Torgerson Properties seeks property tax abatement for hotel project in Willmar, Minn.
WILLMAR — Torgerson Properties of Willmar will be asking the City Council to consider a request for a 10-year property tax abatement for the company’s proposed hotel and conference center renovation project after construction bids came in substantially over budget.
The council’s Community Development Committee discussed Torgerson’s tax abatement request Thursday afternoon and voted to recommend the council give preliminary approval to the abatement and to set a public hearing April 15 to consider the request.
The committee’s recommendation will be considered by the council Monday night.
Kathy Aamot, Torgerson Properties senior vice president of finance and development, told the committee that Torgerson had a budget of about $8 million and that bids come in at almost $11 million.
“Construction costs we have found … have gone up significantly,’’ Aamot said. “There is some inflation being built into that. Construction cost came in significantly higher than we had anticipated.’’
The project, titled “Willmar Legacy,’’ is scheduled to begin this spring and anticipated to be completed in the late fall of 2014. The Planning Commission has approved construction plans.
The project will add a third story to the current two-story Comfort Inn and the hotel will be rebranded to a Holiday Inn Express and Suites with completely renovated guestrooms and public space.
The current Holiday Inn on U.S. Highway 12 East will be rebranded to a Best Western Plus, with renovated guestrooms, re-floor planning of public space and a new porte cohere entrance.
The Green Mill restaurant will move its current bar into the Teddy Roosevelt room with renovations to both the dining room and bar, along with adding an outdoor patio area.
Moving the Green Mill bar allows space for the new Hurricane Grill & Wings restaurant, which will have an outdoor patio area.
Finally, the Willmar Conference Center will be upgraded and the site will get new landscaping and parking lot.
Aamot said the project would create 30 jobs. Current employment is 30 full-time and 113 part-time for a full-time equivalent of 87.
Aamot said the project would be a significant business and cultural asset to Willmar and would compete regionally with Mankato, St. Cloud, Jackpot Junction and Prairie’s Edge for conventions and meetings.
Torgerson Properties owns the city’s best conference facility, according to Bruce Peterson, city planning and development director.
“The city is able to take economic advantage of that privately-owned facility and we don’t have an ongoing municipal cost like the other cities do and that plays into the staff recommendation,’’ he said.
Peterson said three current business tax abatements and one expired abatement have provided economic benefit in the form of increased tax base and increased employment.
Torgerson is requesting its property taxes be frozen at the current 2013 level of $110,362. That amount is divided among the three taxing jurisdictions: the city, Kandiyohi County and Willmar School District. The city is being asked to abate its share and the county will be asked to abate its share, said Peterson.
He said the school district will not be asked to abate its share. He said if one or more of the entities chooses not to participate, state statute allows for the term of the abatement to be increased.
But under this proposal, the abatement period is being held to 10 years even though the school district is not being asked to participate, Peterson said.
Committee members requested an estimate of the total amount of property tax to be abated. Peterson said the city assessor can’t calculate the total because the value of the property is calculated on net operating income.
Aamot said income will actually go backwards during the 2013 and 2014 construction years. The first full year of stabilized performance will be in 2015, which is when Torgerson requests the abatement period begins.
Peterson said he would have an estimate of the annual abatement amount prepared for the council Monday night.