Enid City Commission approved a new term sheet for the downtown hotel development Tuesday evening after the deadline passed with the former developer to close on the property transfer.
Ward 6 Commissioner David Vanhooser made a motion to approve the term sheet for the deal after the commission returned from executive session. The only dissenting vote was Ward 5 Commissioner Tammy Wilson. The term sheet is the third revised draft, according to the top header.
The agreement is with Aston Management Co., a hotel ownership and management group in Oklahoma City. The company is to build a Hilton Garden Inn with a minimum of 100 guest rooms, a restaurant and bar, room service and other amenities required by the Hilton Garden Inn flag, according to the term sheet.
Enid Regional Development Alliance Executive Director Brent Kisling said the former developer, Peachtree Hotel Group II LLC., was aware of Tuesday night’s vote.
Kisling said Aston’s owner, Atul Patel, grew up in Enid, and he generally uses local contractors and partners for projects.
“It’s really like working with one of our own in order to construct this very important asset for our downtown area,” Kisling said.
Kisling said the city and ERDA have been working with several hotel developers over the last four years to finish the downtown project with a hotel property.
“The term sheet that was presented this evening will eventually become — it is a non-binding document at this point — we will use it to create the definitive contract to be voted on over the next couple of months but it does give you an outline of what the public-private partnership will be with Aston Management in order to construct this downtown hotel,” Kisling said.
A public-private partnership is part of the agreement, Kisling said, adding it is performance based.
“There is a partnership agreement on the construction of the parking lot of the hotel, although it will be owned, managed and maintained by the hotel,” Kisling said. “There is also a partnership if the occupancy rate of the hotel falls below a certain level, then there would be public assistance provided. And, also, as has been the case with the rest of the developers we worked with, the property would be transferred for $1.”
ERDA will provide a 40 percent occupancy guarantee over a five-year period and provide a $200,000 grant to the developer to offset parking lot construction costs, according to the term sheet. The developer is not to seek any additional public assistance from the city of Enid or ERDA for the project, according to the term sheet.
If construction of the hotel fails to start within 45 days of the property transfer, the property will revert back to ERDA, according to the term sheet.
The room occupancy guarantee payment, according to the agreement, will be calculated on an annual basis.
Kisling said Aston Management currently owns the SpringHill Suites in Enid.
When Enid City Commission selected Georgia-based Peachtree Hotel Group II LLC in August 2015 to construct a Hilton Garden Inn, a term sheet set the property transfer close deadline for May 16, 2016, with the hotel scheduled to open by Aug. 18, 2017. If the transfer was not completed by that date, the city had the option to terminate the master development agreement and other documents, according to the term sheet.
In February, Peachtree officials said the development of a downtown Hilton Garden Inn would be delayed, according to a city of Enid news release. The developer said the delay was due to the recent economic downturn.
Hotel occupancy rates have been on a decline in Enid, when compared to last year, but are up since the beginning of 2016, reports have shown.
Peachtree was the second developer selected from the project.
LodgeWell LLC, the original developer, proposed a downtown hotel and parking garage in November 2013. LodgeWell CEO Dave Owen originally announced he had funding, but a consultant for the project later said a contract had not been secured with LodgeWell’s bank.
The developer was given until March 8, 2015, to begin construction on the property — after missing a previous deadline, followed by an additional six months without building, while it sought financing for the $15 million project — after the city commission approved a letter of default giving the company 45 days to start construction.
Story Provided by: Enid News & Eagle
Written by: Emily Summars
