City Council approves $5.7 million in tax rebates for 3 Downtown projects

POSTED: 12:48 PM MDT Jun 18, 2013    UPDATED: 09:01 PM MST Jan 15, 2014 
EL PASO, Texas -

El Paso City Council on Tuesday approved $5.7 million in tax rebates for the next ten years for developers to start three projects downtown.

In 6 to 2 votes, council decided to grant $3.05 million in tax abatements and rebates for developers trying to purchase and rehabilitate the Artisan Hotel and $2,654,986 for developers trying to build apartments in the Martin building and commercial/retail suites on the current Foodville site. The $3.05 million will span over the next ten years.

The Artisan Hotel, located at 325 N. Kansas in Downtown El Paso, is currently tied in liens in bankruptcy court. Summit 11 Investment Group, which owns the Holiday Inn Airport and the Comfort Inn in El Paso want to purchase the Artisan from bankruptcy court. According to the city, it will cost the investment group about $11 million for the purchase and construction of the Artisan.

The former Artisan owners owe the city of El Paso $1.1 million in back taxes and a bankruptcy court Judge will decide how much of that money the city will recover, once Summit 11 purchases the building. The judge could decide to forgive the liens or force Summit 11 to pay some or all of the lien amount to the city.

Summit 11 said the Artisan would house 100 hotel rooms and requires a complete demolition of the interior of the building, plus a partial redesign of the building exterior to an "avant-garde design." The hotel would also have banquet space, an on-site restaurant and would also requires pool renovation, rooftop spa and a fitness facility.

The city's Economic Development Director, Matthew McElroy, said any developers would be operating with a loss for the first ten years if the city did not approve the rebates. He said the hotel could not be developed without the abatements.

City Rep. Carl Robinson, who voted against the Artisan tax-breaks, said he was concerned the city was not going to recover the $1.1 million in taxes, and still grant the $3.05 million in tax rebates.

City Manager Joyce Wilson said the city is currently not generating any revenue from the stagnant property, but once its developed, the city would get hotel/motel occupancy taxes from it. "If it stays the way it is for 10 years, you don't generate any money and possibly don't get your taxes either," she said.

City Rep. Eddie Holguin, who abstained from the vote, said adding more hotel rooms to Downtown El Paso made sense, though he said he was still concerned over the million in tax rebates. "I know of at least one convention who didn't come to El Paso because of the lack of hotel rooms Downtown." City Rep. Emma Acosta said the League of United Latin American Citizens did not choose El Paso to host their national convention because there weren't enough downtown hotel rooms.

Wilson said that there are currently about 445 hotel rooms downtown. She said that's in part because only 120 of the more than 300 rooms at the Camino Real Hotel are operational.

City Council on Tuesday also approved $2.6 million in tax rebates for  Martin Building LLC for new construction on the current Foodville site at 212 Mills and redevelopment at the Martin building, located at 215 Stanton. The Martin building currently houses the Percolator and the Sweet Corner on the bottom floors. Martin Building LLC, owned by developer Lane Gaddy, plans to continue to lease out the bottom two floors to retail tenants and build 41 apartments on the top floors. There are 7 floors in the building.

The plans include one and two bedroom apartments. The one bedroom apartments will be 450 square feet and will rent for $585 per month. The two bedroom apartments will be 850 square feet and rent for $1105 per month. The purchase price for one of the units will be $829,000, according the developer.

"This will be housing for young, urban professional -some who don't want to walk to work," said Gaddy.

He said construction will begin within the next six months, if there are no delays from the State Historic Preservation Office and that construction will take about a year. If all goes as planned, the apartments will be ready to rent in just over a year and a half, Gaddy said.

The $2.6 million also includes 10 year tax rebates for new construction at the lot located at 212 Mills, which is where food trucks currently park and sell food during lunch hours. A new building there would be used for commercial and retail space, possibly divided into six suites.