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Read council discussion of G8 versus Gatehouse hotel proposals

MASON CITY – The following are the meeting minutes from the Mason City council work session held on March 8, 2017. The meeting covered two competing hotel proposals – one from G8 Development (Philip Chodur) the other from Gatehouse.

The City Council of the City of Mason City, Iowa, met in Worksession pursuant to law and rules of said Council, in the 2nd Floor Conference Room of City Hall at 7:00 P.M., on March 8, 2017. The meeting was called to order by the Mayor and on roll being called, there were present, Mayor in the Chair Bookmeyer and the following Council Members: Lee, Schickel, Hickey, Adams, Schoneman. Absent: Solberg.

1. Staff presentation and Council discussion regarding RFQ submissions for the Downtown Hotel: Administrator Trout reviewed his memo.

Adams questioned the City having to pay Gatehouse for a feasibility study with Trout stating that was not common, nor was the 4% development fee.

Schoneman asked about EB5 financing with Trout stating it would take too long (a year) which was why Chodur was going with USDA.

Schickel referenced Gatehouse and asked if there was a referendum, would there be three questions and would the votes all have to be “Yes” votes for the measure to move forward with Trout concurring.

Schoneman mentioned a lot was conceptual with Gatehouse with Trout concurring stating that would all have to be firmed up.

Adams asked how many hotels Gatehouse had executed and the size of those hotels with Trout stating eight to ten larger, higher end hotels and there were others in the process of moving forward.

Adams stated one of the delays with Gatehouse would be working around the parking issue and asked why they just now found out about that now with Trout stating he had not brought it up.

Lee asked if Gatehouse’s proposal and G8’s were both with Marriot with Trout concurring, advising however Chodur had provided a letter (which Trout read) that said he was the only one that would be allowed to use that and held the franchise. He also stated the proposal by G8 was the same that had been proposed to IDEA and G8 had secured a commitment from the bank and the general contractor thought work could start quickly, adding if a decision needed to be made today, he would recommend moving forward with G8.

Schoneman stated he really liked a lot of the design and creativity with regards to the Gatehouse proposal, but had to be realistic and questioned how this would pass if the citizens wouldn’t even approve a Capital Improvement Levy.

Lee asked if the vote would have to be 60% in favor with Trout concurring, stating all three questions on the ballet would have to be “Yes” votes at 60%.

Schickel stated he was excited about the two proposals and thanked Trout for his analysis, but believed this was a community decision, adding staff had had a week and the Council one night to review the information and for that reason he was not prepared to make a decision and while he understood the need to move forward, he believed the community needed a maximum of two weeks to review and vet the information.

Schoneman referred to G8’s plan stating Chodur was building a lot of real estate and had most everything completed and while Gatehouse had a great proposed project he did not think it could be done in Mason City and believed the City should focus on G8.

Bookmeyer pointed out G8 was looking to partner with us while Gatehouse was looking to us as the Client which was different and in the end, Gatehouse did not have a lot of “skin in the game”. He also stated the 4% developer fee would essentially mean the taxpayers would be writing a check and it was difficult to imagine selling bonds when the City has been trying to reduce the debt levy, adding it would essentially be giving them a zero interest loan.

Lee stated he loved the Gatehouse vision and they had done a lot of hotels over the last ten years, but also stressed the citizens of Mason City had voted down the Capital Improvement Levy and that was pretty self-explanatory, so he questioned this getting three “Yes” votes and agreed with Schickel that he would like to wait a couple weeks to hear from the citizens, noting he was still digesting the information and wondered how the Council could expect the citizens to do so on such short notice with Adams in agreement that waiting two weeks wouldn’t hurt anything.

Trout commented on how short the turnaround time was for Gatehouse and questioned whether they could get everything done. He also stated if Council wanted to move the vote from August to November that would provide more time, but stressed if the City did not have it by December we would lose the money.

Hickey reviewed the funding and the cost of the Museum and expressed concern over Gatehouse’s 4% fee.

Further discussion followed regarding the timeline, whether the election should be in August or November and how much time the Council and community needed to make a decision.

Bookmeyer asked if it would be appropriate to put together and Exclusive Development Agreement for the March 21st Agenda with Trout stating he would try.

It was the consensus of the majority of the Council to place the item on the March 21st Council Agenda and include proceedings pertaining to an Exclusive Development Agreement.

The Mayor adjourned the meeting at 8:30 P.M.

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