CONSTRUCTION: Work continues Friday on the downtown hotel site on Superior between Main and Union Street. The project will need a new developer because the Dora Hotel Company pulled out earlier this year. Staff photo by Tim Bath
CONSTRUCTION: Work continues Friday on the downtown hotel site on Superior between Main and Union Street. The project will need a new developer because the Dora Hotel Company pulled out earlier this year. Staff photo by Tim Bath

A new developer of Kokomo's downtown hotel and conference center project could be announced in coming weeks, say local officials, who have maintained public optimism despite a set of fresh hurdles within the immense development.

It was publicly revealed in early May that Dora Hotel Company, an Indiana hotel management firm run by owner Tim Dora, was pulling out as the project's developer, less than a year after helping announce the project. 

But while a new developer could be on the horizon, the adjustment is expected to lead to an altered timeline and expanded cost projections. 

Recent progress, however, like innkeeper's tax legislation success and an environmental OK, have kept the project moving forward. 

Officially unveiled in July 2018 – although details had been public for around a year before that – the planned downtown hotel and conference center project was cause for celebration for many in city and county government who had worked for years to enable the idea. 

The development, it was announced, would include a six-story, 123-room Hilton Garden Inn and an adjoining 22,000-square-foot conference center, representing a $26 million investment.

That investment total is now in question, with costs expected to rise, although the hotel brand is expected to remain the same.

Cleared for the project is the block between Main and Union streets, bordered by Superior Street to the north and Wildcat Creek to the south, which used to hold a CityLine Trolley stop and various offices already demolished by local crews.  

Ground is expected to be broken in September, but it’s unlikely the project will be ready for the grand opening previously planned for spring 2020.

Still, officials say a deal is imminent with the unnamed developer, one that could enact a vision to bolster downtown Kokomo and bring a bevy of opportunities to an area already surging with recent development.

'In discussions'

Greater Kokomo Economic Development Alliance President and CEO Charlie Sparks views Dora’s departure as a potentially dramatic obstruction that was in large part placated by local officials quickly latching on to a new developer.

He did not reveal the name of the developer likely to take over the project. The need for a new developer was first reported by the Kokomo Perspective.

“It changed our timetable, and we thought and still think highly of Tim Dora as a developer, so I was disappointed. But it’s really not that uncommon on this type of development to have that type of a change,” said Sparks, who has taken the lead in publicly discussing the project.

“It would have been a tremendously large roadblock if we had not been able to find another development group to step in. The private investment is a key part of this deal. But we have identified another developer that we’re currently in discussions with.”

Sparks said he is confident an agreement will be worked out with the unnamed developer.

He emphasized that local officials are not yet prepared to make an announcement about the developer or updated plans for the major construction project but said one could come “hopefully in the next couple weeks.”

“As is common with a development like this, there are a number of moving parts. We have had some changes with the source of private investment in the deal and the design of the facilities, but the basic scope and scale of the project have not changed,” noted Sparks.

He said the project has the same “basic footprint and layout” but that “proposed changes relate to the look of the facilities.”

He declined to give specifics on why Dora stepped out of the project but said the decision was about business considerations and did not reflect on Dora’s relationship with local officials.

“That’s kind of his business, if he wants that known or not. It’s not something that I would disclose,” noted Sparks. “It was strictly a business decision on his part.”

Dora could not be reached for comment.

Despite the move, Sparks said there is no bad blood between Dora and those in Kokomo and Howard County.

“I just had lunch with him a couple, three weeks ago,” he noted. “So we’re good. We’re still communicating. Yeah, we’re fine.”

Again in question, however, are particulars about how the project will be financed. Previous estimates placed the cost of the hotel at $18 million and the conference center and included auto museum at $8 million.

A funding plan revealed last summer showed a mix of private funding, innkeeper’s tax revenue, Howard County government payments and city financing mechanisms like bonds and cash reserves. Kokomo Mayor Greg Goodnight said at the time: “Easily the biggest chunk of money is going to come from Dora Hotels.”

“We’re confirming those numbers now. It looks like construction costs have increased some since those numbers were developed,” said Sparks.

“We don’t have specific numbers today on the increase.”

About who would see the spending increases, Sparks said: “Those are the kinds of issues that we’re working through with the developer currently. … Those are the items that are currently being worked out and negotiated.”

Another topic emerging alongside the developer change is the future of the Kokomo Automotive Museum.

The museum vacated the Kokomo Event and Conference Center in May 2018 after more than two decades at the North Reed Road site. By that time, plans to move the museum into the future downtown conference center had been public for months.

Specific plans were unveiled in July 2018, showing the museum would have a ground-level entrance but be situated on a second level below the conference center when it opened.

Kokomo Automotive Museum Director of Development Jeff Shively, in the latter months of 2018, then bounced around to local groups like the Howard County Council and Kokomo Common Council, giving presentations about the museum’s vision for its future home.

Now Shively is the one looking for information.

“As of right now, we are moving ahead with fundraising and planning just as we have for the past year, with the assumption that we will be downtown. We'll keep moving in that direction until or unless we hear differently,” he noted in an email late Wednesday.

“I wish that we knew more. We're in a holding pattern. We have talked with a couple of design firms, but we can't commission anything until we know the final dimensions of the space. We're hosting the Sunday in the Park car show next month and we'll have an auction and fundraiser in the fall, just as we have been doing. That is all we can do for now. Let's hope that we'll all know something concrete soon.”

Sparks said Thursday the auto museum will remain part of the downtown project.

Innkeeper’s tax

Indiana Gov. Eric Holcomb on May 6 signed legislation enabling Howard County to bump its innkeeper’s tax from 5% up to 8%, a move that could bring over $300,000 in additional tax revenue each year.

It was the culmination of efforts from city and county officials stretching back to 2016. The initiative started with controversy, as public officials sparred publicly about legislative specifics, before enough of an agreement was reached for Indiana Rep. Mike Karickhoff, R-Kokomo, to file legislation in 2017.

After two years of failure, Karickhoff combined his proposal this year with a Senate bill that included 11 other counties or entities that wanted changes to their innkeeper’s or food-and-beverage tax, which is specific for each county and must be approved by legislators.

It led to a legislative OK long awaited inside Howard County.

“It’s hard to say no when you’ve got a lot of people on board,” Karickhoff said in a previous interview.

Howard County Auditor Martha Lake said the 5% tax last year brought in $627,000. If that tax had been at 8%, it would have generated just over $1 million in revenue, she said.

The additional revenue is expected to be spent on the conference center, confirmed Sparks and Howard County Council President Jim Papacek.

Papacek said the council is expected to vote on an innkeeper’s tax increase at its June 25 meeting. While the legislation allows Howard County to raise the tax up to 8%, a vote approving the measure is still required to come from the seven-member council.

Papacek said a vote at this month’s meeting, on May 28, likely won’t happen “because we’ve kind of been tied up with that other thing,” referencing an ongoing dispute over salary raises between the council and Judge William Menges that saw a failed mediation earlier this month.

The innkeeper's tax is charged to people who book rooms in hotels, motels, bed and breakfast spots and other lodgings. It is collected when a customer pays for their stay. Locally, the money funds the Howard County Conventions, Visitors and Tourism Commission – also known as the Convention and Visitors Bureau.

Papacek said he would like to see the tax raised in full to the new ceiling of 8%, although he has not yet had conversations with the other six council members about their opinions.

While the entirety of innkeeper's tax money won't go to the conference center, it is expected to receive the new, additional income. 

“I would assume so,” said Papacek. “Because if I remember the way the ordinance was written … the first thing [the tax increase] has to go to is toward the payment of any debt. So I’m pretty sure it would go to that first.”

Added Sparks: “We still need to operate a Convention and Visitors Bureau; we’ll still have an operating budget. But we would anticipate that any new revenue would be dedicated to this project.”

It is so far unclear exactly when the tax increase would be effective in Howard County, although Lake said past ordinances regarding innkeeper’s tax collections “were effective upon adoption and publication as required by law,” meaning there could be a quick turnaround.  

Progress with IDEM

The Indiana Department of Environmental Management, meanwhile, has given the all-clear to build the hotel and conference center after determining chemicals and other contaminants found at the site don’t pose a health threat.

An environmental study, commissioned by the city and completed in February 2018 by the consulting firm SME, found levels of more than a dozen compounds and substances in the soil and groundwater that are above the approved limits set by IDEM.

Some of the substances over state limits include PCE, which is primarily used for dry cleaning fabrics and degreasing metals; and arsenic, a metallic element that occurs naturally in the earth’s crust but is also found in wood preservatives, tobacco products and metal adhesives.

That led the state to launch an investigation into the site to determine the extent and cause of the contamination.

Now, that investigation is complete at the site where the building will be constructed, which encompasses the northern parcels of the property.

IDEM in March issued a letter to the Kokomo Community Development Corp. allowing the project to move forward and declaring the contamination does not present a threat to human health or the environment.

However, city officials have signed a covenant agreeing not to use or extract the groundwater at the site for any purpose, including human or animal consumption, gardening, industrial processes or agriculture, without approval from IDEM.

Although the state has cleared the site where the actual structure will be built, the southern section of the property where the parking lot will be located still has yet to get IDEM’s approval.

Sarah Bonick, IDEM’s director of external relations, said the city’s consultant should be at the southern secition this week to complete additional sampling required by the state. Once IDEM receives the report from the additional investigation, it can begin the process of declaring whether that part poses a health threat or not, she said.

The effort to get IDEM’s approval on building at the site was put on the fast track earlier this year, when the project was placed within the Indiana Brownfields Program. IDEM officials said the program allows the developers to move forward with the hotel and conference center, while ensuring the project’s development is not harming human health or the environment.

Over the years, a slew of businesses have been located at the site that may have contributed to the contamination, including a blacksmith, automotive repair and painting, machine shops, welding, battery service, furniture stripping and natural gas operations.

The city has been conducting environmental studies at the construction site since 2013, when it acquired the first parcel of property there at 212 S. Main St. Since then, the city acquired three other parcels of land there, all of which underwent environmental inspections.

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