Butler County Times Gazette
  • Letter to the Editor: Consequences of multiple incentives

  • Consider the process by which you are considering providing incentives for a new hotel.
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  • To the Gazette -
     
    To the citizens of Augusta and the City Council – I urge you to consider the process by which you are considering providing incentives for a new hotel. I have been in the hotel business as part of a national company, and as an individual have developed hotels locally, including in Andover. Unfortunately, incentives have become the norm for many, but not all towns – especially in the mid-west. But there does exist a difference between incentive and greed.
    In any normal transaction – public or private – parties define what they want, and what they are willing to give up to receive it. This proposed transaction appears to be a three story Best Western, with the hope of other things, against giving up about everything possible to give up.
    Augusta may need a new hotel – I have no view on that. And to get a new hotel, Augusta may have to provide some incentives – I believe this true. However, the sheer volume of what is being asked by the developer passes so far past what is “market”. Wichita saw this with the recent Ambassador Hotel project in its downtown. The one element of the multi layered incentives provided to the developer to which the citizens could have a say (the rebate of guest or occupancy taxes) was pushed to a public vote – and citizens of Wichita voted a resounding NO to giving this rebate to the developers. It was interesting to watch from afar – I don’t think the vote had much to do with the rebate itself or being against the hotel, but really reflected on the process and reasoning of providing the incentives by the city and the magnitude at which these incentives were provided.
    I have many problems with what I assume is the logic for aggressively seeking a new hotel – it reeks of “everybody else has one, so should I”, and seems to be justified by “if we build a hotel restaurants and other development will follow”.
    The former is bad public policy, and the latter is factually untrue. “If we build it (with public money) development will come” is a great sales pitch – but when you reconcile reality it falls far short. A recent article pointed this out as it relates to the three year old $220+million Intrust Arena. But in fairness, the desire to seek a new hotel may be as simple as Augusta having plenty of demand for one – again on this point I don’t know. The logical question is if demand were unequivocally true – then why all of the incentive.
    However, my main concern is the process by which this investment of public funds is being undertaken. Solicit a deal based on what the city wants and what it is willing to give up. When the city builds new public assets, it decides what it wants, what a rough estimate of costs is, and it puts these jobs out to bid. It seems logical – that the city, and API which may or may not be the city depending on how you look at it, should come up with a package of incentives – capital, rebates, abatements, whatever – and couple this with what the city wants (design, developer must own for X years, specific location(s), whatever the city wants – and if you want a new sit-down restaurant then make that a favored criteria) – and put out an RFP, or at least shop the package around. If the city is going to invest funds – in whatever form than it has a responsibility to seek the best deal.
    Page 2 of 2 - Lastly – the City should analyze the long term consequences of giving multiple incentives without a vetted and clearly defined public policy. Once you go down this road, is does not have an exit ramp, but it does have a lot of potholes.
    There is a saying – make sure the juice is worth the squeeze. In my view this deal is not. However I believe Augusta is a great town - I urge our council to show some confidence and belief that people want to be here. And if you choose, use incentives to get something better than what you would have normally received.
     
    Tim Johnson
    Augusta
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