Wednesday, February 23, 2011

Proponents of a private luxury hotel make a strong case for government incentives, but they should have serious reservations about whether that’s enough to make it work. By Leslie Turk

 City-Parish Councilman Keith Patin is taking a beating over a project that promises to bring a four- or five-star hotel and convention center to Kaliste Saloom Road — if, and only if, it gets the City-Parish Council to incentivize the hotel by creating two special taxing districts. “My thoughts are from A to Z [on the proposal],” says Patin. “I’m lucky I don’t have to vote today,” adds the District 8 councilman, who remains steadfast in his commitment to study every pro and con of the developer’s request before casting his vote, scheduled for March 15, despite mounting pressure and threats from the Tea Party of Lafayette.

The proposed economic development districts — also called a Tax Increment Financing district — are located on 34 acres of prime real estate at Kaliste Saloom Road and Camellia Boulevard, across the street from upscale River Ranch, in District 7, which is represented by Councilman Don Bertrand. River Ranch is a traditional neighborhood development that has successfully built up in the past dozen years without requesting such incentives, made possible by the Louisiana Legislature in 2002 when it amended decades-old incentive laws to allow for a wider range of economic development projects.

Developer Glenn Stewart, a radiation oncologist who no longer practices medicine, has already dumped about $20 million of his own money into the land and infrastructure of his proposed “lifestyle center” over the past two years; the hotel he is seeking help for is a $30 million project. City-Parish President Joey Durel, with the support of Lafayette Economic Development Authority President/CEO Gregg Gothreaux, is the driving force behind Parc Lafayette’s plan to construct a 124-room luxury hotel and connecting convention center; Bertrand says while he supports this particular TIF, he is still studying the issue and awaiting more information.

Both Durel and Gothreaux hold up a feasibility study conducted by a national firm showing that this type of amenity is not feasible without the incentive. And both argue fervently that it will boost our growing community to world-class status and serve as an economic shot in the arm. “It’s a question of whether we want to go from good to great,” Durel says.

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Developer Glenn Stewart, a retired doctor, has already put $20 million of his own money into land and infrastructure at Parc Lafayette, a proposed lifestyle shopping center at Kaliste Saloom Road and Camellia Boulevard. Stewart is now asking the Lafayette City-Parish Council to allow him to charge additional sales and occupancy taxes at the 34-acre site to help pay for a luxury hotel that he says will connect with a planned convention center.
They say Parc Lafayette’s proposed luxury hotel neatly fits the description of what the state law is designed to do because it offers a unique product to the market. Both believe the TIF law should be applied judiciously and neither thinks it will lead to TIF districts popping up all over town, as opponents fear. They do, however, believe the tool will — and should — be applied more in Lafayette Parish. “They are used all over the country by municipalities,” Gothreaux says. “I don’t really understand the grief about a person wanting to add a penny to their project as long as they’ve got something to hang their hat on. It’s got to be something unique, though, [like] public infrastructure in a blighted area. Specifically this is being used to support a four- or five-star hotel. It needs to be done on a project-by-project basis.”

The TIF legislation allows local governments to set up these districts and use additional tax revenues to fund private development; the Louisiana Avenue Target center was Lafayette’s first TIF district but is different from the current proposal in that the state also gives up 1 penny of the 4 cents it collects on retail sales at the north Lafayette center. The state is not involved in the current plan on Kaliste Saloom Road, which calls for an additional 2 cent sales tax and 2 cent hotel occupancy tax at the hotel, and a 1 cent sales tax in the retail development that will surround the hotel. The base sales tax of 8 percent would continue to line the coffers of the state, local government and the Lafayette Parish School Board, and absolutely no tax dollars are on the hook if the development fails; the additional tax expires when the bonds are paid off. The revenue generated from the extra hotel and sales taxes would fund the hotel development only (any aspect of it), says Stewart, a Lafayette native who returned home from practicing medicine in Alaska and went full force into real estate development. Stewart owns apartment complexes in Baton Rouge and Lafayette and is in the process of selling some of them.

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Developer Glenn Stewart

And while he has a lot of skin in the game, not getting the TIF district is no skin off Stewart’s back. “It was definitely not my idea,” he says. “If, in fact, this thing does not pass, I’m going to go back to my original [50-60 room] luxury boutique hotel. The way the media has portrayed it is everybody’s doing me a favor and I’m asking the taxpayers of Lafayette to pay for my project. The way I’m looking at it is I’m doing the city a favor by taxing my own property to build them a convention center. I’m by nature a very conservative Republican. I don’t believe in all these government incentives, but if no one can build a convention center without some kind of city assistance, I think Mayor Durel and Gregg are far-sighted to want to bring a modern convention center/hotel to Lafayette,” he continues. “We have the culture and the food and everything else these people want. The only thing we’re lacking is the facility to host the meetings. There is no reason why we couldn’t be the best tourist town in Louisiana outside of New Orleans.” Stewart says Lafayette is losing convention business to cities like Shreveport and Baton Rouge. “We’re competing primarily for regional conventions, not really national conventions. The Cajundome is great, but there are no hotels and restaurants there.”

While the Hilton Garden Inn is across the street from the 100,000-square-foot Cajundome Convention Center, it is not a luxury hotel, and it’s not connected, which conventioneers desire. Even a higher end three-star hotel, if connected to the convention space and offering more rooms (the Hilton Garden Inn has 153 rooms), would have made Lafayette much more competitive in its efforts to attract convention and meeting business.

Proponents argue that if you don’t want to pay, you don’t have to play. Shop and stay elsewhere. “You do get to vote with your steering wheel,” Durel says. “This does not tax the people. It taxes persons. This tax is not forced on anybody.”
That is not placating the Tea Party of Lafayette.

Patin visited with about a dozen TPL members five days before the Feb. 15 meeting, in which the council — including Patin — voted to move the proposal to a March 15 vote. “The Parc was the item that started the hoorah,” says Patin, noting that his pragmatic approach was not what they wanted to hear. “They chewed me up.” Two or three of the members were “screaming and yelling,” Patin says, and threats were made. “If you don’t get straight with the party,” he recalls one member saying, “we’re going to run somebody against you.” The next day, three TPL members called Patin to apologize for fellow members’ behavior.


If the Jeremiahs (a reference to real estate developer Jeremiah Supple) show up and turn my meeting to shit, I'm going to get the cops to put them out." -- District 8 Councilman Keith Patin, who is hosting a town-hall style meeting tonight, Feb. 23, at 6:30  p.m. at the Southside Regional Library to address constituents' concerns about the proposed TIF district. Patin has invited the developer, Glenn Stewart, to attend, and the councilman is adamant the discourse will be civil.

What the tea party-types won’t even consider is that this may very well be good project in a prime location offering adequate road access, proximity to the airport and existing shopping, restaurants, entertainment and other amenities those staying at the hotel would favor.

LEDA’s Gothreaux believes that kind of stubborn opposition could affect Lafayette’s pro-business, pro-growth reputation the next time someone with a niche product comes calling. And Lafayette could miss out big to another community. But is this established need enough to make the project work? Stewart undoubtedly has personal wealth, much he says from selling apartment complexes in Alaska, and the extra taxes will help pay off the bonds. But he’s still going to have to get a bank to get behind the development.

And what is the downside if it fails? Absolutely none for taxpayers. It’s all on Stewart and those who buy the bonds.
Failing, however, could set a bad precedent. When the next proposal comes up, particularly one even more worthwhile that may be in economically distressed area — as many argue TIF districts were originally designed for — the council may not be as willing to go out on a limb.

That’s why we need more information before moving forward.

Lafayette missed an opportunity by not having a better plan when the Cajundome Convention Center was constructed. We have a chance to do that now, and we should seize it. The council’s March 15 vote is one of several hoops the project will need to jump through, but the council must ensure that the Cooperative Endeavor Agreement it eventually enters into with Stewart requires him to build the convention center — an essential component for the hotel to realize its potential — and connect it to the hotel with a covered walkway. If he violates the agreement, the supplemental tax collection stops. Additionally, the updated feasibility study, which Stewart is funding, may reveal that both the 124-room hotel (he does have a second planned if the first is successful) and 25,000-square-foot convention center need to be larger.

Stewart should also prove that he has the financial wherewithal to pull this off, along with a bank’s commitment to finance it. And he needs to show that he has an experienced management group and reservations system to ensure the hotel’s success, since he does not have firm plans for a recognized flag.

Patin is meeting with his District 8 constituents Wednesday, Feb. 23, at 6:30 p.m. at the Southside Regional Library to hear from them and to address their concerns about the project, which borders his district. He’s invited Stewart to attend, and the councilman is adamant the discourse will be civil. “If the Jeremiahs (a reference to real estate developer Jeremiah Supple) show up and turn my meeting to shit, I’m going to get the cops to put them out,” Patin says.

Parc Lafayette’s Economic Impact

LEDA’s study of the 34-acre, $150 million-$200 million development’s impact on the local economy is based on it offering two full-service hotels, a convention center and retail/office tenants. A separate feasibility study commissioned by LEDA and conducted by Houston-based PKF Consulting in December 2008, for a proposed Westin hotel in River Ranch, is being updated for the current economic environment and this project. That study reveals that a four- or five-star hotel and convention center in Lafayette can only be successful with a government incentive, such as the proposed economic development district. Developer Glenn Stewart says units in the first phase of his lifestyle center development — 100,000 square feet of shopping and office space — should begin opening in July. It consists of 70,000 square feet of retail (Stewart says only 7,500 of this is not yet leased) and 30,000 of office (with half of that remaining for lease). The anchor is an unnamed women’s high end department store, which Stewart says has signed a lease.

Total Economic Impact on Lafayette Parish from Construction: $326.32 million

Direct Jobs from Construction/Equipment Purchases: 1,006

Direct Annual Jobs from Operations: 604

Annual Tax Revenues from Operations: $1.25 million for Lafayette Parish; additional $849,527 for city of Lafayette

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