Hollister gives break on fees to new hotel

Council members Monday authorized the deferment of impact fees for the new Marriott Hotel until the end of 2018.

The deferment of impact fees has an estimated financial impact of $524,245, according to the staff report.

“The deferment would be in effect until December of 2018,” Housing Program Manager Mary Paxton said to council members. “The original agreement envisioned it being until December 2018 and so that time would be the same. They’d pay their impact fees Dec. 15, 2018, so it’d be about a year and a half.”

Paxton said normally, impact fees are paid upon final occupancy. The hotel is expected to reach final occupancy in July or August of this year.

According to the staff report, the city council authorized two incentive programs for securing financing for new and refurbished hotels in 2014.

On August 18, 2014, the city council established the Hotel Transient Occupancy Tax Incentive Program, also known as the TOT Program. The staff report states that the program allows the city to enter into an agreement with a hotel owner or developer pledging a grant of 50 percent of future occupancy tax revenue received by the City annually. This applies to both new or “significantly refurbished” hotels in Hollister for a maximum of 15 years or a maximum cap of $1 million, whichever is achieved first. The developer can then use the agreement and funding pledge to secure additional financing from the primary project lender, the staff report states.

Then on Dec. 15, 2014, the council authorized an impact fee deferment agreement with Lotus Management Group for the Marriott Hotel at 390 Gateway Drive. The new owner, Hollister Hotel LP, has consented to enter into a new agreement at the 2014 rates.

Vice Mayor Karson Klauer asked if the occupancy tax incentive program would continue with other potential hotel developers. City Manager Bill Avera responded.

“I think what staff would probably do is come back to you on a case by case,” Avera said. “I’d imagine though that hotel developers of these facilities would come to you. As long as we’ve done one already, I wouldn’t see them not taking advantage of a similar type of program.”

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