Hampton Inn

Council approves TIF for Hampton Inn project
March 19, 2008
by Kathy McCarty of the Star Herald

ALAIN OUELLETTE, of the Northern Maine Development Commission, explains the benefits of Presque Isle City Council approving a TIF for developers of the Hampton Inn, a hotel proposed for property on Main St. that was once home to the armory. Seated listening to Ouellette, from left, are project developers Roger Beaulieu and Jamie LeBlanc, of BLD Properties LLC, of Yarmouth. An architectural rendering of the layout of the property is shown on the board behind the men. In it, the hotel is depicted at the back of the property, running parallel to Main St. and using the save entrance from Route 1 as the County Federal Credit Union. In front will be space for two retail structures.

JAMIE LeBLANC, a developer with BLD Properties LLC, of Yarmouth, presented the details of the proposed Hampton Inn to City Council on Monday night, with the help of his business partner, Roger Beaulieu, seated at left, who assisted with PowerPoint images. Here, City Manager Tom Stevens listens as LeBlanc explains what construction of the new hotel will mean to the community of Presque Isle. The 58,500 square-foot four-story structure, to be located on Main St. at the former site of the armory, will have 93 rooms and employ over 30 people. Developers hope to have the project completed within a year.

PRESQUE ISLE- City Council got its first glimpse at what BLD Properties LLC, of Yarmouth, has planned for the property formerly home to the armory during Monday night’s session, voting in favor of a TIF (tax increment financing) for the project.

A PowerPoint presentation by Roger Beaulieu and Jamie LeBlanc, developers with BLD, provided an overview of what was to come, including a four-story Hampton Inn, as well as room for two separate retail structures. Beaulieu explained how a TIF would benefit both the city and BLD.

A TIF, according to Aroostook Partnership for Progress, is a local financing tool that permits a municipality to use some or all of the new property taxes that result from an investment project within a designated district to assist in that project's expenses. The municipality may disburse the tax increment directly to the investing business to help pay project costs, use it to retire bonds it issues as part of the project or retain it for allowable economic development purposes.

Larry Clark, executive director of the Presque Isle Industrial Council, introduced the developers, noting the main reason for their visit was to seek a TIF for the proposed hotel.

“I’ve been working with the developers since last fall. The developers (LeBlanc and Beaulieu) will explain the need for a TIF and the benefits to the city and surrounding area,” said Clark.

Next, LeBlanc stepped forward to speak, as Beaulieu ran the PowerPoint presentation. LeBlanc said he and Beaulieu were no strangers to Aroostook County.

“Roger and I have been partners in retail development for over 20 years. We own two Hampton Inns in Freeport and Waterville. We’re kind of the constants – others are involved financially but don’t work day to day (with BLD),” said LeBlanc. “We have an affinity and appreciation for the County. Roger grew up in Van Buren and I was a school teacher at Sacred Heart for three years. I fell in love with the area, made friends and love the County.”

A different project was the initial reason BLD began considering a site in Aroostook.

“We want to express our sincere appreciation to Katahdin (Trust), APP, the Presque Isle Industrial Council, NMDC (Northern Maine Development Commission). They came to us last year and asked us to come to the area to talk about a resort area. It was a great idea but wasn’t for us. We saw this site at the time and became interested in doing a Hampton Inn,” LeBlanc said.

LeBlanc said since BLD acquired the property, they’ve had a lot of help from local entities and individuals.

“Thanks go out to B.R. Smith, Carl Soderberg, County Abatement – three businesses we’ve been working with since coming to town. We bid things out but favor local as much as possible. We also want to give special appreciation to County Federal Credit Union for agreeing to let us share their entrance off Main St. City Hall staff – Norma (McEntee) and Penny (Anderson) have helped us,” said LeBlanc.

“The 93-room hotel will be four stories (tall). Hopefully it will take about a year to build. There will be 110 parking spaces. The two lots up front (we’re) hoping and asking (Zoning) Board’s approval for retail and restaurant spots. The facility will include, in addition to hotel rooms, an exercise room, swimming pool and hottub, relaxing lobby, dining area, meeting room – about 1,000 square feet that would accommodate 60-80 people comfortably for weddings, parties, formal functions,” said LeBlanc.

The Presque Isle facility will be a franchise operation, according to LeBlanc, and a member of the chain of businesses nationally operated by the Hiltons.

“It will increase the tax base – armory was property-tax exempt. It will create 35-45 jobs with high retention, with nationally-recognized training and skill development. Benefits (for employees) will include health and life insurance, dental, vision and 401k,” said LeBlanc.

In addition to creating good jobs, the new 58,500 square-foot hotel will provide an economic boost to not just Presque Isle but the County as well, providing rooms for tourists and individuals traveling for business. The structure will be built at the back of the lot, parallel to Main St. and will use the same entrance at the light as the Credit Union. There will be space at the front of the lot for two other yet-to-be-named businesses, with plans for a separate driveway entrance off Main St. for those buildings.

“The hotel will increase tourism, business growth and development. The Presque Isle area competes with other regions. It’s a synergistic thing. Presque Isle will be able to compete with the likes of New Hampshire and Vermont. It makes the area more competitive with other areas. When places look to expand, they look to see if there are enough places to house visitors,” explained LeBlanc. “About $6 million to $10 million will be bid out to local contractors, vendors, suppliers for hotel/retail construction.”

“Why haven’t there been any built in northern Maine? It goes to the fact of the difficulty and challenge of building such (a facility) in rural areas. Developers chose to take the easy way, closer to home, closer to jobs. This is where the TIF comes in. The state created TIFs as a tool so developers would go in an area they wouldn’t otherwise,” said LeBlanc.

As examples of how such a facility benefits an area, LeBlanc provided data on what each of BLD’s three other facilities (one in Waterville and two in Freeport) have done for the economic picture in those communities. In each case, there was over a $1 million increase in lodging revenues annually.

“The Hampton Inn in Freeport created an increase in lodging revenue of over $3.8 million its first year, Hampton Inn in Waterville increased revenue just over $1.3 million and Hilton Garden Inn in Freeport saw an increase of over $1.1 million in its first year of operation,” said LeBlanc, including information from a Hampton Inn in the Rockland area owned by another group. “Hotel sales increased in all four cases by what the hotels brought to the market.”

LeBlanc said unlike other businesses, hotels add to the economic base of a community.

“Hotels have an opposite effect. We’re not taking away from other businesses,” said LeBlanc.

“Why are we asking for a TIF? New hotels are highly capital intensive – a major investment. New construction is higher than ever – material costs, amenity expectations, franchise requirements, labor costs, land values, ‘green’ buildings – these things increase the cost and make it more challenging to do. There’ve been over 21 new hotels constructed recently in southern and central Maine – remote areas are more difficult and challenging to develop projects,” said LeBlanc. “The state of Maine recognizes the importance of economic development and created the TIF program to equalize these issues – balance playing fields for regions and areas of the state, so all places can get benefits of places like the Portland area has.”

“We’re excited to get going and appreciate your support,” concluded LeBlanc.

NMDC’s Alain Ouellette was next up to the podium and provided a brief explanation of the TIF request.

“We know the city of Presque Isle is pro-development. As of April 1, 2007, the estimated value of the property was $123,400. The captured assessed value (CAV) that will take place over the term of development is estimated over $4.5 million; 35 full-time and three part-time jobs will be created, in addition to construction work. There will be spin-off benefits,” said Ouellette.

The CAV is on real estate only – personal property is not included in the TIF district. Ouellette explained that a credit enhancement agreement on new assessed value of real estate only would be developed by the city. The maximum percentage of CAV would be 75 percent, with the balance to be returned to the economic development fund in each of the 10 years.

“It is estimated that the impacts upon the city’s taxing jurisdiction will be very positive,” said Ouellette, noting in addition to the hotel jobs created, approximately 50 construction jobs will be created.

“The spinoff in sales for other commercial enterprises in the area such as food, fuel and retail goods should spur additional employment and economic activity,” said Ouellette.

The addition of available hotel rooms will “enhance competitiveness” among local hotels and encourage other such facilities to make upgrades and improvements as well, creating a more hospitable environment for guests and thus result n more room nights and longer stays, according to Ouellette.

“This is at zero financial risk to the city – can be done through a CEA or bonded. This is a major project, providing very good full-time positions, with 50-100 jobs created during the construction project. The other thing exciting for us in the economic development world – not only are we seeing an $8 million project before us, but the way other developers are looking to develop the other two lots – not included in the TIF – somewhere around $75,000 and $100,000 in new taxes to community off those two projects, to say nothing of construction,” said Clark.

“It’s also exciting to realize the other two lots are there. The hotel will be a catalyst for those two lots,” said Clark. “It’s anticipated within the next three years we will see those other two lots with developments on them,” said Clark.

With that, Councilor G. Melvin Hovey made the resolve for Council to approve the creation for a TIF for 2.5-plus acres of property and that a TIF program be approved as presented by BLD, with Council voting unanimously to pass both measures.