Downtown wasn’t worth the bet
By NewsPress Now
If you build it they will come.
Except in Downtown St. Joseph. New developments fall into disrepair or disuse despite giddy promises of Downtown’s renaissance. If this is a renaissance, it might be the early part with the plague still hanging around the streets of Florence.
In St. Joseph, the long march to Downtown’s renewal was dealt another setback with the collapse of a development agreement to bring a Courtyard by Marriott to the site of the former Sheraton, Holiday Inn and Red Lion hotel at 102 S. Third St.
Blame was placed on rising borrowing and construction costs, making the project unfeasible for developer HDDA of Nashville. While this is true, the city would be wise to acknowledge there’s more than bad timing standing in the way of a fancy new hotel at this location.
HDDA was created to develop hotel properties that are distressed or in default. This is a costlier and riskier proposition than building hotels on greenfield sites in a newer part of town, which is something that’s happening near the Shoppes at North Village despite high interest rates.
To succeed, HDDA was going to need three things: Affordable borrowing, local government willing to grant incentives and a strong belief that Downtown St. Joseph is a hidden gem just waiting to be discovered.
The city played ball with the promise of a $3.5 million incentive package, but interest rates remain high and project costs soared from $21 million to $36 million in 18 months. Meanwhile, even if inflation eases and interest rates start to drop, the question has to be asked: Can a hotel make it Downtown?
About two decades ago, the city approved $2.7 million in tax-increment financing to revitalize a distressed hotel property into a Holiday Inn. Eventually, it reverted to a distressed hotel property that was torn down.
The city never really had an answer for what was going to be different this time.
St. Joseph has seen an increase in Downtown apartment living, but the tenants aren’t going to stay in a hotel. The new parking structure/retail space on Felix Street marks a vast improvement in terms of aesthetic appeal and structural soundness, but it remains underutilized. It’s hard to imagine the inspireU Children’s Discovery Center is more than a one-day excursion, meaning few visitors will stay in hotels.
Now the city is floating the possibility of a huge investment on the east side of town to create a youth sports complex. This would attract visitors, but good luck getting them to stay Downtown when there are plenty of hotels closer to the ball fields and basketball courts.
The city has sunk considerable funds into upgrading the Civic Arena, which has attracted events like the NCAA Division II Women’s Basketball Championships. This was a big deal for St. Joseph, but apparently not big enough to warrant a $36 million bet on Downtown.
So the quest continues. Maybe HDDA, which did St. Joseph a favor just by spending $2 million to demolish the old eyesore hotel, will develop the property or flip it.
Until that happens, the best thing the city can do is take a portion of that $3.5 million in hotel incentives and use it to fix up Frederick Avenue, because that’s how overnight visitors will be getting to the Civic Arena for the foreseeable future.
