Hotel proposal gets half-hearted support

COEUR d'ALENE — Coeur d'Alene's urban renewal agency, ignite cda, unanimously approved half of an originally proposed $1.25 million partnership on a multi-use piece of property highlighted by a four-story Fairfield Inn & Suites by Marriott.

But approval Wednesday didn’t come without plenty of controversy.

Now the responsibility lies on hotelier Ron Ayers to not only make his dreams for the 4.55-acre piece of property on Northwest Boulevard and Emma Avenue a reality, but to meet his estimated assessed value of the project — values that were frequently questioned by ignite cda board members — if he hopes to be reimbursed the $680,000 promised in the deal.

"The assessed value, that's the risk that the developer takes," said Commissioner Denny Davis. "We're not going to put this money out up front; we're going to reimburse, and if he doesn't create enough, that's on him."

Ayers, who describes the "Coeurllaboration" project as a "200,000-square-foot, mixed-use, solar powered, Fairfield Inn & Suites by Marriott-anchored entrepreneurial and economic development focused hospitality center," proposed the partnership with ignite cda last month, primarily to address infrastructure

improvements needed before construction of the hotel begins. During the regular meeting of the board Wednesday, Davis found unanimous support when he cut more than 50 percent of the original proposal due to components of the improvements not falling within the agency's purview.

"While less than I would have liked due to the substantial risk a developer takes in a project like this, and if it's not built I get nothing, I think they made a reasonable and informed decision," Ayers told The Press on Thursday. "I'm pleased with the outcome of the meeting last evening, and I greatly appreciate the ignite cda board embracing and supporting the vision for this impactful, landmark project. This project is textbook tax increment financing, with the desired outcome benefiting the community by generating a huge property tax increment, and would not happen without the ignite cda board's support."

Under the partnership agreement, ignite cda will not provide any funding up front. Instead, Executive Director Tony Berns said, the funding will be in the form of an "Improvement Reimbursement Agreement."

"The developer pays for all of the board agreed-to public improvements up front, then the developer is reimbursed for the public improvement costs over time solely from property tax increment revenues generated from his project," Berns said. "If the project does not generate sufficient funds to reimburse the developer prior to the (Lake) district's sunset, then the developer does not get fully reimbursed for his up-front costs."

Berns said ignite cda has not partnered directly with any hotel project in the past. The entirety of Ayers' project is within the boundaries of ignite cda's Lake District, which is set to expire in 2021.

According to estimates provided to ignite's board by Ayers, the completed project will bring the overall assessed value of the property from $2 million to $22 million — $15 million for the hotel and $7 million for the restaurant and retail portion — bringing an 18 to 1 investment-to-value ratio on the approved $680,000. That estimate, according to Ayers, would also completely refund his up-front infrastructure investment before the district expires.

Mayor Steve Widmyer was the first member of the board to call into question Ayers’ estimates.

"That seems rather high when we look at all the other assessed values of the hotels around there," Widmyer said. "How comfortable are we with these numbers?"

Before Ayers could respond to the question, Commissioner Mic Armon asked a follow-up related to Ayers' timeline for completing the hotel portion of the project. An opening date of July 2017, Armon said, is only seven months away.

Armon also asked if the other components of the project would be ready to open at the same date. In his presentation to ignite last month, Ayers said that, along with the 112-room hotel, the solar-powered site would feature above-ground, off-street parking with a 60-space parking structure, a Solar Roadways installation on the sidewalk and parking area, and up to 2 acres of restaurant and retail pads.

"I don't really know construction that well, but it seems like seven months is a pretty quick turnaround," Armon said.

Ayers told the board that project members are actively working on the other components of the project.

"Without disclosing who and what those encompass it's a little bit hard for me to talk about it and make public knowledge about it to someone I might be competing with," Ayers said. "But those are actively being worked on development wise. The timing, it could be in line with the hotel and it might be a little bit later."

"How comfortable are you with July?" Armon asked.

"Depending on how we do tonight, it's close and it's tight," Ayers responded. "We're ready to go, but weather is a factor. It's about eight months and I think it's right in there."

In an interview with The Press Thursday, Ayers said the project is still set to move forward based on the July 2017 timeline.

"Is there an appraisal that supports the $15 million value?" Widmyer asked.

"Yes," Ayers replied, without further elaboration.

Commissioner Justin Druffel called into question several components of Ayers' proposal, which he said "seemed like a little bit of a stretch as far as public improvement." Davis agreed, and then proceeded to eliminate multiple components of the proposal before making a formal motion on the now $680,000 partnership.

"I personally never thought this was going to raise enough increment to reach that before the district sunsets anyways," Commissioner Brad Johnson said after seconding the motion. “So even if we pass that as it sits right there, I don't think they'll realize it."

"I just think it's bad precedent for the board to approve items that we otherwise wouldn't," Davis responded. "Even though, at the end of the day, it's never going to reach that number."

When asked about the concerns raised over his estimated values, Ayers said establishing such values requires looking into the future and coming up with a "best guess." Ayers added that he started with the project cost when establishing the estimates, and agreed that the final value may very well end up being less.

"But even at very conservative estimates, the increment is huge. So they made their decision from their best guess," Ayers said. "The assessed value question, coupled with the relatively short period before the Lake District sunsets in 2021, puts a clear limit on the extent in which they can participate."