City hammers out details on motel deal
Conference room, name important to facility
For years, those involved in the revitalization of Madras have talked about the need for a new, national chain motel with a conference room and other amenities.
This month, the Madras Redevelopment Commission (MRC) will enter into a memorandum of understanding (MOU) with Cross Keys LLC -- a group of Central Oregon investors -- to develop such a motel in Madras.
MRC member and City Councilor Melanie Widmer is enthusiastic about the project. "It's a really exciting opportunity to partner with a limited liability corporation to provide something that our community needs -- number one being some meeting space," Widmer said.
In the agreement that City Administrator Mike Morgan discussed with representatives of Cross Keys on Tuesday, both the developer's and MRC's responsibilities were outlined.
High on the list of requirements is that the $3 to $4 million motel -- which hasn't yet been selected -- have meeting space large enough to accommodate 200 people, without tables, or 150 people with tables.
"It was something that was really on our wish list -- to come up with some more meeting space so someone could have a small conference," she said.
The developer must choose from a handful of well-known chains. "The motel must have national brand recognition of the Marriott, Hilton, Holiday Inn or Comfort Suites or Hampton Inn families of motels," the agreement states. "Any other brands must be approved by the MRC."
"Although the local motels are clean and nice, the long-distance traveler is typically looking for a nationally-recognized chain," said Chamber of Commerce Director Parrish Van Wert. When travelers call, or go online to book their rooms, he added, "They know the type of hotel and the amenities they offer is consistent."
Van Wert said that there are a lot of small groups who like to hold their meetings in Central Oregon, close to recreational opportunities. In the past, he has had to refer those groups to Kah-Nee-Ta, Redmond or Prineville.
"We haven't been able to compete for those small meeting groups," he said. "To us, it's a major win for our community."
In addition to providing a conference room, the motel must contain at least 60 rooms, with interior hallways, an indoor pool and spa, and an appealing lobby and exterior.
To ensure that a motel is able to meet those requirements, the MRC is offering $525,000 to the developer from urban renewal district funds. The developer is expected to spend about $375,000 of that money for the meeting space, $50,000 for lobby and curb appeal, and $100,000 on infrastructure for the multi-million dollar project.
If the developer and MRC agree on the terms outlined in the agreement, the developer will receive $105,000 per year for five years.
The community will recoup its investment as the motel brings in Transient Occupancy Tax revenue. MRC Chairman and Madras Mayor Rick Allen estimates that at 50 percent occupancy, the motel would bring in at least $60,000 per year in TOT.
The urban renewal district (URD) was created in 2002 by the city of Madras to improve and prevent blighted areas. The URD collects money from each local taxing district and will eventually have $14 million to use specifically for revitalization of Madras' downtown corridor.
That corridor will likely be extended to include the 20-acre parcel which Ron and Kathie Olson recently sold to Cross Keys. The property is located along the west side of U.S. Highway 26, on the hillside across from Safeway. Zoned commercial, the property was annexed into the city limits in August.
Allen is excited about the potential for a nationally-recognized motel chain. "A motel brings people to your town," he said. "They spend money at your restaurants and bars."
Madras currently has about 256 rental units in seven motels. The newest motel is also the largest -- Hoffy's, which was built 17 years ago and has 80 units, according to Van Wert. The Best Western Rama Inn in Madras is the only nationally affiliated motel.
"We've been attempting to recruit a motel for a number of years," said Van Wert. "This has been a very long process to get this investor group engaged in this motel. We're very lucky to have them."
Morgan will help hammer out the details of a memorandum of understanding between the MRC and Cross Keys, which he hopes to present to the MRC at its next meeting on Jan. 18, for approval and adoption.
Once the MOU is signed by both parties, the developer agrees to a certain timeline for construction, Morgan noted.
"Normally, if we enter into a deal like this, we like to see construction start within a year, and be finished within two years," he said. "On a project this large, they'll probably initiate construction within 12 months, and finish within 36 months. That's the concept they approved."