Agreement approved for new hotel
DELAVAN—An agreement between a developer and the City of Delavan could help get a new business started—and keep it up and running.
On Tuesday, the Delavan City Council unanimously approved a developer's agreement with Best Hospitality, the group that bought the former Delavan House Hotel, 215 E. Walworth St., in the heart of the city's downtown.
“This has been on the top of the council's priority list for a number of years,” said Delavan City Administrator Denise Pieroni. “We are very excited to see it move forward.”
Twice in the past ten years, investors have stepped forward with promises to reopen the hotel, but those plans came to nothing.
--Stipulates that the city apply for grant funds from the Wisconsin Economic Development Corporation. The maximum amount of the grant would be $250,000. The money would be in the form of a loan to Best Hospitality, and could be used for facade improvements and renovations to the main floor of the building.
Each year the hotel, its restaurant and retail space remains open, the interest on the loan payment would be waived. The interest payment would be waived for ten years. The last five years the principal payment would also be waived.
The grant/loan also requires a 75 percent financial match from the investor.
Alderman Bruce Dewitt stressed that the developers would not receive any money until they put their own money into improvements.
If the city fails to get the grant, the business would still go forward.
--Allows developers to be eligible for reimbursement of a portion of the taxes generated from new development.
The hotel is part of the downtown Tax Incremental Financing District No. 5 (TIF). A TIF is a financing tool that allows municipalities to attract private investment through property improvements and other incentives.
The cost of those improvements and incentives are charged to the district. As the district's property value rises because of new investments, the increase in property taxes is used to repay the municipality.
As part of the agreement, the developers have to run to hotel year-round, invest at least $1 million in the building and use part of the first floor as a restaurant and retail space.
In addition, the developers must provide the equivalent of at least 16 full-time jobs.
If the TIF district is successful, the developer can be reimbursed for up to 80 percent of new taxes generated from the hotel.