Covington is on track to get a high-end boutique hotel in the next few years.
Nicknamed Project Landmark, the $32-$35 million hotel would be located off Williams Street between Pace and Elm streets downtown. The project, which has been in the works for a year, was given the nod by the Covington Downtown Development Authority (DDA) last year.
Serra Hall, director of commercial and retail development for the Economic Development Office of the Covington-Newton County Chamber of Commerce, updated the authority on the project’s progress. The 85- to 100-room hotel would include a restaurant, bar, meeting space and a ballroom, which can be divided up into smaller areas.
Estimates by the hotelier, as well as economic development, are that the hotel will create between 85 and 100 jobs, averaging $15 per hour excluding executive salaries.
According to Hall, a market study was done and manufacturing, tourism and film industries responded positively to the idea of an upscale hotel in Downtown Covington.
“In the study, they say we have the perfect storm,” she said in a later interview. “We have the corporate cliental and executives, and the film and tourism base. Film brings in crew, talent, which includes the big name movie stars, and tourists who come to visit the sites where all the series have been film.”
Hall said that the bigger movie stars “we’ve seen recently, unfortunately, aren’t staying with us. They often need more amenities or larger room space for their families and assistants.
“The Hampton Inn is top notch, and the new Holiday Inn Express has added suites, which will help, but this boutique will help as well as round out the need for a higher end amenity demand.”
The tax incentive package put together by the city and economic development offers the hotelier property tax abatements for 15 years, Georgia state tax credits for every job the hotel provides, plus additional credits for creating jobs in a state-designated Opportunity Zone.
With the approval of the DDA, Stansfield signed a letter of intent, outlining the four-pronged incentive package the city and economic development office had put together.
The first incentive is the Georgia state tax credits given for every job an employer creates. The amount is increased because the hotel would be built in a state designated opportunity zone, running from downtown Covington, along the Highway 278 corridor and Washington Street.
With the additional tax credit incentives, the hotelier is expected to receive a $3,500 credit against revenues on taxes for 10 years. Hall estimates the company would save $4 million over the 10 years because of the state’s tax incentives.
The second part of the incentive package is property tax abatements. The land is owned by the city, so no property taxes are currently collected. “In the [property tax] abatement schedule, Hall said, the hotelier will pay at least 7 percent of its appraised value, an estimated $30,000 in year one, rising to an estimated $500,000 at the end of 15 years, when the hotelier begins paying 100 percent of the property taxes.
The third incentive is a reduction in the cost of utilities such as electric, gas, sewer, and water. The incentive is in line with a package the city and economic development worked on and is offered to small businesses coming into the community as well as for expansion of existing businesses.
Finally, the DDA is offering a ground, or long-term, lease for 50 years.
As part of the abatement, a tax revenue bond will need to be issued. The bond covers the balance of the property taxes that have been reduced over the 15 years.
Robert Stansfield, a member of the authority and a partner with the Greer, Stansfield and Turner Law Firm in Covington, explained later that a tax revenue bond is issued by the governmental authority which owns or leases the property. The hotelier either sells the revenue bonds to finance construction or it holds the bonds, while paying construction costs with their own funds, borrowed funds or a combination of both.
“In either case, debt service on such bonds is payable from the rental payments to be made by the project developer under its lease or sublease with the Downtown Development Authority and are not payable from tax revenues or any other public monies,” he said.
By law, the city, county and state do not pay the bonds.
The hotelier is expected to return the signed letter of intent by early next week, which outlines their commitment to the project.
“It’s not a binding document, but it is an indication of where the project is heading and that each side is doing its due diligence [such as research, studies, design],” Hall said.
At Thursday’s DDA meeting, Project Landmark moved another step closer to fruition when the authority approved the hiring of Glen Thomson, a partner with Alston and Byrd, LLP, Atlanta, specializing in economic development incentives.
After Stansfield stepped out of the meeting room, the authority voted 5-0 with one abstention, to name Greer, Stansfield and Turner the local legal counsel to assist in the development incentives.
Earlier, Stansfield was elected chair of the DDA; Rob Fowler vice-chair; and Cedric Hamm secretary.