The Tucson City Council moved forward Wednesday on a tax incentive deal for a new hotel near the University of Arizona.
Main Gate Partners applied for a site specific sales tax incentive, which gives a developer a 45 percent rebate on the siteβs sales taxes and bed taxes for eight years.
To qualify, a project must show through an economic analysis that it can raise more revenue than the value of the tax abatement.
An analysis showed the hotel will have about $13 million in annual taxable sales, while the benefit to the developer is about $2 million over eight years.
The city, state and other local taxing authorities can expect to gain about $16 million in direct tax revenue during the eight years.
The $36.7 million project is to build a new Marriott Residence Inn Hotel on Marshall Foundation property at the southeast corner of North Tyndall Avenue and East Second Street. It would have 213 rooms, a restaurant, meeting space, retail space, a rooftop pool and a parking garage. The top floor will house an exclusive club for faculty and alumni.
As part of the incentive deal, the first $1.2 million of the tax rebates will pay for a public plaza between the new hotel and the existing Main Gate Square buildings. It will include trees, art, a water feature and a digital message board.
Once finalized, this will be the second project to receive a site specific sales tax incentive from the city. The first was an AC Hotel by Marriott, now under construction in downtown Tucson.
The incentives are meant to lure new, large hotel and retail businesses to Tucson, said Camila Bekat, economic development specialist with the cityβs Office of Economic Initiatives.
βWe know from previous studies that we need a much greater number of hotel rooms in and around downtown to make the Tucson Convention Center viable and help the University of Arizona with their peak hotel season,β Bekat said.
The council must approve a development agreement to finalize the deal.
Bourn incentive deal moves forward
The council also advanced a government property lease excise tax (GPLET) agreement with Bourn Cos. for a $3 million renovation project to turn 20 E. Congress Street in downtown Tucson into a restaurant and offices for Bourn and for Samsung subsidiary SmartThings.
For a developer to receive a GPLET, which exempts property taxes for eight years, an economic analysis must show the project at least doubles the value of the property and show the tax benefit to the government is greater than the tax break for the developer.
An analysis showed the city, state and other local taxing authorities will receive about $1.1 million in direct tax revenue over eight years, while the property tax exemption for Bourn Cos. is about $760,000 over eight years.
The council must give one additional approval, for the lease agreement, before the incentive deal is done.
