SIOUX CITY -- The Iowa Economic Development Authority awarded the Warrior Hotel and Davidson Building renovation project more than $11.3 million in historic preservation tax credits Tuesday, which is $5 million short of the $16.5 million the Sioux City Council agreed to guarantee.
Roger Caudron, a spokesman for developer Lew Weinberg, who owns the Warrior and Davidson, said he and Weinberg are "very, very happy" with the tax credits the state awarded. He said the $71 million project could be awarded the additional $5 million in the state's next budget year.
"The reason it's a partial (award) is because of the size of the request -- $16 million out of $23 million for basically one project is a lot to ask, so it will be split among budget years," he said. "By doing that, then they can afford to do other projects elsewhere in the state -- spread the money around, which is a good thing."
For the October 2018 registration period, the Iowa Economic Development Authority received 14 applications requesting $62 million in tax credits with approximately $23 million available for award. Projects were scored based on readiness, financing, and local support and participation.
In March, the council approved an economic development agreement package for the Warrior project that offered more than $12 million in assistance in the form of a loan, grant and property tax rebates. Then, Weinberg requested that the city consider additional support for the project in the form of a $16.5 million historic tax credit guarantee until the project received the anticipated funding from the state. The council voted in September to amend the agreement and guarantee $16.5 million in historic tax credits, bringing the city's total financial commitment to the project to nearly $30 million in assistance.
The guarantee allowed the developers to qualify for a construction loan and move forward with construction.
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Caudron said construction and demolition work is expected to begin in December.
"At this point in time, it's get out of the way, because we're going," he said.
With the state award Tuesday, the city's obligation will be reduced by $11.3 million, leaving $5 million for the city to guarantee. If the state awards the project an additional $5 million next spring, the city's obligation will be complete.
If the state Legislature decides to end the historic tax credits program next year -- as some lawmakers have proposed -- Caudron said the worst case scenario is the developer would have to borrow the $5 million instead from the city.
"The city has not indebted themselves. They've not borrowed the money. There's no interest expense by the city," explained Caudron, who said the city's only expense so far has been the paperwork and staff time associated with the agreement. "If by chance the worst case scenario comes up and we do need that extra $5 million from the city, then loan agreements would be signed at the end of project, after the project is completed."
Plans call for the Warrior and part of the Davidson to be converted into a Marriott Autograph brand hotel. Along with nearly 150 rooms, the hotel will include full-service amenities with a restaurant, bar, ballroom, banquet kitchen, pre-function space, business and exercise centers, and commercial space. The Davidson will have restaurant and commercial space on the first floor, 54 hotel rooms on the second through fourth floors and 22 luxury apartments on the fifth and sixth floors.
A planned skywalk crossing Sixth Street will connect the two buildings with the Orpheum Theatre and Martin Luther King Jr. Transportation Center's parking ramp. Surface parking with 130 spaces will sit to the north of the hotel.
This story has been updated to reflect the current cost of the Warrior Hotel project, which is $71 million.
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