Finney County Commission gave tentative approval Friday morning to allow transient guest taxes generated by two new hotels in Garden City over the next 20 years to be used to help finance construction of a 22,000-square-foot indoor water park near the intersection of Lareu Drive and Schulman Avenue.

The decision is pending a positive review by the county's legal counsel that the charter ordinance that covers the use of guest tax funds, currently a 6 percent tax added per night to hotel stays, can be used for the purpose.

In addition to the water park, local hotelier Amro Samy intends to build a 90-room hotel and a 6,000-square-foot national level restaurant. The proposal would allow the guest tax generated by the proposed hotel and from the Sleep Inn, now being built at 1931 E. Kansas Ave., to be used to finance construction of the water park portion of the overall project.

Evan Fitts, an attorney with Polsinelli, a Kansas City-based law firm working with Samy on the project, told the commission that he believes the guest tax diversion would be allowed by the charter resolution, which allows funds to be used for tourism purposes.

Fitts said according to a market study, the water park is estimated to pull in 35,000 out-of-town visitors per year, who would spend $6.8 million during their stay, or an estimated $194 per visitor. He said the study anticipates an additional 23,000 new overnight stays, which would benefit both the new hotel and existing hotels in town, as well as 126 construction jobs and an estimated 104 full-time jobs.

The water park would help Garden City, which already gets a lot of Monday-through-Thursday business travelers, increase hotel stays on Saturday and Sunday, and also compete with attractions in other communities, Fitts said.

"Dodge City has done some things recently that are drawing people. Same thing with the water park in Hays that people drive to from the area. So with this, Garden City would have something to compete in bringing in that weekend tourism traffic," he said.

Overall, the total project is estimated to cost around $25 million. The cost of the water park alone is estimated at $10 million.

Fitts said the water park would be financed by about $3 million in private investment, leaving about a $7 million gap the developers hope to recover through public incentives.

Fitts estimated the bed tax diversion could bring in about $2.4 million over 20 years. The developers intend to request tax increment financing and a community improvement district for the project. The TIF would allow new property taxes generated by the development to be used to finance various infrastructure improvements. A CID would allow an additional 1 percent sales tax to be levied within the property to finance additional improvements.

"That is all going to cover this public gap in the project of $7 million, and so we're just trying to piece together the tools that are available to do that," he said.

Fitts said diverting guest taxes won't take away from, or cut into, guest taxes already being generated by other hotels. It would only come from taxes collected by the two new hotels in the future.

"We're going to make it 'pay as you go,' meaning no bond issues or county credit at risk, no obligation from the project. It will effectively live or die on its own," he said. "If the hotel is successful and kicks off the expected transient guest tax, then we'll be able to finance the water park as we've projected it.

"If not, Samy and his partners will have to dig into their own pockets to figure out how to make it work."

Fitts said developers are proposing guest tax funds go first to the city of Garden City, then be redirected to Samy through a developer's agreement, tied to the opening of the water park.

"So no water park, no transient guest tax reallocation to the project," Fitts said.

Samy, who is also board president of the Finney County Convention and Visitors Bureau, said the water park fills a need for an attraction that can operate year-round.

"We feel it would be a great asset. We constantly invest in our community and that's what we're trying to do," he said.

In response to a question, Samy said he doesn't believe the proposed hotel will compete with others, because as a new facility, room rates will likely be higher. He also said he can't control how other hotels manage their properties.

"We're all very creative. We just have to figure out how we can bring people to our hotels. There are many hotels in Finney County. It's just a matter of them getting creative and adding a little bit," he said.

Samy said he's talked to a few other hoteliers this past week who are excited about the project and think it will also benefit their businesses.

However, one hotelier, Della Brandenburger, general manager of AmericInn, expressed concerns about adding yet another new hotel, and the impact the water park could have on attendance at the municipal Big Pool.

"As far as the water park, it's a great idea, but it will compete against the city pool in the summertime. We'll be taking away from the city pool when we need to be encouraging (attendance) because that's our tax dollars at work at the city pool," she said.

Brandenburger said the community is looking at 380 additional hotel rooms with the proposed hotel, the Sleep Inn which is expected to open in July, a Best Western, a Marriott and a hotel proposed in Holcomb.

"That's a lot of people to fill. It's a concern when you're already starting this year down," she said.

Fitts pointed out that the market study indicated a potential 23,000 new visitors drawn by the water park to the county. Considering the proposed hotel has 90 rooms, he said it's likely a portion of those new visitors will stay at other hotels.

Kim Inderlied, CVB executive director, supported Samy's project.

"This is income we're not bringing in currently, so you can't miss what you don't have. I believe it's going to significantly impact the income that's brought in from the guest tax because every hotel in town is going to be full," she said.

Inderlied said another reason to support the project is its impact on economic development as an attraction that will bring people to the community. If there is a concern about other hotels wanting to keep their guest tax revenue, Inderlied said her response would be, "If you're going to build me a multi-million dollar, 365-day attraction, I'm going to be in favor of that as well."

Tom Walker, board chairman of the Finney County Economic Development Corp., said he supports the proposal, but had questions about jobs. Walker asked if there are talks going on with the city's recreation commission to manage the water park, and if so, whether they would be employees of the city or the water park itself.

Fitts said there are discussions going on with the rec commission about having a role in the operation, but decisions about management or whose employees they would be have yet to be determined. The idea was to add a more community aspect to the proposal by possibly including the Garden City Recreation Commission.

GCRC Superintendent John Washington was out of the office Friday afternoon and could not be reached for comment.

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