A hotel/conference center in the Exit 150 area would operate in the black, according to a feasibility study commissioned by the Botetourt County Economic Development Authority (EDA), but the return to investors would be below the market rate of return.
Botetourt Economic Development Director Ken McFayden told the EDA during its Friday afternoon meeting in Fincastle that it would likely require some form of public investment to produce the rate of return needed to attract a developer.
The 153-page draft feasibility study was done by HVS Consulting and Valuation Division of TS Worldwide LLC based in Asheville, N.C. late last year.
The EDA agreed to have the consulting firm create an additional financial model to show what the county’s obligation might be to produce a market rate of return in order to attract a developer.
McFayden also provided the EDA with one potential form of financing the county might be able to use. That is through the Virginia Tourism Corporation’s (VTC) Tourism Development Program. That program is able to provide “gap financing” for qualifying tourism-related development where the county or municipality assists with limited debt service payments.
McFayden said about a half-dozen other localities in Virginia have used the program.
“If this helps get the project under way, it’s something worth considering,” McFayden told the EDA members.
He noted, too, that an unpaid consultant who has worked with the county on the hotel/conference center idea said if public investment wasn’t necessary “it would have already happened.”
The detailed feasibility study supposes a $36.5 million investment on an approximately 18-acre site with a full-service lodging facility that’s affiliated with a nationally recognized hotel franchise.
The study suggests it would take about $8.5 million in public investment to attract a developer to reach a rate of return between 10.5 and 22.9 percent (the average is 17.8 percent). The study estimates the rate of return on the project without some public investment at 9.7 percent.
According to an executive summary in the study, the property is proposed to feature an upscale hotel with 200 rooms, a conference center, a restaurant and lounge, an indoor pool, an outdoor sundeck, an indoor whirlpool, a fitness room, a business center, a gift shop or a market pantry, a guest laundry room, an outdoor patio area, ice machines, appropriate parking capacity and all necessary back-of-the-house space.
The study notes that the analysis is based on “the extraordinary assumption” that the hotel is completed by January 2020, and that no particular piece of property has been identified as site.
McFayden noted that there are several potential sites in the Exit 150 area, and the study says the consultants analyzed four sites.
In addition, the executive summary says the study “also assumes that significant retail, service and housing growth will occur at Exit 150…in advance of the opening of the hotel.”
McFayden said that retail and restaurant out-parcels would also have to be part of the hotel/conference center property.
McFayden told the EDA there is interest among hotel developers.
In other business, the EDA:
- Agreed to allow a survey of the Greenfield Historical Preservation Area at Botetourt Center at Greenfield.
- Released the EDA’s lease with Botetourt County to facilitate the new APCo electrical substation at Botetourt Center at Greenfield.
- Accepted the Avery Row property off US 460 from the School Board. The property had been set aside a few years ago for a new elementary school, but the School Board opted to purchase another site off Laymantown Road.
- Got a report from County Administrator Gary Larrowe that Eldor Corp. was close to getting its certificate of occupancy.
- Heard a report from Larrowe that Ballast Point Brewery was still waiting on a certificate of occupancy for its brewery. The county has an incentive payment of $806,000 to make to the brewery when the certificate is issued.
