What kind of hotel is it? Where is the proposed hotel?
The proposed hotel is a Courtyard by Marriott with 140 rooms, five stories high. To find a hotel with the same height, you can look at the new Springhill Suites being built across from the Coral Ridge Mall Younkers.
The proposed location is 901 Melrose Avenue, on the east corner of University Heights.
It is a triangle-shaped property, with its northeastern side by the railroad tracks, the south side bordering Iowa City, and the west side bordering three University Heights properties.
One of these properties has been purchased by the hotel developer, the other two are investor-owned. The developer also plans to purchase 909 Melrose Avenue to facilitate entry and exit into the hotel. This is the property on the southeast corner of Melrose and Olive Court.
What is the option for a rooftop restaurant?
The hotel developers have proposed adding a rooftop restaurant as an option. This rooftop restaurant was not in their original proposal. They have provided to Council a document showing both the current design, and the potential design with a rooftop restaurant. I'm interested in your feedback about this proposal.
How much revenue can we expect from the hotel?
A very conservative estimate of revenue would be at about $352k a year, or about 30% of current City revenue and about $320 per City resident per year. This is assuming a $10 million valuation for the hotel property (half of what the developer and Pat Bauer, Zoning Commission Chair, estimated), and the hotel having an average occupancy rate of only 60% while charging $120 per room/night. It is quite likely that actual revenue would be higher.
Using this very conservative estimate, about $95k of the revenue would come from an increase in property taxes paid to the City. If the hotel tax is approved by voters on November 7, about $257k would be collected from it. Per Iowa law, 50% of the hotel tax has to be used to promote and encourage tourism. The hotel tax language says 90% of the other half has to be used for neighborhood housing and infrastructure revitalization, including road repairs, neighborhood stabilization, and parkland or greenspace acquisition, maintenance, and operation.
This results in about $108k/year going to the City's general fund, $115k/year dedicated to neighborhood revitalization, and $129k/year for tourism.
All revenue from the hotel would come to the City without adding any new residents or increasing taxes to residents. In addition, the school district would get about $126k a year.
How do you propose to use the revenue?
With the 50% portion of the hotel tax going to tourism I would:
- Acquire the Swisher Tract for walking/jogging/biking, consider a dog park, as well as an amphitheater for outdoor concerts and performances.
- Relocate and rehabilitate the historical house currently at 901 Melrose. Similar to Manville Heights' Ned Ashton House on Park Road, this is a historic house that could serve as a City Library or Coffee House.
- Fund community events, such as summer chautauquas, the Farmers Market, and the Luminary Walk.
- Provide incentives for residents to invest in improvements (with an emphasis on energy efficiency) that will increase property values.
- Incentivize long-term residency.
- Eventually consider property tax relief.
- Pay for sidewalk repairs (currently paid by homeowners).
- Accelerate the repair of City streets and curbs.
- Install new lights in streets where there isn't good coverage.
What was the process for approving the hotel?
The timeline of events can be found under the City's Building/Zoning/Sanitation page. The hotel developer first approached the City in November of 2016, and there have been at least 11 public meetings to discuss the project.
While the Zoning Commission voted down the hotel proposal 4-1, two of the negative votes were on the fence, as made clear in the Zoning Commission Report. Following this report, City Council worked to address the issues brought up by the Zoning Commission, which were addressed in the Conditional Zoning Agreement.
City Council then voted 4-1 to approve this agreement. The property will only be rezoned if the developer completes all the conditions. The next step for City Council is the PUD agreement, which will spell out further details of the hotel.
What conditions did the City set for the hotel to move forward?
As part of the approved Conditional Zoning Agreement, the developer agreed to:
- Not seek any type of financial assistance from the City (including TIF).
- Transfer two investor-owned properties on Olive Court or one on Olive Court and the other being 905 Melrose Avenue to an organization to be selected by the City to turn them into owner-occupied homes. We expect homeownership will help revitalize the neighborhood and increase property values.
- Not acquire additional properties in the area. This prevents further expansion of the hotel.
- Transfer ownership of the home currently on 901 Melrose Avenue to the City. The home has some historical architectural value and the City would have one year to relocate it.
- The hotel brand may not be changed unless approved by City Council.
Is there any corporate welfare in the deal?
No, the developer has not asked for and has agreed not to request any kind of financial assistance from the City, including TIF.
Why did you vote in favor of the hotel?
My vote reflected addressing the concerns of various constituent groups in University Heights. For example, (1) there is no corporate welfare or TIF in this proposal; (2) the historic house on 901 Melrose will belong to the City and is ours to figure what to do next; (3) no additional single family homes can be purchased by this development team to turn into businesses, and finally (4) the developer turns two investment rentals into owner-occupied homes on Olive Court. This is a significant series of wins for our relatively small city. Even if we take very conservative estimates, City revenue will increase by more than 30% without adding new residents, or increasing taxes. This will give us the resources to stabilize our neighborhoods, promote community, protect green spaces, and provide financial security for our City. I can't find a better deal in the Iowa City area. It's very easy to promise, but very hard to deliver unless you have the resources.
After the vote I learned that the Swisher Tract can go on sale. With the hotel revenue we can afford to buy it and keep over 9 acres in our City as designated green space.
What will happen to property values of homes near the hotel?
It is difficult to predict what will happen to property values as many variables, besides the hotel, can affect them. I am aware that some neighbors on Olive Court are concerned about their property values being negatively affected by the hotel.
I tried to find evidence of hotels negatively affecting property values and was unable to find any, but I understand their concern.
What I did learn in doing that research is that high concentrations of investor-owned properties lower property values, and increases in the percentage of owner-occupied homes increase property values.
For this reason, I negotiated the condition of turning two homes on Olive Court from investor-owned to owner-occupied, and will advocate for the neighborhood revitalization funds to be used to incentivize long-term residency focusing on the area near the hotel.
By significantly increasing the percentage of long-term residents in the area near the hotel we should be able to make it very likely that property values will actually increase.
Has anything else been previously proposed for the same property?
Yes. Council considered a proposal for a 506 bed student housing project in November of 2014. A community forum took place to consider the proposal. The proposal was turned down (I did not favor it). We received another proposal for a 120 unit rental apartment project in March of 2016. This proposal never made it to a community forum and was also turned down (I did not favor it).
Is there another hotel?
Yes, but we do not control it. The University of Iowa owns the University Athletic Club and plans to build a 100 room hotel in that location. Since the University also owns contiguous land outside of University Heights it is unclear if the hotel will be partly or entirely in our City and to what degree we will be able to collect taxes from it.
Because the land is owned by the University of Iowa, the City cannot specify what gets built there.
Do you support additional development around the City?
I don't foresee any need or reason for additional development in the City. There will no longer be fiscal needs to do so. In fact, I am proposing to acquire the Swisher Tract to keep it green and without development. I also do not support turning Melrose Avenue into a high-density commercial/residential strip.