Southlake council OKs incentives to lure second hotel

City leaders are putting in the investment to help bring a hotel along Texas 114.

The City Council approved a resolution Feb. 3 to provide a $5.4 million incentive for the construction of a hotel.

“This is one of the most significant types of investments the community can have,” said Shannon Hamons, Southlake’s economic development director. “It will have a very positive effect on our Town Square — anything we can do to invite more day and evening time shopping.”

The developers said they needed the city’s funding to begin construction of a 18,000-square-foot, 220-plus room hotel at Texas 114 and Grace Lane just east of North Carroll Avenue.

Hospitality Southlake Investments Llc. estimate the project’s construction to cost about $60 million, including $45 million for the hotel, $5 million for a 375-space parking garage and adding in land, furniture, fixtures and equipment.

“We’re not writing them a check. They will not get a penny back until they start generating revenue, then we return some of it back to them,” Hamons said.

The developers would receive the incentive using self-generated sales taxes, property taxes and through the hotel-occupancy tax.

The city believes the hotel would generate $9.26 million in financial benefit. That amount includes the hotel occupancy tax and the estimated impact a hotel would have to retail sales and business gains in the city.

“That’s a pretty significant return on investment,” Hamons said.

In the agreement, the hotel must manage an average occupancy of at least 60 percent, although city staff expects a greater occupancy rate. The hotel must also make a minimum of 24 room-nights available to the city on an annual basis for no cost from its opening date to 10 years out. The rooms would allow the city’s Economic Development and Tourism Department to house visiting CEOs of potential businesses or be used for tourism sales packages.

The hotel must also provide the city with one event where room usage fees are waived and the city will receive a $10,000 discount on food, beverages and services.

The city expects having a second hotel to help with the goal of attracting more businesses and with increasing the options for conferences and group stays.

This story was originally published March 1, 2015 at 2:50 PM with the headline "Southlake council OKs incentives to lure second hotel."