The Enid News and Eagle, Enid, OK

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March 19, 2013

City commissioners OK contract terms for downtown hotel

ENID, Okla. — Enid city commissioners Tuesday night approved a contract with LodgeWell Group LLC to construct a downtown hotel and parking garage.

The contract formalized terms under which LodgeWell will construct a $14 million Hilton Garden Inn adjacent to the new Enid Event Center and Convention Hall.

The city signed a master development agreement with LodgeWell on Feb. 21, specifying LodgeWell would privately develop, own and operate the hotel.

The contract approved Tuesday specifies LodgeWell will develop a 131-room hotel and a parking facility with ground-level retail space.

The hotel will be located at Independence and Maine, incorporating the facade of the Kress Building. The parking garage is planned for frontage on Maine, east of the hotel.

Ward 1 Commissioner Ron Janzen raised concerns over considering the hotel and the parking garage in the same contract.

“I have no difficulty building that hotel there, or going through with LodgeWell for that purpose, but I’m not in favor of building that parking garage, so for that reason I’m voting against this,” Janzen said.

Rickey Hayes, retail consultant for the city of Enid, stepped forward to speak to the possible benefits of developing the retail space in the parking garage, in conjunction with both the hotel and Enid Event Center.

Hayes said the new retail space will help Enid attract national brand “boutique- type retail.”

“The downtown area is a unique area in terms of recruiting retail to your city, because it is in a situation we see in every market where there is a substantional national retail presence — those national retailers want to stay in a synergistic pattern with other retailers,” Hayes said.

“If you asked me ‘Could we recruit national retail downtown?’ I would say, only in a situation like tonight where you have a quality developer bringing in a quality hotel ... that will complement your Event Center and the quality of life you have in Enid,” Hayes said. “With that in mind, your downtown becomes a natural seed bed for some specialty retail.”

Hayes said he envisioned the 18,000 square feet of retail space in the parking garage filled with a sit-down restaurant, a “quick-service restaurant,” and boutique shops.

Ward 4 Commissioner Drew Ritchie moved to accept the contract, citing both the need for a hotel to support the Event Center and the retail opportunities in the parking garage.

“This contract that is in front of you is the next necessary step in making the downtown vision a reality,” Ritchie told the other commissioners.

Ward 2 Commissioner Mike Stuber interjected, requesting an amendment to the motion to allow for a contingency clause if planned new market tax credits or tax increment finance district funds do not materialize to help fund the parking garage development.

The contingency would allow the contract specifications to reduce the size of the parking garage if the extra funds do not become available.

LodgeWell partner Dave Owen stepped forward and said LodgeWell would support such a contingency. Owen said a two-level garage — as opposed to the planned four-level garage — still would support the hotel’s required 131 parking spaces.

The contingency version of the parking garage would retain the retail space.

Ritchie accepted the amendment to his motion, and the commission approved the contract on a vote of 6-1, with Janzen dissenting.

The contract terms approved specify the city will lease the land for the hotel and parking garage to the developer during construction, and once contract terms are met, convey the land to LodgeWell at a cost of $10.

The contract also states the city will provide a 100 percent rebate for 10 years for all undedicated sales tax generated in the parking garage retail space.

Enid City Manager Eric Benson clarified during Tuesday’s commission meeting that sales tax rebate will be earmarked to be used by LodgeWell as a recruitment incentive to bring in new retailers to fill the parking garage retail space.

The city will rent the parking facility and retail space for at least 10 years, with the total rental cost being equal to the cost of constructing the parking facility and “all operating and reasonable management fees and expenses.”

The parking facility agreement specifies a maximum of 131 parking stalls be allocated to the hotel, and all parking revenues generated in the facility will be shared on a 50/50 basis between LodgeWell and the city.

Upon completion of the 10-year lease term, LodgeWell would transfer title for the parking facility to the city, under the contract terms.

The contract also specifies a room occupancy agreement between the city and LodgeWell. The city will guarantee a 40 percent average monthly occupancy for seven years, and a guaranteed 30 percent occupancy for an additional three years.

In other business, commissioners entered into a cost-sharing agreement with Enid Park Board for improvements at Champlin Park. The Park Board has received donations of $140,000 to fund new playground equipment and improvements at Champlin Park, at a total price of about $191,000.

Under the cost-sharing agreement, the city and the Park Board will split the remaining $51,000 needed to fund the new equipment and improvements.

In relation to the project, commissioners approved a bid from Cunningham Associates for $190,447.25 to construct new playground features, benches, picnic tables and sidewalks at Champlin Park.

Commissioners tabled an agenda item that called for purchasing a hangar at Enid Woodring Regional Airport at a cost of $335,000. The 10,000-square-foot hangar is owned by a revocable living trust of Harold Hamm, who has offered to sell the building to the city.

Airport director Dan Ohnesorge said the hangar includes 3,000 square feet of recently renovated office space, is heated and was built in 1983.

Ohnesorge said the hangar would provide the city opportunities to lease the entire space, or to break it into separate hangar and office leases.

He said if the leases were filled, the city could recoup the cost of the purchase in 15-17 years.

Ward 6 Commissioner Dr. David Vanhooser asked during the evening’s study session that a formal appraisal be obtained before the city considered the offer.

Ward 5 Commissioner Tammy Wilson made that motion during the regular session, seconded by Vanhooser and approved by the commission.

Consideration of the hangar’s purchase is expected to come back before the commission once an appraisal is obtained.

Commissioners also approved a $193,850 contract with Mike Klemme to “design, procure and install artwork for the Enid Event Center.”

The art contract calls for installing photography art printed on fabric screens that can be installed on and removed from metal frames of different sizes.

The frames also can be used to mount advertising for Event Center vendors and events.

Klemme said the fabric art work will increase flexibility, and “keep things fresh,” because the artwork can easily be switched out or moved.

Klemme said the concept also will help generate revenue through the Event Center by allowing for more advertising space.

Klemme said the contract includes the initial materials, his photography services to fill the frames with artwork, and two years’ worth of work preparing the Event Center art package.

Klemme said industry standards in large public venues call for one percent of the total construction cost to be allocated for public artwork. He said the contract amount was “well below” the one percent guideline for the Event Center.

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