The Mower County Board unanimously rejected a tax abatement request for the $6.7 million GrandStay Hotel project during Monday night’s public hearing.

With no members of the public present to speak in support or against the project, the Mower County Board was left to make a decision without much input on the proposed tax abatement request. Commissioner Polly Glynn expressed her disappointment from the lack of public interest and participation in the tax abatement hearing for the GrandStay Hotel Project, which was a similar sentiment shared among other county commissioners during the hearing.

She noted that even with having two separate occasions of the project being brought to the county’s attention, as well as being publicly discussed, there was little to no apparent interest.

Despite the public hearing not being mandatory, it was held because the county board wanted to hear directly from the public about their thoughts on the pending project and was instead met with general silence on either side of the aisle. Project investors were also absent.

“I’m disappointed,” Glynn said. “I’m disappointed that no one came to speak on behalf of the project if they supported it or not.”

The GrandStay Hotel project would consist of a four-story, 56-unit hotel that would be built in downtown Austin on the vacant lot on Fourth Avenue between Tendermaid and the Paramount Theatre. Around 41 parking stalls would be created.

The project requested a $182,174 tax abatement over three years, with the estimated county share being $21,925.77 per year or $65,777.31 total.

Overall, the construction budget for the GrandStay Hotel was slated at $6.7 million, with the assessed value being an estimated $2.7 million.

After the Mower County Board voted unanimously not to grant approval for the tax abatement, County Administrator Trish Harren emphasized it was not due to the lack of support for the GrandStay Hotel project.

“The Board supports building the GrandStay Hotel in Austin,” Harren said in an email Tuesday. “However, they have never approved an abatement for a hotel type project before.”

For the county’s tax abatement program, abatements were traditionally given to projects that increase market value, and/or bring jobs that are at 125 percent of the federal poverty rate for a family of four.

Harren went to further explain that although the GrandStay Hotel project would increase market value and provide economic growth that helps spread the tax burden while adding about 15 jobs—consisting of full-time and part-time — to the market with an estimated payroll of $255,000, 75 percent of the jobs still failed to meet the minimum requirement of the at or above 125 percent federal poverty rate for a family of four.

“A key consideration in applying economic incentives is that there is not an adverse impact on taxpayers as a result,” Harren said. “When you add jobs that are below the poverty rate, especially if they are not jobs with health insurance benefits, it can have a negative impact.”

County officials also noted that the Cobblestone Hotel project that recently broke ground in Austin had a similar land value to the GrandStay Hotel project of $250,000 and had paid market value for their property and had not requested a tax abatement.

For this specific scenario, the development agreement stated that the group building the GrandStay would get the property at a significant reduction, possibly because it was not shovel ready.

“The county was also approached by an existing hotel within the past few years about an abatement for an addition,” Harren said. “They were denied.”

As of right now, the development agreement contains language that the city of Austin’s decision to grant an abatement is contingent on the approval of the school district and county.

“We sincerely hope the project moves forward,” Harren added.

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Two sides to every story

Below are the pros and cons that weighed into the decision of the tax abatement request, according to Harren:

Pros 

• Abatement is less costly than tax increment financing so would have less impact on taxpayers.

• Provides the basis for investment of $6.7 million – county assessed value is estimated at $2.75 million. Growth is good for everyone.

• Annual local tax impact for city/county/township: $63,000 plus $19,000 state general tax.

• Would help spread tax burden.

• Investment ratio to abatement is large – $6.7 million investment for $180,000.

• Abatement pay pack time is short – 3 years.

Cities are the primary economic development drivers for counties.

• When investment is made in Austin, it positively impacts the entire county.

• Regional economic development study indicates that counties investing in tourism and recreation are the fastest growing. Mower is projected to lose population and jobs in the next 20 years.

• Businesses are equally able to ask for economic incentives.

• This project location meets an economic development target for city to redevelop downtown for the benefit of all downtown businesses.

• The project makes the highest and best use of the land based on the city’s comprehensive land use plan.

• Adds approximately 12-15 jobs with payroll estimate of $255,000 (2 above 140 percent of poverty).

Cons

• Other hotels are/were willing to come to town without economic development incentives.

• The Development Agreement provides that the property would be provided at substantially below market value – it has a $250,000 value.

• Concern about hotel need/capacity – how many beds do we need?

• Concern about potential negative impact on existing hotels and loss of value and/or tax base and jobs.

• Board has not heard from any of the local investors regarding support of abatement or any member of the public.

• Concern about adding more lower paying jobs and the impact on county services.

• Concern about low employment rate and difficulty finding employees for service sector jobs.