Two months ago, the East Baton Rouge Parish Metro Council for the first time rejected a tax break for a hotel planning to locate downtown, sending a message that they were growing weary of the seemingly endless requests for public subsidies for downtown projects.
But it appears as though some on the council have had a change of heart.
Later this month, the Metro Council is expected to vote again on approving tax increment financing, or a TIF, for a Courtyard by Marriott at the corner of Florida and Third streets. That spot is currently a surface parking lot in the heart of downtown Baton Rouge.
If approved, it will be the fifth downtown hotel with a TIF. Another hotel the Renaissance, on Bluebonnet Boulevard, also has a TIF.
TIFs rebate local, and sometimes state, sales taxes paid on rooms and goods back to the developer to cover construction costs. The Marriott’s proposed TIF was for the 2 percent local sales tax collected by the city-parish.
It’s one of the smaller hotel TIFs. The Hilton Capitol Center downtown, which was the first TIF, is the most generous. It keeps 10 cents of sales taxes, about $900,000 a year.
The council was relatively split on the TIF in July, but proponents came up short the necessary seven votes to approve it.
Trae Welch was among the opponents of the TIF at the time. He said after the initial vote that he felt the once-blighted downtown area had been given enough incentives to get it to a point where it should start to stand on its own.
But this week, Welch said he “has a lot more information,” and is open to the idea of changing his vote.
Bill Fayssoux Jr., a principal with Windsor Aughtry, the South Carolina-based hotel developers, said he and his team have spent the past few weeks trying to better educate the council members about the need for a TIF and the benefits of the hotel.
He said without the TIF, they will not build the hotel.
While the city-parish will lose its sales tax contribution from the hotel with the TIF, Fayssoux noted that the hotel would still generate thousands of dollars in other taxes for the local and state government.
The hotel is projected to pay $190,000 in property taxes and $715,000 in city and state hospitality taxes.
Fayssoux also noted that the Courtyard will provide 50 full-time jobs and 125 construction jobs. Windsor Aughtry is also the developer behind the downtown Hampton Inn and Suites, which also has a TIF.
He said that the city-parish has set a precedent by approving TIFs for the other downtown hotels, so the lack of a subsidy for their newest project would send lenders a bad message and make financing difficult.
“A lender sees what’s happened in the past, and now it’s not granted here,” he said. “That shows the city does not believe in your project.”
Critics of TIFs say they’re supposed to be used to spur development in blighted, economically depressed areas, which is no longer the case for downtown. Other industry representatives have characterized the Baton Rouge hotel market as soft and question the wisdom of subsidizing more hotels without an overwhelming demand for rooms.
Downtown advocates are aiming to get between 1,200 and 1,400 rooms available in the area to attract more conventions.
Fayssoux said if the market was soft, they wouldn’t be interested in opening another hotel downtown.
Councilman Ryan Heck said he won’t be changing his vote and will vote against the TIF again.
“This just doesn’t fit my criteria,” he said. “They should be used in areas of extreme blight and in areas that really need a booster shot in the arm.”
But Councilwoman Donna Collins-Lewis said she is also considering changing her vote. She originally voted against it.
“I had not met with the developers before, and I want to better understand it,” she said. “I don’t want to set a precedent of approving some TIFs and not approving others, so at this time I’m considering the TIF.”
Councilman Buddy Amoroso is co-sponsoring the TIF with Tara Wicker. Amoroso wasn’t present for the first vote, but he said he firmly believes in using TIFs and other economic development tools to help businesses thrive.
The proposed hotel, estimated at $21 million, would be eight stories tall with 147 rooms. The first floor would have 1,500 square feet of retail space. It’s slated to open in late 2016.
Advocate staff writer Andrea Gallo contributed to this report. For more coverage of city-parish government, follow City Hall Buzz blog at http://blogs.theadvocate.com/cityhallbuzz.