To: Honorable Mayor and Members of Town Council
From: David Corliss, Town Manager
Kevin Tilson, Director of Downtown Alliance
Title
Ordinance Approving the City Hotel Redevelopment and Financing Agreement Between the Town of Castle Rock, the Castle Rock Downtown Development Authority, and White Development, LLC (Second Reading - Approved on First Reading on January 7, 2025, by a vote 4-3) [located at 415 Perry Street]
Body
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Executive Summary
Town Council is requested to consider the redevelopment and finance agreement for the proposed City Hotel project at 415 Perry Street.
Project to include:
• Restoration of the Historic City Hotel Building located at 415 Perry Street.
o To include lobby, food and beverage lounge space of ~3,700 SF.
• Construction of a new 22,000 SF boutique hotel building on the same site.
• To include:
• 3,500 SF of devisable commercial space
• 1,350 SF for a rooftop bar
• 33 boutique hotel units in 11,300 SF of space
• 3,700 SF of garden courtyard
• Parking Spaces: approx. 7-10 onsite spaces
• Valet: Hotel to provide valet parking service to offsite parking for required parking spaces. Town and developer to partner to identify, create and pay for necessary parking spaces needed to meet Town parking requirements. The City Hotel Project to be required to provide 39 parking spaces for their project as a requirement with occupancy.
The Design Review Board approved the Site Development Plan for this project on November 13, 2024.
Financial Incentives for the Project
Because of the extensive costs associated with historic redevelopment - in this case of the Town’s oldest building and the speculative nature of a higher end lodging facility, staff recommends support of a financial incentive package for this project. Staff believes the project successfully targets a number of important Town values: historic preservation, unique retail, higher end lodging, lodging in the downtown area, roof-top amenity, and lodging and sales tax generation from a property that currently does not provide any sales tax for the Town.
The financial incentives recommended are as follows:
Town/DDA Loan
Town/DDA to provide a low interest loan to the developer for up to $750,000. The Loan shall be used for the purposes of site improvements and restoration of the historic City Hotel.
• Loan proceeds shall not be disbursed until issuance of a Temporary Certificate of Occupancy for all or part of the Project.
• Term of loan not to exceed 10 years.
• Loan annual interest rate to be set at:
o 2% for the first 3 years
o 3% for year 4
o Prime % for year 5
o Prime +1% for year 6
o Prime + 2% for year 7
o Prime + 4% for year 8
o Prime + 4% for year 9
o Prime + 4% for year 10
• Loan shall be payable in monthly installments - interest only for the first 3 years. Loan shall be
payable in full upon any refinancing of principal financing for the project.
TIF Agreement
• Town and Developer shall enter into a tax increment financing (TIF) agreement pursuant to which the Town shall reimburse to Developer 50% of all sales tax generated by the Project for a period of ten (10) years. Share back will be capped at $1,000,000.
• Developer shall not be entitled to any reimbursement of lodging tax generated by the Project.
Traffic Impact
• The Town and DDA shall pay up to $50,000 from the DDA Special Fund to the Transportation Fund to cover the impacts to traffic for this project.
Project Parking
• Town/DDA to identify offsite parking spaces from Town-owned or Private-owned property in Downtown Castle Rock for the City Hotel Project to meet Town Code.
o The Town/DDA maintains the right to change the location of offsite parking as they determine necessary.
o Town/DDA to lease 29 offsite parking spaces to the City Hotel Project.
Parking Spaces Lease Terms between the Town and City Hotel for surface parking:
• $50/space/month
• Price increases 2.5% annually starting in year 3.
• 10-year lease with the Town.
• Lease automatically renews for up to 50 years unless/until the City Hotel provides other parking spaces in Downtown Castle Rock for the project as determined by Town Code.
If the Town/DDA builds a parking garage in Downtown Castle Rock for the public and City Hotel project, the City Hotel Project to share in the costs associated with the garage, by leasing 29 spaces for $150/space/month.
• Price increases 2.5% annually starting in year 3.
• 10-year lease with the Town.
• Lease automatically renews for up to 50 years unless/until the City Hotel provides other parking spaces in Downtown Castle Rock for the project as determined by Town Code.
• Leases shall be terminable in the event Developer identifies alternative parking in satisfaction of its parking requirements.
Proposed Motion
“I move to approve the Ordinance as introduced by title.”
“I move to approve the Ordinance with the following changes: ___”
“I move to continue this item to the Council meeting on (date) to allow additional time for: ___”
Attachments
Ordinance
Proposed City Hotel Redevelopment Agreement