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Consider a “STEP 4” Economic Development Incentive Grant for Monroe Hospitality (Project OVERNIGHT) in an Amount not to Exceed $940,000 over a Five-Year Period
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INFORMATION CONTACT:
Chris Plate, Monroe-Union County Economic Development Commission, Executive Director, 704-282-5780
ACTION REQUESTED:
1) Award a “STEP 4” Economic Development Incentive Grant in an amount not to exceed $940,000 over a five-year period and 2) authorize the County Manager to negotiate and execute an agreement substantially consistent with this agenda item.
PRIOR BOARD ACTIONS:
June 17, 2024, Regular Meeting, Agenda Item # 24-422 - Public Hearing Conducted.
BACKGROUND:
Monroe Hospitality, LLC is requesting an Economic Development Incentive Grant in support of the purchase of land, a new specialty hotel to Downtown Monroe within the Municipal Service District (MSD). The “STEP 4” Economic Development Incentive Grant (Grant Factor of 2.35%) is in an amount not to exceed $940,000 over a five-year period beginning in FY 2027.
Typically, we do not incentivize commercial operations like stores or hotels. For this grant, the project must occur and be located within a designated Municipal Service District (MSD) of a municipality within Union County, NC. The MSD’s require higher standards for construction and are usually off the main commercial thoroughfares; therefore, to induce this investment within the core of a municipality, it is appropriate to assist in these projects.
The company is considering the purchase of former Hotel Joffre site in Downtown Monroe. The firm will construct a new specialty hotel with approximately 80-100 rooms, restaurant and other amenities. The project has a potential value totaling $40,000,000.
Based on the anticipated capital investment, it is proposed that the Board award an MSD focused “STEP 4” Economic Development Incentive Grant in an amount not to exceed $940,000 paid over a five-year period. The value of the incentive grant will be based upon appraised value each year as appraised by the Union County Tax Administration office. This grant is based on the company’s projected total investment of $40,000,000 in land, new building(s), and equipment over the grant period, but not less than $30,000,000. Based on its projected investment in Union County, the current tax rate, and assuming a consistent assessed value with no depreciation, the company will pay estimated ad valorem taxes on the new taxable investment in the amount of $1,176,000 over the grant period. Actual tax revenue to the County will be based on the assessed value of the investment each year by the Union County Tax Administration Office and will vary each year depending upon the depreciation schedule and timing of the investments.
This grant is also contingent upon the company creating at least 10 full-time employees.
The economic development staff has reviewed the details of this project and concluded that the project will have a great impact to the County, via new tax revenue, new sales tax revenue, new jobs, etc. It is also a tremendous benefit to the industrial base in Union County.
FINANCIAL IMPACT:
The project, if brought to Union County, would have an economic development incentive grant not to exceed a total of $940,000 but could generate approximately $1,176,000 over the (5) five-year grant period. Actual tax revenue to the County will be based on the assessed value of the investment each year by the Union County Tax Administration Office and will vary each year depending upon the depreciation schedule and timing of the investments. The project will also bring additional quantitative and other non-quantitative benefits to Union County exceeding the value of this MSD focused, performance-based, incentive grant.