The fate of a new hotel in the de facto lodging district of McFarland Boulevard is now in the balance.
Ascent Hospitality, the local company behind several hotels in the city, has formally withdrawn its application for economic aid from City Hall after weeks of negotiations without an agreement.
Developers asked for property tax rebates and license fees totaling $ 386,295 to support the construction of a new Avid hotel valued at $ 12 million.
But on Friday, Tuscaloosa attorney Bryan Winter, who represents Ascent Hospitality and Ajit Kher and Ajay Kher’s father-and-son team, confirmed to The Tuscaloosa News that the Khers withdrew their application after city guides refused while the July 13th council meetings.
Planned for a vacant lot next to the La Quinta Inn & Suites on McFarland Boulevard – a hotel also developed and operated by Ascent Hospitality – the Avid Hotel, when it is finally built, would add another 87 rooms to the area, along with one Peloton fitness center and charging stations for electric vehicles.
It would also create 120 construction jobs, an estimated 17 new full-time positions after it opened, and would be only the fifth Avid hotel, a brand controlled by the InterContinental Hotels Group (IHG), to open in the state.
“Time is of the essence here,” Winter told the council. “We either have to move on with it or we don’t.”
Winter said IHG is pushing Ascent Hospitality to develop the hotel or risking losing the rights to build a now relatively new brand in the Alabama market.
The economic incentive application provided for property tax rebates for the next 10 years, or approximately $ 260,000 total, whichever comes first, along with the one-time exemption of $ 126,273 in building fees.
This was a modified and scaled-down version of Ascent Hospitality’s original proposal, originally proposed in March, which included similar discounts on accommodation taxes.
But city officials and Mayor Walt Maddox, after reviewing Ascent’s initial proposal, determined that the global coronavirus pandemic – along with previously approved incentive offers at other high-end and luxury hotels in downtown Tuscaloosa – increased the possibility of City has eliminated lodging taxes and that a deal that includes them would not be considered.
“In the mayor’s view, the city’s lodging tax revenues have not recovered significantly from the economic fallout from COVID-19,” Tuscaloosa prosecutor Scott Holmes said in a June 2 letter to Winter. “This, together with the overuse as an incentive for economic development in recent years, makes it economically impossible for the city of Tuscaloosa to encourage development through the use of accommodation tax revenues.
In keeping with the motto “Some is better than nothing”, Ascent Hospitality decided to take a short economic break in order to develop the hotel and to help rejuvenate the district that Winter referred to as an economically weak district.
But now that plan is officially pending, said Winter.
“I think you can see that this is an area that is badly affected by rot, and rot is helping create opportunities for crime,” Winter said. “Somebody has to start economic development down here and these people are the first to really invest in the area.”
A slightly different guest
In order to justify the now withdrawn application for economic aid, Ascent Hospitality is targeting a different guest with its new project than those who were targeted by previous developers of economically subsidized hotels.
In addition to building the La Quinta Inn & Suites, which opened in 2017 with an estimated $ 10 million and 101 rooms, Khers and Ascent Hospitality also developed the nearby Comfort Suites on McFarland Boulevard in 2006.
Outside of McFarland Boulevard, the company also built the 89-room Comfort Inn & Suites on Jack Warner Parkway and financed the renovation and conversion of a derelict hotel on Skyland Boulevard into the Red Roof Plus +, which is next to Howard Johnson by Wyndham. located hotel that the company also operates.
The Avid Hotel, according to the company, would be intended for a similar clientele and planned as an option that the company described as “upper middle class”.
“Our hotel will present (guests) a new, upscale product,” said Ajay Kher.
Although Winter said the IHG’s deadline for opening the hotel was “yesterday,” the city council’s finance committee rejected a decision, saying it would take at least a week – if not two – to get comfortable to feel take action.
And while the committee didn’t seem open to the request, Matthew Wilson, the newly incumbent city councilor, asked why Ascent asked for help with this hotel when it had not in the past.
“What made you want to get incentives for this project?” Said Wilson, who represents District 1.
Winter provided a multifaceted answer, from rising material costs to a reason for private investors to spend capital in District 7.
“I think we have to tell people that we want them to be in this area and grow there,” said Winter.
Questions and usually received
Before the motion was withdrawn, the Avid’s tax and fee rebates would have been about $ 13,800 per room, the lowest per room rate considered by City Hall.
In contrast, the city’s first economic incentive package for a hotel has been expanded to include the $ 31 million Embassy Suites, located downtown on the corner of University Boulevard and Greensboro Avenue.
After the city revised its policy of economic incentives to align with the rewritten state law, the city decided to offer the developer tax refunds and discounts over time. Thus not only was the performance of the development directly linked to the granting of the aid, but also a deadline set in each individual case for the maintenance of the tax reductions it had approved.
On 154 rooms for the Embassy Suites, the city offered back a percentage of the lodging and property tax generated by the new development, capped at $ 4.89 million, or about $ 31,724 per room.
While the Embassy Suites package is slated to expire in April 2025, its performance since opening means the discount amount will likely be met before that, which will allow all future lodging and property taxes to remain in the city’s treasury.
A $ 1.7 million incentive package was approved for the 91-room Hotel Indigo on the Black Warrior River, which opened in 2016 and has 91 rooms valued at $ 17 million. These incentives are roughly equivalent to $ 18,727 per room and are expected to end in October 2026 if that cap is not met.
The $ 2.2 million discounts approved for the 114-room, $ 19.7 million Homewood Suites by Hilton on the corner of Jack Warner Parkway and Greensboro Avenue total approximately $ 18,803 – dollars per room. They were approved for nine years of discounts or until the cash cap was reached.
A $ 3.5 million package was awarded to the AC Marriott, valued at $ 27 million and 120 rooms, which is nearing completion on the former No. 1 Fire Station site on Lurleen B. Wallace Boulevard. This equates to approximately $ 29,166 per room, and these discounts are not meant to last more than seven years if the cap is not met.
And when the city council approved the economic incentive last year for the $ 30 million, 112-room luxury hotel, The Alamite, currently under construction in downtown, those discounts came to about $ 31,959 per room.
While The Alamite’s deal was the most expensive per-room economic incentive package for a hotel the city council has approved to date, the city’s finance team warned at the time that the continuation of lodging tax discounts would eventually exceed responsible boundaries.
“We want developers to make a profit,” Maddox said in March 2020, “but we want taxpayers to make a profit too.”
You can reach Jason Morton at jason.morton@tuscaloosanews.com or 205-722-0200.