A shovel remains in the ground across from the Ford center after a groundbreaking for the new Hilton DoubleTree hotel and convention center in Evansville on March 10, 2014. The $71.3 million development is expected to take 18 months to complete. Staff photo by Jason Clark
A shovel remains in the ground across from the Ford center after a groundbreaking for the new Hilton DoubleTree hotel and convention center in Evansville on March 10, 2014. The $71.3 million development is expected to take 18 months to complete. Staff photo by Jason Clark
EVANSVILLE - Evansville government officials said the Downtown convention hotel project will be reset in early 2015, and potential new investors have contacted Mayor Lloyd Winnecke.

The city has committed $20 million in bonded funding, but the bonds have not been sold. Winnecke and Old National Bank CEO Bob Jones announced Dec. 18 that the most recent hotel effort, which city officials had said for weeks was on the cusp of construction, had failed because of a shortfall in private financing committed by Old National.

Jones said Old National believes in the need for a Downtown hotel and still wants to be an investor. Kelley Coures, director of the Evansville Department of Metropolitan Development, said that Winnecke — who left town for the holidays — began hearing from additional entities interested in the project after the news conference with Jones.

“I am 100 percent confident we will have a convention hotel adjacent to the Old National Events Plaza and the Ford Center,” Coures said. Winnecke and Jones made the same prediction at their news conference.

It’s not certain whether HCW — the Missouri company that was to developed the hotel — will remain involved. Rick Huffman, CEO of HCW, has said the company has invested about $1 million on the Evansville project.

Coures said HCW has already made some recommendations on how to trim the project’s cost. The previous plan had been for a 244-room, 10-story, full-service Hilton DoubleTree hotel with a rooftop bar, meeting space and a fitness room.

According to Coures, HCW officials have since suggested two, five-story adjacent towers.

City officials had quoted the project’s total cost as $71.3 million. It was to include an apartment tower, a parking garage that was to be shared with the planned new Downtown medical campus, sky bridges connecting the various buildings and streetscape improvements.

HCW this month said the project’s cost had risen to $78 million. The same statement said Old National Bank’s funding was $8 million short. Jones had said the shortfall was $6.5 million.

Jones said Old National’s shortfall occurred because a third-party evaluator found that the bank’s investment in the hotel and its naming rights on the Old National Events Plaza (formerly The Centre) were not of equitable value.

Leaders of the Evansville City Council — who in 2013 capped the public funding at $20 million after Winnecke had pushed for more — said they were not kept abreast of what was happening with the hotel project in recent months. They were surprised to learn it had failed and that the naming rights value was presented as the reason.

Council Vice President Dan Adams, D-at-large, said that after the council set a $20 million limit on public financing, he encouraged Winnecke to reach out to the private sector, and a consortium led by Old National would make up the gap.

“Not once was the valuation of The Centre’s name a part of that,” Adams said.

The project was bid twice because an initial round of bids were over-budget, but officials said the second bids were within budget and a contract was awarded to Hunt Construction of Indianapolis. Hunt Construction trucks were seen at the site this month, and a backhoe was placed there, perhaps signaling that work was about to start.

On Friday, the backhoe was hauled away.

The $20 million in public financing passed City Council unanimously on Sept. 30, 2013, Adams, Council President John Friend, D-5th Ward and Finance Chairman Conor O’Daniel, D-at-large, all said they want a Downtown hotel project to move forward, but the public financing was held down so the city also could afford bonds for the medical campus.

Bonds totaling $55 million have been OK’d for that project. City and Indiana University School of Medicine-Evansville officials are hopeful to receive nearly $50 million in the next state budget, which would combine with the $55 million Evansville has committed.

The Indiana Commission for Higher Education did not include the Evansville medical campus on its list of recommended capital projects for the General Assembly. Local officials vow to push for its inclusion in the budget. Adams, an adjunct instructor in the Indiana University School of Medicine-Evansville, said the medical campus remains his higher priority.

“I’m unwilling to put another dime in the hotel until I know the real motor of economic development (the medical campus) is coming,” Adams said.

Council leaders say the dual hotel and medical campus projects will stretch Evansville’s Downtown Tax Increment financing, and Old National’s recent successful appeal of its own property tax bill on its riverfront headquarters will make the task of paying for both projects even more challenging.

Old National’s property taxes were trimmed about $1 million due to its appeal. Council leaders say that if the hotel and medical school projects come to fruition, the city would have little to no wiggle room in its Downtown TIF.

It is hoped by all city officials that the hotel and medical school projects increase Downtown property values and stimulate growth within the TIF boundaries, making it easier to retire the debts.

“Twenty million (for the hotel) was my top number from a very early spot, and it remains,” O’Daniel said. “I think there are other things that can be done to get this project on a cost timetable.”

O’Daniel suggested starting construction on the footprint that’s envisioned, but leaving a floor or two unfinished for the time being. Winnecke has cited a tourism consultant’s opinion that a convention hotel needs a minimum of 240 rooms to be viable.

Friend said he is “open-minded” about what the city should do to revive the hotel plans, but he and other council leaders said Bob Swintz, bond counsel to city government, has advised the Downtown TIF can’t be stretched much further.

Coures said it’s his understanding that Winnecke will reconvene the interested parties in early 2015 to discuss how to proceed with the hotel project.

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