ASHLAND, Ky. — The Ashland commission on Thursday agreed in principle to let the city finance department issue bonds of about $4.6 million to help business developers turn the Ashland Plaza Hotel into a Marriott brand.
The measure still needs final approval. It’s a crucial step in the city’s plan to revamp its downtown.
The hotel developers, Jim Nizzo and Andy Spiros of New York, plan to buy the Plaza Hotel and transform it into a Marriott Delta. The sale will likely close next month according to City Economic Development Director Chris Pullem.
Nizzo and Spiros sought an incentive from local government before moving forward with their more than $16 million investment. The city commission and Boyd County Fiscal Court have agreed to provide it.
The local governments established a Tax Increment Financing, or TIF, district called the Ashland Plaza Development Area in downtown Ashland that will allow the city to capture all future increases in local tax dollars within the district for the next 20 years.
Taxing bodies in the county, with the exception of school districts, would receive the same amount of tax revenue generated inside the TIF district.
The city plans to use the TIF money to incentivize the hotel developers and pay for a $14-million parking garage and convention center. The city would topple the old Ashland Oil headquarters at 1401 Winchester Ave. and construct a four-level structure with 400 parking spaces in its place.
The assurance a new parking garage would be built was a deal breaker for the hotel developers, according to city officials.
The city is banking on the new hotel spurring economic growth downtown that will generate more revenue from property, sales and payroll taxes. A consulting firm hired by the city estimates the local TIF will provide the city with $4.7 million over the next 20 years.
The city also asked the state for permission to create a state TIF within the local district. The state TIF would provide the city with a projected $11.8 million in TIF-eligible state tax dollars over its life span according to the consulting firm.
The city can only use state TIF money for public infrastructure projects. The local TIF dollars can be used to pay back private developers for some vertical construction costs in addition to public projects.
Government bodies across the state and nation use TIFs to land new businesses in their communities, but not without risk. If TIF dollars don’t roll in as projected, the new redevelopment projects could saddle the city with millions in debt and far less funding to pay for it.
But city officials are confident the new development will stimulate economic growth in the form of new jobs and business.
The bonds issued by the city will be in the form of general obligation bonds. Additional costs associated with the bond process include about $65,000 according to the finance department. The city must hire a financial bond adviser, paying agent, rating agent and bond legal counsel.
The city commission will reconvene today at 9 a.m. to continue its recessed meeting.