The Newton City Council on Monday will consider providing financial incentives to a Denison-based hotel developer in order to complete and open the bankrupt and yet fully constructed Prairie Inn & Suites hotel property on the east edge of the community.
Boulders Inn and Suites, a limited liability corporation started by Jay Marten in 2007, has entered into a tentative agreement with Bank Iowa to acquire the property, complete construction of the hotel - including the installation of an elevator - and have it open for business this summer.
To do so, Boulders Inn is asking that the council provide a $125,000 economic development grant and partial property tax rebates.
The grant would be payable upon completion of the project and the property tax rebates would be for the Tax Increment Financing taxes collected by the city above a certain amount for a five-year period. Over the period, the rebates are projected to amount to $104,000.
In addition, the agreement calls for the $1.5 million minimum assessment on the project to end in 2017, the same time the bond payments on the site end.
If approved, the Newton Boulders Inn and Suites would be the sixth hotel in the chain. Boulders Inns are are also located in Denison, Okoboji, Lake View, Atlantic and Polk City.
The Prairie Inn and Suites project was initially started in 2008 by Dave Fisher and Alan Halferty. Part-way through the construction project their development group, HNF Development, ran out of cash and stopped construction on the project.
Bank Iowa eventually foreclosed on the property which led to a tangled legal proceeding. A number of local and central Iowa contractors filed counterclaims in the foreclosure action attempting to recoup money they were owed for work on the project. None of the contractors were successful.
The City of Newton also lost a significant amount of money on the development deal. In the 2008 redevelopment agreement with HNF, the city agreed to a $250,000 economic development grant. Per the terms of the agreement, the city paid the developers $125,000 at the halfway point of the project, money eventually lost following the foreclosure.
The foreclosure action was finally settled in the fall of 2011. Bank Iowa has been attempting to sell the uncompleted motel property since that time.
Additional information about Boulders Inns and Suites can be found here.