The Newport Board of Commissioners unanimously voted to approve $16.5 million in general obligation bonds at their meeting Monday evening to finance a city parking garage planned to go in near the World Peace Bell at the intersection of York and Fifth Streets.
The garage will be city-owned, but it is part of a larger development spearheaded by local hotelier Shaun Pan, who owns the Hampton Inn & Suites on Columbia Street. Pan purchased the land in 2018.
The development will eventually include a building with two Hilton properties–a TRU and Home 2 Suites, the first of its kind in the region, Pan said–and an office building, which a separate developer will develop. The World Peace Bell itself will not move locations.
Monday’s vote only pertained to the garage and was the first in a “multi-step process,” said Assistant City Manager John Hayden, which will eventually include a development agreement that will come before the commission at a future meeting.
General obligation bonds are debt measures backed by the city itself. The city will solicit investors to buy bonds, in this case $16.5 million worth, which will provide the city cash to finance the garage’s construction. The city is then fully on the hook to pay back both the principal of that debt plus any interest. In a worst-case scenario, this could entail changes to the tax ordinance to ensure the city makes its repayments, but city staff and the commission were confident that wouldn’t be necessary.
“By our very conservative estimates, by the time this project is done the city should have made a profit of several million dollars,” Hayden said.
Moreover, Hayden said, if the city ever decides to sell the property, it will legally have to do so at fair market value. Likewise, since the garage is in a tax increment financing, or TIF, district, the city can redirect tax dollars back into the site, some of which they can then use towards debt repayments.
Pan took questions from the commission members and shared more details about the development during the meeting.
Based on the size of the development, Pan said, “We are projecting to bring in visitors to the community that will be contributing about $1.5 million every month to the local economy.”
Commission members and staff were broadly complimentary of the development and the potential economic boon it may be to the city. They also complimented Pan, commending him for his community involvement.
Commissioner Ken Rechtin asked about the number of jobs the development may bring.
Pan replied that the hotel will bring in about 40 full-time positions and between 25 and 30 part-time positions. Pan could not give figures for the number of jobs the office development may bring as it will be a separate project with its own developer.
Lenny Kuntz, Newport’s director of finance, spoke briefly about how the city came up with its projections, describing how TIF districts work as well as payments in lieu of taxes, which developers pay on projects funded with industrial revenue bonds. Kuntz told LINK nky after the meeting that the hotel and office complex would likely be funded with industrial revenue bonds, as opposed to the general bonds used to finance the garage.
Mayor Tom Guidugli Jr. asked Kuntz to prepare a presentation drilling down into the details of the projections for a future date so that members of the public could have a better idea how the city reached its numbers.
“These are incredibly conservative projections,” said Commissioner Mike Radwanski.
“It’ll be a landmark project that’s going to be beneficial to the community and the area for many years to come,” said Commissioner Julie Smith-Morrow.
View more renderings of the development below. All designs are preliminary.
