Owensboro city commissioners have put timelines on the planned construction of a third downtown hotel, with financial penalties if deadlines aren’t met.
On Aug. 10, commissioners authorized Mayor Tom Watson to enter into an amended memorandum agreement with Riverfront Brio, which proposes to build a 110-room hotel, 400-space parking garage and more than 180 residential units downtown. Officials broke ground for the project in the 500 block of West Second Street, between Locust and Cedar streets, in 2019.
City Manager Nate Pagan said Wednesday the memorandum of agreement will be completed within a week. From that point, Riverfront Brio will have 90 days to begin work on the hotel and parking garage. Riverfront Brio is an affiliate of Gulfstream Commercial Services.
The city is providing a total of $4.6 million in financial incentives to Gulfstream for the hotel and residential projects. The amended agreement allows the city to reduce the incentive payments to Gulfstream if construction deadlines aren’t met, Pagan said.
“There are construction milestones for the hotel, but there is also a timeline set with that,” Pagan said.
The city has $3.5 million in incentives for the hotel and garage. After construction starts, the deadline to complete the hotel and parking garage is 24 months, Pagan said. The city, which is providing its incentive in five payments, will reduce its payment by 10% for every 30 days the work goes beyond the deadline, Pagan said.
The financial penalty only applies to the payment that is pending at the time of the deadline, Pagan said.
The amended memorandum also amends the hotel agreement somewhat. The initial agreement was for a 120-room hotel, but the understanding between the parties allows for a 110-room hotel instead. The change was made “at the recommendation of the hotel company,” Pagan said.
The memorandum also allows for residential units to be built in up to three locations downtown. Ed Ray, Gulfstream’s chief operating officer, could not be reached for comment Wednesday afternoon.
Timelines will also be placed on the construction of the residential units. City attorney Mark Pfeifer said work on the residential units that will be built at the hotel site must start within 180 days of the signing of the agreement and must be completed within 24 months of construction, or 30 months from the signing of the agreement.
Construction on the residential units off the hotel site must begin within 12 months of finalizing the agreement and must be completed within 30 months of work beginning, or 42 months from the signing of the agreement, Pfeifer said.
The city has allocated $1.1 million in incentives for the residential units. Pfeifer said Gulfstream will receive incentives based on the number of units that are complete by the construction deadlines. For example, if 150 units were completed by the deadline, the incentive would be reduced to reflect that, Pfeifer said.
Pagan said the agreement was amended “to better protect our taxpayers.” Mayor Tom Watson said the agreement is “just really the normal course of business.”
“It’s a friendly agreement,” Watson said. “It’s a common practice.”
The new hotel, Watson said, is expected to help the Owensboro Convention Center attract larger conventions.
“We need 400 rooms downtown, and we’re 100 short,” Watson said. Once the hotel is operating, “we’ll be watching closely, to see if it did make a difference.
“If you look across the country, there aren’t many communities building hotels in the middle of this pandemic, so it’s an awesome thing” the project is moving forward, Watson said.
James Mayse, 270-691-7303, firstname.lastname@example.org, Twitter: @JamesMayse