Mt. Vernon Register-News

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December 4, 2012

Council approves Drury agreement

A new seven story, 180 room hotel will be built on the site of the existing one

MT. VERNON — — The city council approved a development agreement with Drury Hotels, but not without comment from other Mt. Vernon hotel managers and owners.

According to Joe Pereles, vice president of Drury Hotels, a new seven story, 180 room hotel will be built on the existing site of the Drury Hotel, with plans for two restaurants to be located on the project site, which encompasses the existing hotel site, the former Denny’s restaurant property, the former gas station property and the Thrifty Hotel property, which will all be demolished. The former Behind the Pines Hotel will also be demolished, but not included in the project development area.

The total project cost is estimated at $19.9 million.

The city will reimburse Drury up to $5.03 million using a combination of East Side Tax Increment Finance District funds realized in the Drury project area and from tax reimbursements.

“The Drury Inn with 80 rooms opened on the site in 1977,” Pereles said. “The existing Drury Inn no longer meets Drury standards. We appreciate the city working with us to redevelop the corner. ... The agreement we reached puts the burden on us to succeed, and we bear the financial burden.”

Reimbursements only affect the Drury project area, in TIF reimbursements and in rebates on the 85 percent of the incremental sales tax revenues above the current amount received on the property. The other 15 percent of taxes will continue to be put in the city general fund. Sales tax funds which will be tapped for reimbursement are the hotel/motel tax, the bed tax, the 1 percent sales tax, the 1 percent home rule tax and the 1 percent food and beverage tax earned on the Drury project area.

However, Jason Quinn of Fairfield Inn and Suites, said he and other hotels believe the development agreement give Drury an unfair advantage over other hotels.

“There is a saturation of the market,” Quinn alleged. “We’re not selling 100 percent of the rooms in the market. Why does this situation garner nourishment from the city? ... We’re not selling out the market we have, so why is there this intrusion of the city?”

Quinn also said city hotels are seeing the best years with record numbers of rooms and admitted the Fairfield is at maximum capacity.

“But that won’t last forever,” Quinn said, adding the reason for good room numbers is the influx of oil and gas industry executives staying in the city. “This is a beautiful project, but my product is beautiful too. When the market changes, we will be at a  competitive disadvantage because of this project.”

Quinn’s comments were addressed by Councilman David Wood and by Councilman Dennis McEnaney.

“It’s a competitive world we live in,” Wood said. “This agreement is typical of incentive agreements reached in municipalities all the time. ... We get something out of this — for one, look at Behind the Pines. It’s a dilapidated, falling down hotel. It’s coming down. This development will revitalize an important part of Mt. Vernon. ... The reality is, if we don’t do this with the Drury, they will build this hotel — the question is whether they will build it in Mt. Vernon or somewhere else.”

McEnaney said saturation of the market is an issue which has been considered.

“We heard this same argument before when Kohl’s came in,” McEnaney said. “It’s the intention of this council to grow this city. ... It’s my belief if you bring in more, more people will come into our community. Look at Kohl’s. More people come into the city to shop at Kohl’s, which has increased the number of people who shop in stores like Sears and Penny’s. We know that because of the sales tax figures. ... This project is good for the whole area, and I think it will be good for you, too.”

In other business, the council:

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