City to issue temporary notes for part of the purchase of the Atrium Hotel property
The city will sue $ 675,000 in temporary notes from local banks to finance part of the purchase of the old Atrium Hotel, city staff at Hutchinson City Council informed Tuesday.
The notes will be for a four-year term so that the current transient guest tax, which is a tax charged on every hotel or motel room rented in the city, can cover the refund without having to increase the tax. , City Manager Jeff Cantrell told the board.
Officials estimate the cost of issuing the tickets at $ 15,000 to $ 16,000.
âWe have at least a temporary note closing date of October 5 scheduled for funding,â Cantrell said. âNow we will continue with the local banks. We’ll bring it back to you with a chance to approve it.
The city will combine the temporary tickets with the money accumulated from the tax on transient guests since the hotel closed in December 2019 to purchase the deteriorating property, Cantrell confirmed, responding to a question from City Councilor Jon Daveline. .
Although Cantrell has not disclosed the purchase price, city officials have previously indicated absent owner Joshua Joseph of Dallas is asking for $ 1.5 million. The property was previously listed on the stock exchange for $ 3 million. Its current estimated value is $ 1.6 million, including $ 1.1 million for the acreage on which it sits.
The board staff authorized to negotiate the purchase of the 215-room shuttered property at 1400 N. Lorraine in April.
Daveline on Tuesday asked for assurances that there would be no lien from banks or landlords attached to the property.
âIt’s part of the pro forma,â Cantrell said. âWe’re issuing the temporary notes on the front-end to fund it and knock everyone out of the title. This is an outright purchase and not a land contract. If the privileges don’t go away, they don’t get the money.
They plan to return to the board on September 7 to officially authorize the issuance of the tickets, CFO Angela Richards said.
If quotes are above the expected rate of 1% to 1.5%, the city has the option of using internal temporary tickets – money borrowed from the city itself – to finance the purchase.
âIt’s not the route we want to go initially because the rates are so low,â Richards said. “But that’s an option if rates don’t get where we think they will.”
Daveline then asked if they should change the notes to pay for the demolition of the building as well, but Cantrell said that would “lose coverage for the TGT (transient host tax), and we would have to increase it by an additional 1% and use another form or instrument to pay it over time. “
âEven if we add the 1%, there isn’t enough upfront funding to cover the cost of demolition,â which itself is estimated to be between $ 1.4 million and $ 1.5 million, Cantrell said.
The city will consider a bond issue to fund the Fairground Fire Hall again this year and may add it to that, Richards said, or another bond issue in the spring.
âWe are making the right decision with the first step of the acquisition,â Daveline said. âIt can’t happen soon enough that this property will go out of fashion. “