A majority of area respondents oppose Blue Earth County helping to subsidize a proposed Marriott hotel in downtown Mankato, according to a Free Press online question.
Out of 310 total respondents, 253 voters — almost 82% — say they don’t support the use of public money to subsidize taxes on the proposed hotel. Another 57 voters disagreed.
The Blue Earth County board reviewed the request last week, while the Mankato City Council heard a similar proposal several weeks ago. The two local governments would surrender a combined $2.5 million in tax revenue generated by the new Marriott-brand hotel, an estimated $14.2 million project, over two decades. In return, the 117-room hotel would bring benefits to Mankato Area Public Schools, to downtown Mankato and to the broader economy, developer Gordon Awsumb told the board.
The financing plan for the SpringHill Suites hotel includes “opportunity zone” tax benefits made available by the 2017 federal tax bill. Those tax advantages, which incentivize redevelopment in certain lower-income census tracts, are also available elsewhere in Mankato and elsewhere across the U.S., giving developers multiple options for their investments.
final decision on whether the Mankato hotel project proceeds, rather than one of the alternative investments, will depend on the projected profit margin, Awsumb said. And the tax abatements, if approved by the city and county, will enhance the profit margin for the project.
When the project was first brought to the City Council in December, Awsumb suggested the only direct subsidy needed was the abatement of $1.3 million in property taxes paid to the city. Under that plan, additional property taxes generated by the hotel for the city would have been dedicated to covering the cost of a covered walkway connecting the hotel to the civic center complex and to replace some of the public parking that will be lost when the hotel is constructed within and above the city-owned parking ramp on Cherry Street.
The city also would have to sell the parking ramp for a nominal sum to Awsumb, who owns the land beneath the ramp and the “air rights” above it.
Awsumb said then a county tax abatement also could be requested to help pay for additional replacement parking in the city center.
By January, Awsumb had altered the request, saying a closer examination had been completed of the construction challenges of incorporating a hotel into an existing parking ramp. It showed that the entire city tax abatement would be required just to cover those added construction costs, leaving the county tax subsidy as the sole source of funding for the covered walkway and replacement parking.
The city has contracted with a parking consultant to study whether the hotel will leave downtown with a shortage of public parking. The Cherry Street parking ramp has 156 stalls, 35 of which will disappear if the hotel is constructed. In addition, dozens of the remaining stalls will be needed for hotel guests, depending on the time of the day and the hotel’s occupancy.
The five commissioners didn’t foreshadow how they might vote on the tax abatement, although commissioners wondered about a 10-year — rather than 20-year — expiration of the tax subsidy.
The Free Press online question, sent out Friday, asked, “Should Blue Earth County help subsidize a proposed downtown Mankato Marriott hotel?”
There were two options to answer, “yes” or “no.”
Commenters unanimously agreed the project should move forward on its own merits rather than through public subsidy, arguing conditions were right for a hotel to profit on its own. Others disagreed with using that much money to forgive taxes on the project for so long.
“Foregoing property taxes for 20 years is too long. Foregoing $2.5 million is too much,” Barbara Keating wrote. “I might (or might not) be more amenable to 5-10 years and less than $1 million to help them get started in a new community although Marriott is a profitable, for-profit corporation and should not require taxpayer subsidies.”
Mike Miner wrote, “A viable economic project should be able to stand on its own without taxpayer subsidies.”
“Marriot has big bucks,’ Gary Lindsay wrote. “They should finance it themselves.”