Developer Requests 7-Year, 100% Tax Abatement to Build Hotel in South Windsor

A developer has applied with the town for a 7-year, 100 percent tax abatement as a condition for building a hotel on a 4-acre parcel at Evergreen Walk.

Ohio-based Radius Hospitality has proposed constructing a 70,000-square-foot, 110-unit Cambria Suites Hotel in conjunction with a 200-unit apartment complex next to the hotel’s parcel at Evergreen Walk.

The developer has been looking into the project for about two years, Radius Hospitality President Scott Yaeger said. He hopes to have a groundbreaking by April 2013 and have the hotel open by Spring 2014.

“We’re very excited about the project,” Yaeger said.

But, according to Yaeger, the market is still so soft that the project will require the long-term, full tax abatement on the real estate to make the project viable.

Specifically, Yaeger said that, based on market research, the hotel would anticipate 60 percent occupancy at a rate of $90 per room in the first year. Yaeger said that, at least in the first three years, the hotel would be “buying business” through deals and discounted rates.

“For 35 years I’ve watched the ups and downs of this business,” Yaeger said. “We’ve seen a slight uptick, but we will see it go down.”

What’s more, the Cambria brand does not have the name recognition of a Hilton property or a Marriott and, therefore, would take more time to build up business, Yaeger said.

Without the abatement, Yaeger said that it would be difficult for the project to move forward. That could mean further delay in building the apartment complex, which was approved by the Planning and Zoning Commission last year. The idea is to build the hotel and the apartments simultaneously to take advantage of the economies of scale, according to Town Manager Matthew Galligan.

Building the two together, according to Galligan, would create a village-type effect. The abatement would not apply to the apartment complex, Galligan said.

But members of the Town Council were, at best, cool to the notion of giving a 100 percent real estate tax abatement, particularly one for seven years. While the number is subject to debate, the hotel would pay about $200,000 in real estate taxes per year.

Councilors noted that the town had never given a 100 percent abatement before. In addition, other projects that that have received tax abatements from the town, such as the Federal Express small package sorting facility currently being constructed on Sullivan Avenue, have substantial personal property that will be subject to taxes and/or contribute to the town’s infrastructure in some fashion.

The hotel, which will contain mostly furniture that depreciates quickly, will do neither.

“We typically don’t give 100 percent tax abatements to anyone,” Town Councilor Kevin McCann said. “The rest of Evergreen Walk was built without tax abatements. We need to have some reason [to give a tax abatement].”

Councilor Saud Anwar said that he hoped Yaeger’s group would look to hire locally, something that Yaeger says his company typically does.

Deputy Mayor Gary Bazzano said that he flat out would not support the abatement, as it would be difficult to tell people on fixed incomes that the hotel was not going to pay real estate taxes for seven years.

Still councilors said that they would keep an open mind and would work with the developer to perhaps find some workable arrangement.

Councilor Jan Snyder said that she believed that the hotel was a perfect fit.

“I’m very open minded about what we can do,” she said.

No action was taken and the matter was referred to Town Manager Matthew Galligan for further discussion.