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City of Owensboro, Kentucky Receives Five Proposals
for $20-$30 million Downtown Hotel Venture

By James Mayse, Messenger-Inquirer, Owensboro, Ky.McClatchy-Tribune Regional News

Aug. 4, 2009--FIVE DEVELOPERS -- all of which have experience building hotels in other communities -- have submitted proposals to construct a "full-service" hotel in downtown Owensboro.

The deadline to submit proposals was Saturday. Officials will review the proposals and hope to be ready to recommend a developer to the Owensboro City Commission in December.

Nick Brake, president and CEO of the Greater Owensboro Economic Development Corp., said the five developers submitted plans to build a downtown hotel that would have 150 to 250 rooms.

"In most cases, what we're talking about is a $20 million to $30 million venture," Brake said Monday. "From that standpoint, it breaks down to being $100,000 to $130,000 per room."

The downtown plan created by the Gateway Planning Group calls for a new hotel and convention center to be built on the site of the state office building at Frederica and Second streets. The city and county are in negotiations with the state to acquire the building.

The developers propose building a hotel under well-known franchises, including Hampton Inn, Hilton, Holiday Inn, Marriott and Sheraton. All the developers have done projects in other cities and have access to capital, Brake said.

"Everybody has done a project that involves significant hotel development," Brake said. "They're all credible. Many of them have a national scope in the work they've done."

The proposals come with different plans for parking, including building a new parking structure or using the parking garage now being constructed by Audubon Area Community Services for its transportation fleet. That garage is being built behind BB&T's downtown office at Second and St. Elizabeth streets.

"All of them asked for some kind of incentive," Brake said. "They vary (widely) in the kind of incentives they're asking for."

The proposals will be evaluated by EDC staff, City Manager Bill Parrish and Judge-Executive Reid Haire, Brake said. Gateway officials will also be involved and discussions are under way to have an outside economist review the proposals as well.

"The access to capital is going to be a big thing we look at," Brake said. "What we've got from the proposals so far looks very strong. We've got a level of confidence in each of them, so it will be a difficult task or process of due diligence.

"It's my hope the city will be moving toward a development agreement in December and have the signed (agreement) in the new year."

Haire said negotiations to acquire the state office building are on hold while Gov. Steve Beshear's office reviews an appraisal of the office building site.

"It's my understanding that appraisal ... was sent over to the governor's office," Haire said. "I think there's an awareness in the governor's office about the importance of the state office building, in that we're moving along with the (request for proposals) ... we're going to try to work it out as smoothly as possible."

Haire said a location for workers in the state office building has to be agreed upon before the state will transfer the site to local officials.

Downtown Development Director Fred Reeves said the federal government also has a stake in the state office building.

"We know there's federal equity," Reeves said, "and we have said we would be willing to pay the federal equity, which is $660,000."

Local officials hope to hear from Beshear's office about the appraisal "in the next several days," Reeves said.

"We think it's moving toward a satisfactory outcome," he said.

Brake said the names of the developers who submitted proposals are being kept confidential. The EDC press release says local developers are involved "in more than one of the proposals."

"A lot of them are looking at some proprietary information and have spent some money of their own doing this in a competitive environment," Brake said.

James Mayse, 691-7303, jmayse@messenger-inquirer.com

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To see more of the Messenger-Inquirer, or to subscribe to the newspaper, go to http://www.messenger-inquirer.com.

Copyright (c) 2009, Messenger-Inquirer, Owensboro, Ky.

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