Council Oks Tax Abatement

CAPTION: A public hearing regarding a Chapter 353 tax abatement application from Ehrhardt’s Chillicothe Redevelopment Corporation for a new 62 room Comfort Inn within the Stoneybrooke TIF took place last night (Monday) at City Council. The property is directly south of BTC Bank.

C-T Photo/Laura Schuler

Chillicothe city council members passed an ordinance Monday night approving the application for tax abatement submitted by the Ehrhardt Chillicothe Redevelopment Corporation which plans to build a hotel within the Stoneybrooke tax increment finance (TIF) district in south Chillicothe. The action was taken during a public hearing held during the regular bi-monthly city council meeting at City Hall.

Ehrhardts Macon, LLC and the Ehrhardt Chillicothe Redevelopment Corporation submitted the 353 tax exemption to the city council. The package consisted of an application for tax abatement under the URC Law, the Urban Redevelopment Corporations Law, which authorizes the city to approve development plans that allow for the redevelopment of blighted areas within the city of Chillicothe and the granting of tax abatement to encourage such redevelopment.

The redevelopment area is blighted by reason of age, obsolescence, inadequate and outmoded design, physical deterioration, has therefore become an economic and social liability and these conditions are conducive to ill health, transmission of disease, crime or inability to pay reasonable taxes. A development plan, titled “Ehrhardt Chillicothe Chapter 353 Redevelopment Plan”, details the proposed redevelopment of an approximately 2.38 acre site, located on Old Highway 36, directly south of BTC Bank Restaurant in Lot 9 of the Stoneybrooke Subdivision.

A new 62-room Comfort Inn Hotel is planned to include a substantial meeting room, indoor pool, spa, business center and exercise area and would be 32,272 square-feet. Of the 62 available rooms, approximately 13 will be suites. According to Robert Cowherd, Ehrhardt attorney, Chapter 353 tax abatement was requested because the hotel project as proposed to be developed, is projected to have a limited cash flow given the high cost of new construction and the high operation expenses. A tax abatement would help lower the operating costs and assist continued operation of the hotel, which will provide high quality hotel rooms, ranging from $99 to $119 per night, and a meeting room for 150 people.

The budgeted cost of the project is $2.8 million and is proposed that the funds will be obtained through a combination of sources, 20 percent from owner equity and 80 percent from bank loans. The lender on the project is anticipated to be the Macon-Atlanta Bank. The developer requested tax abatement of 100 percent for 10 years and 50 percent for 10 years. The abatement tax is the real estate tax on the project and would amount to a total of $192 a year. The real estate tax, when collected, goes towards the ambulance district, the city, school district, emergency services, etc. However, the city will still collect 100 percent of sales tax generated from the hotel through the purchase of fixtures, furniture, bedding and such, which will pay the TIF. The city will also collect 100 percent of hotel/motel tax and personal property tax on the project.

Additional information on Monday night's council meeting will be in the C-T's Wednesday, Dec. 31 edition.

City Leases Fast Lanes Entertainment Center for $2.2 Million
Wednesday, December 31, 2008, C-T

CAPTION: The City of Chillicothe, the Chillicothe Industrial Development Center and Chillicothe Development, Inc., have formed a cooperative partnership and will lease Fast Lane Family Entertainment Center from the Grand River Entertainment Inc., for $2.2 million.

C-T Photo/Paul Sturm

Chillicothe City Council approved an ordinance Monday night authorizing the City of Chillicothe to enter into a lease/purchase transaction, the proceeds of which will be used to pay the costs of purchasing the Fast Lanes Family Entertainment Center for the purchase price of $2.2 million from Grand River Entertainment.

The ordinance states in part that the City Council approved the sale of the 2008A Certificates to Citizens Bank & Trust for the purchase price of $990,000, with an interest rate of 4.00 percent per annum, calculated on the basis of a 360-day year, consisting of 12 30-day months, subject to the conditions set forth in the Declaration of Trust and $1,210,000 for the 2008B Certificates, with an interest rate of 5.00 percent per annum, calculated on the basis of a 360-day year, consisting of 12 30-day months, subject to the conditions set forth in the Declaration of Trust. Delivery of the Certificates shall be made to the purchaser as soon as practicable after the approval of this ordinance, upon payment therefore in accordance with the terms of sale.

In order to purchase the Fast Lanes the city must enter into a lease/purchase agreement with Citizens Bank & Trust Co., pursuant to which the city, as the lessee, will sublease the property from Citizens Bank. Attorney Robert Cowherd stated that, according to the agreement, the city’s portion of the agreement was $990,000, 45 percent of the project’s total.

The City of Chillicothe, the Chillicothe Industrial Development Corporation and Chillicothe Development, Inc., entered into a cooperative agreement in which the two companies will make payments to the city, and in turn, the city will then make payments to Citizens Bank & Trust for the purchase of Fast Lanes Family Entertainment Center. The companies will also receive an allocable portion of the proceeds from any future sale of the property, according to the ordinance.