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Local News

April 14, 2014

County agrees on economic incentives for hotel, waterpark

BEAUMONT — Over the protests of local hotel owners, Jefferson County Commissioners approved an incentive package to offer developers of a proposed convention quality hotel and amusement waterpark to be built at Ford Park.

Local hotel owners say the economic incentives offered will give an unfair advantage to the Ford Park hotel.

“While being sensitive to existing hotels, I view this as a very unique opportunity we have,” Branick said. “Ford Park is a $70 million facility that our taxpayers are financing. It is important to bring more traffic, business and attention to that facility.”

To do so, the commissioners unanimously approved a letter of intent to the developers detailing economic incentives for the 200-room convention hotel and the 13-acre water park.

The developers, Pate Development Co., a Wichita, a Kansas-based company, and Innovative Leisure Partners, of Rosharon, will fund the $25 to $40 million project, with no cost to the taxpayer, Branick said.

Jefferson County is offering a 35-year ground lease with a 35-year renewal option to Pate Development Co., the hotel’s developer. The lease will cost the company $25,000 per year on the first $250,000 of net hotel income and an additional $25,000 per year for every year that hotel income exceeds $500,000.

The waterpark will be offered a 35-year ground lease for an annual payment of $15,000, with an option of a 35-year renewal.

Hotel and waterpark developers will repay Southeast Texas Economic Development Corp. approximately $27,000 expended for feasibility studies and legal fees.

In addition, the county will rebate hotel/motel taxes due the developer for a 15-year period and ad valorem tax payments for 10 years.

The waterpark developer will be rebated ad valorem tax payments for 10 years and sales taxes on ticket sales for a 10-year period.

As a condition of the letter of intent approved Monday, the developers will be required to use local labor and vendors and to purchase local supplies.

Bill Bianchi, president of the Golden Triangle Hotel and Lodging Association, spoke on behalf of hotel owners.

“Everybody wants to see Ford Park a success. Nobody wants to stop construction of hotel, but this is very much at the expense of existing hotels,” Bianchi said.

Marketing and the staff at Ford Park are paid from Hotel Occupancy funds, which are paid by patrons of local hotels.

In addition to the unfairness of existing hotels helping to pay their competition, it is a bad time right now to build another hotel, Bianchi said.

The hotel industry is heavily overbuilt, he said.

Occupancy last year was in the low 50’s, though it is up slightly this year. To be profitable, a hotel’s occupancy rate should be 65 to 70 percent, Bianchi said.

“Right now there is a half-dozen hotels in the process of sale or bank action. There are 6-8 that have lost their franchise, he said

“This is providing an unfair advantage to businesses already paying taxes,” he said.

Troy Gibbs, an employee with Cameo Sabine Neches Travel in Beaumont, said he was in favor of the hotel.

Hotel Occupancy taxes, he said, were not paid by the hotel, but by the guests.

When trying to sell a convention, they always want to know if you have a hotel on site, Gibbs said. “This is a win-win situation. It is a positive we’ve not had in our area for a long time.”

Branick said almost all convention centers built now involve public/private partnerships.

“This will serve our citizens well and stop a lot of traffic going through,” Branick said.

During the 2013 fiscal year, the county expended $2.2 million to cover the shortfall in Ford Park operations.

Another $2 million is budgeted in the current year budget.

Since Ford Park opened roughly 10 years ago, the county has supplemented operations every year.

It is hoped having the waterpark and hotel on Ford Park grounds will ultimately reduce some of that cost, in addition to adding jobs to the community.

The waterpark is expected to bring hundreds of jobs for primarily youth during the summer. The hotel about 50 to 75 jobs, Branick said.

Beaumont City Council will consider offering economic development incentives at their regular meeting Tuesday.

E-mail: skoonce@panews.com

Twitter: skoonce@panews.com

 

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