City Agrees to Room Guarantee on Downtown Hotel

ENID, OK - The Enid Economic Development Authority voted at Tuesday night's City Council meeting to approve a Room Occupancy Guarantee Agreement with the downtown hotel developer. The vote was approved 6-1 with Commissioner Tammy Wilson being the lone no vote. Wilson commented, "I said I would never support that room rate guarantee ever again and I will not do it."
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Four documents needed to be approved before the property could be closed on. They were the Room Occupancy Guarantee Agreement detailing how the hotel room rate guarantee will be paid and refunded based on the annual occupancy. The Completion Guaranty which ensures the prompt and complete performance of the obligations of the developer to the EEDA. The Parking Lot Grant Letter Agreement which details the parking lot incentive and the Special Warranty Deed that conveys the downtown property from the EEDA to ENIDBWP, LLC at the closing.
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The EEDA voted to guarantee that the developer shall achieve a minimum forty percent (40%) average annual occupancy rate of the 96 rooms in the hotel during the five (5) year period. The EEDA will have to pay the developer the guarantee payment if the hotel does not have more than 14,016 rooms occupied in a 12-month period.
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The amount the City would have to pay would be equal to the difference between the Minimum Hotel Occupancy Rate and the actual hotel occupancy rate for the applicable year, multiplied by the average daily room rate, per night, per room (not to exceed $120.00 regardless of the rate actually received by the hotel), actually received by the Hotel exclusive of applicable room taxes, during the applicable 12-month period.
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The EEDA’s annual obligation will be capped at $1,681,920.00 per year, which is calculated as 14,016 (minimum guaranteed Hotel room nights), multiplied by $120.00 (maximum ADR).
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On an annual basis, developer would be required to refund all or a portion of any Guarantee Payments previously made if, the Minimum Hotel Occupancy Rate is exceeded during subsequent annual periods during the Guarantee Term.
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City Manager, Jerald Gilbert, said, "I will be very surprised if we ever pay." Gilbert was asked if the City of Enid had similar guarantee room rate agreements with any other hotels. He said he was not aware of the City ever having a incentivized another hotel that he was aware of.
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Commissioner Ron Janzen asked if anyone had an idea when the project would close. Gilbert assured the commission that the closing was very close. The latest update he had received, as of Monday, was that the bank was waiting on the title work which should be arriving at any time.
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Once closing takes place, the developer will only have 45 days to begin construction. Brent Kisling, Executive Director of the Enid Regional Development Alliance, spoke to the developer Tuesday morning and Dr. Patel said he was not what was holding things up, that they were waiting on an appraisal to complete the financing. According to Kisling, Dr. Patel is ready to get fencing up and move dirt as soon they have a closing. He also said the ground moving equipment is already in town and ready to go.
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All four documents were approved. Watch the City Commission meeting below.
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RELATED ARTICLE: Downtown Hotel Moving Forward
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