Tuesday, October 27, 2009

Downtown Owensboro Hotel Update

EDC President/ CEO Nick Brake delivered the following update on the selection of a development team for the downtown Owensboro hotel:

A review committee, consisting of staff from the EDC and Downtown Development Director Fred Reeves, Judge Executive Reid Haire, City Manager Bill Parrish as well as Gateway consultants, including an economist with extensive experience in vetting similar deals, is working to select a development team from the RFPs received.

The committee is using the following criteria to evaluate the RFP respondents:

  • Adequate financing
  • Experience in construction and management of hotels
  • Providing a full service experience
  • Track record of success on previous projects
  • Willingness to incorporate the design into the Downtown Master Plan
  • Level of involvement with the Convention/Events Center

The committee and consultants identified three finalists. As with other economic development projects, providing specific information about each proposal would jeopardize the deal and result in the potential of the developers from withdrawing their proposal from consideration.

The Committee is recommending a developer and not working with hotel chains. The developers have indicated which hotel flag or flags they could potentially bring to the development in downtown Owensboro. Each proposal comes from highly respected developers that have strong relationships with nationally respected hotel flags.

All three proposals have significant local groups involved with the proposal or have already made significant investments in the local economy.

Given the current economic environment, each proposal brings different mixes of financing options, ranging from publicly supported bonds to private equity financing and traditional financing from banks. The Committee has clearly indicated that public bonding and public financing of the hotel is not an option. All three proposals have asked for public incentives, such as infrastructure improvements.

All proposals have strong urban design components that match the Downtown Master Plan. All have expressed a strong desire for the hotel design to match the design of the convention center/ events center.

All three proposals meet the requirements of a full service hotel, as defined by the Kentucky Tourism Development Act. These amenities include room service, a restaurant and bar on the premises, and the catering services to the convention/ events center. Many of the proposals have innovative ideas for these amenities.

Each proposal indicated their intent to construct a hotel with a range of between 150 and 175 rooms. The average room rates, cited by the three finalists, ranged from $110 to $140 per night for a standard room.

The review committee and consultants have asked each of the three proposals for clarifying information. The committee will receive responses from each of the three over the next couple of weeks, at such time the committee will begin negotiations with those that provide the appropriate follow up information.

The committee expects to have a recommendation to the City Commission in 30 to 60 days.

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