For a community the size of Newton, one of the amenities it has been lacking for several years has been a facility to hold more than 300 people.


This story first appeared in the Sept. 20 edition of the Kansan.

For a community the size of Newton, one of the amenities it has been lacking for several years has been a facility to hold more than 300 people.

With the city of Newton in discussions with developers for a new hotel/conference center, the Newton Area Chamber of Commerce is beginning to get excited about what the center can help pull into the community.

“We turn away three or four large conference inquiries a month from state department conventions to larger reunion-type of events,” said Virgil Penner, Chamber CEO. “Currently, the largest meeting hall is the VFW, which holds between 250 and 275 people.”

The plans for the conference center will include about 15,000 square feet that will hold about 500 people in a banquet room setting or that can be divided into smaller areas, said Tim Johnson, Newton community development director. There also will be a permanent boardroom area, food preparation/staging area for outside caterers and office space for management.

“The facility will be equipped with the latest technology,” Johnson said. “There will be audio/video and Internet access capabilities in the conference center.”

Penner said the design of the conference center will provide adequate space for many types and sizes of gatherings.

“The facility has been designed right so that it supports flexibility,” he said.

That flexibility will come in handy, he said. Groups wanting to host multiple day meetings will be able to use a large single-room setting as well as smaller groups for breakout group sessions.

Penner said the Chamber will begin promotion of the new conference center once construction begins.

“This center isn’t just an asset to the business community,” Penner said. “The community as a whole will see the benefits of this facility as it can provide space for wedding receptions and reunions.”

Community events like wedding receptions and reunions typically happen on the weekends, which already are the best days for the hotels in Newton, Penner said. With the addition on the conference center and adjoining hotel, business during weekdays should begin to pick up.

The conference portion of the new development east of Interstate 135 on the north side of Broadway will cost no more than $3.55 million to construct and furnish. It will take about $3.34 million to construct, and furnishings, fixtures and equipment will cost about $210,000.

“(Government obligation) bonds will be used to finance the conference center in order to obtain the lowest possible interest rate,” said city attorney Bob Myers. “Then the bonds would be repaid using a combination of incremental increases in property-tax revenues for the redevelopment area and a dedicated portion of the city’s bed tax.”

Myers said the revenues used to finance and reimburse the cost of the conference center will consist of an incremental increase in the ad valorem tax revenues from the properties in the redevelopment district other than the conference center.

In other words, these funds will come from the hotel and commercial out lots; transient guest or bed tax from the hotel facilities in the redevelopment district, which has been increased from 5 percent to 6 percent; and the increased bed tax from all other hotels within city limits, which also will be raised to 6 percent.

“Only the additional 1 percent from other hotels will be used toward repayment of debt,” Myers said. “This is justified because the other hotels will benefit from the conference center through additional overnight guests associated with events hosted at the conference center.”

According to plans submitted by the developers, the hotel construction costs will be about $3.55 million. That puts the entire project at $7.1 million — the city paying for only the conference center and the developers putting forward the money on the hotel.

At the current city mill levy rate, this will produce estimated annual tax revenue of $112,713, which will be dedicated to the repayment of bonds, Myers said.

The Newton City Commission has yet to decide on a down payment for the project. The money for the down payment would come from economic development funds the city has accumulated from the 1 percent sales tax increase that went into affect at the end of 2006.

To help lessen the annual debt burden, Myers suggested the commission consider an up-front payment. Three debt service repayment projections were presented to the commission.

With a $500,000 up-front cash payment, the principal amount of the bonds would be $3.05 million. At the assumed interest rate of 4.75 percent, this would require an average of $244,923 annually in debt service. With the estimated revenue, there wouldn’t be enough to cover payments, Myers said.

Putting forward $750,000 and assuming the 4.75 percent interest rate, the annual debt service would be $224,811, which would be covered by revenue. The third option, giving $1 million up front, would require an average debt payment of $204,711.

Alongside the conference center will be a hotel and two additional commercial outlots.

The hotel design will be a three-story structure with 70 to 80 guest rooms, a portion of which shall be suites — rooms 20 percent larger than normal to be equipped with a small refrigerator, microwave and separate “living” area. Other amenities will include an indoor swimming pool, a business center and exercise room.