Minutes 05/28/1996 - Laserfiche WebLink

Home Browse Search

May 28, 1996 96-191 Letter from the City Manager recommending adoption of a resolution authorizing the City Manager to submit a Section 108 Loan Application to the Department of Housing and Urban Development. "One of the City's most important strategic areas is the East Waterfront as identified in the Vision 2005 Plan. A long standing goal has been to encourage development of a first class hotel in the area, in order to further the attainment of increased tourism and convention activity. In that regard, the staff has been working with the owner of the Holiday Inn on the proposed renovation of that facility. Standards for maintaining a Holiday Inn franchise have been upgraded nationally, and along with the age and natural wear, require renovations at the local hotel. Because of the structure of the existing financing, the owner of the hotel has been unable to obtain market financing for the project and has requested assistance. It is proposed that the City obtain a Section 108 loan of $2.4 million through the United States Department of Housing and Urban Development. These funds can be obtained by securing the loan with a pledge of the City's future Community Development Block Grant entitlement. The funds for servicing the debt would come from the revenues of the hotel. It is anticipated that there will be sufficient cash flow for the loan to be repaid within four years. Portsmouth Hotel Associates, which operates the Holiday Inn, will pledge the property as collateral. Through our negotiations, the owner has agreed that after renovations are complete, the local Holiday Inn will well exceed the newly established corporate franchise standards. The renovation would create 39 new jobs and save 28 jobs which are all available to low and moderate income persons. It is anticipated that the City will realize an increase of $267,000 in annual tax revenues from higher room, food, and beverage sales. There should also be increases in the business license, personal property, and real estate taxes. I recommend that Council adopt a resolution authorizing the City Manager to submit a Section 108 Loan Application to the Department of Housing and Urban Development." Motion by Mr. Martin, and seconded by Mr. Griffin, adopt the following resolution, and was adopted by the following vote: to "A RESOLUTION AUTHORIZING THE CITY MANAGER TO SUBMIT A SECTION 108 LOAN APPLICATION TO THE UNITED STATES DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT AND TO PROVIDE ADDITIONAL INFORMATION AS REQUIRED. WHEREAS, the City of Portsmouth, Virginia has recently completed the "Portsmouth 2005 Plan"; and WHEREAS, the East Waterfront, as identified in the Plan, is a "unique tourist, recreation, business, and living envirornnent which reunites the historic core of Portsmouth with its neighborhoods" and is one of the City's four strategic centers; and WHEREAS, the Holiday Inn Hotel is located in the East Waterfront district as identified in the Plan; and WHEREAS~ the Holiday Inn Hotel must modernize its facilities to maintain its franchise and to compete with upscale hotels in the Hampton Roads area; and