The Augusta City Council held a work session Monday night to try to add some information to the controversy surrounding a potential new hotel development on Seventh Street.
Raju Sheth said that Mike Clifton, a member of Augusta Progress Inc. has worked for him as an accountant. As Sheth’s group of hotels grew, Clifton often pushed Augusta as a possible site for a new development.
For many years, API and other local groups have identified hotel inventory as an economic development issue for the city.
After Sheth’s group recently built a Best Western Plus in Hiawatha, Kansas, a group of local investors have pooled more than $1 million to combine with Sheth’s personal investment in an attempt to make a new hotel in Augusta a reality.
A new hotel is enticing to local people interested in economic development because the age and condition of Augusta’s existing hotels has led to what some call a leak of hotel revenue to cities like Andover, El Dorado and even Wichita.
The belief is that a new hotel would capture some of the revenue that is currently being lost.
But there are several issues that could derail the project. First, Sheth called a new hotel project “a risky investment” without incentives.
Many local cities, including, Derby, El Dorado and Andover have used various incentives to support new hotels in their markets.
The investment group hoping to bring the new hotel to the site of the old Ranger Hotel near the new Walmart, brought a list of requested incentives to the council and asked the governing body to agree to the plan by Dec. 1 in order to get the plan started.
Some of those incentives include property tax abatements, Industrial Revenue Bonds, a Community Improvement District and even the rebate of guest tax income for several years.
Those requests and the proposed timeline have been sticking points among some council members.
But other conditions exist that will have to be resolved in tandem with the new development in order for it to work.
The council found out the area in question has too little water flow and pressure for adequate fire suppression. This discovery came as Walmart built a 200,000 tank on its new property. Had the council been aware of the situation prior to the construction of the tank, a new line could have been justified to serve the new Walmart and future development of the Seventh Street corridor like this hotel project and any restaurants or other businesses that could locate in the area.
Even the car wash adjacent to the property requires a pump to operate properly.
Page 2 of 2 - City engineer Larry Henry with MKEC said that the best way to solve the problem in the long term is to extend the 12-inch line that currently stops at Cliff Drive. But depending on how that line was extended, the project could cost as much as $250,000 to $500,000.
“A tank like the one in place at Walmart could range in cost from $100,000 to $200,000,” Henry said. “That can be a deal breaker for future development in the area. The need is there to extend the line, but it would have been an even better idea if it had been done when Walmart was coming in.”
Bond Counsel Kevin Cowen went over all of the legalities and opportunities for funding sources for the possible hotel project and how local incentives could legally be accomplished if the council chooses to pursue that option.
Interim City Manager Josh Shaw said staff didn’t have an opinion on the project, but that the process is common in new hotel development. He pointed out that hotel inventory had been an issue for 20 years in Augusta and whether it was this project or another, something similar would have to be considered.
“Also, the fact that it was brought to the council by a local investment group makes this project different than many others,” Shaw said.
The council asked Henry to prepare plans for how water supply could be improved in the area. They also asked the development group to go ahead with the cost benefit analysis that is required under several of the incentives that were requested.
Both items will be on upcoming agendas.