Developer pushes Downtown hotel completion plan to 2026
By Cameron Montemayor
Hopes for completion of a new Downtown Marriott Hotel by 2024 were officially dashed during a work session with the hotel’s developer on Monday evening.
After looking poised to begin construction in 2023, rocketing interest rates and construction costs forced HDDA’s primary lender to back out due to market concerns, leaving the developer with a sizable financial gap — approximately $8 million — to have to fill.
“We started to have a serious problem in the realm of feasibility, higher interest rates, higher mortgages,” said Aaron Gumpenberger, HDDA, LLC director. “We couldn’t find anybody willing to take on the project and help us close our financial gap.”
After an all-out blitz to secure the last chunk of financing for the $22 million hotel came up short last year, developers realized they would have to come back to the drawing board with the city to propose a new construction timeline for the $22 million hotel.
With many current council members not on the council when the initial incentive package was agreed to in 2022, Monday’s work session gave council members the opportunity to hear HDDA’s new proposal and ask important questions about a key anchor in the city’s plan for Downtown revitalization.
“This is a big project,” said Clint Thompson, St. Joseph planning and community development director. “The council understands the importance of a Downtown hotel and I think you can see from the support of the council at today’s meeting to work with the developer on the timeline.”
The council previously authorized up to $3.5 million in reimbursement for the hotel project from a combination of sales tax and tourism tax revenue. Gumpenberger said HDDA is committed to that agreement despite the delayed timeline for construction.
Thompson said city officials plan to work with HDDA over the next 30 days to amend the agreement to bring to the city council for a vote.
“By April 1 of this year you should see an amended agreement that allows the developer to go forward and help to get that additional financing to be in construction sometime later this year,” Thompson said.
To help keep the project within budget in the face of rising costs, developers were able to negotiate with Marriott to decrease the number of planned rooms from around 155 to 123.
While the new agreement establishes an August 2024 timeframe for construction to start, if the council OKs the amended agreement and HDAA is able to secure financing quickly, construction could start well before then.
“That’s kind of now where we are is a big push to go out a find that debt. We’ve got $12 million of it. But we need $8 million more,” Gumpenberger said.
