The Virginia Beach Development Authority was briefed today on the incentive program that is being evaluated for use on the 27th Street Hyatt hotel project.
The City Council had requested once again that the Authority evaluate the project to determine whether it meets criteria to receive public funding. Deputy City Manager Doug Smith outlined how the Tourism Development Financing Program works and how the hotel stacks up against its requirements.
The application is on the second of six steps that are necessary to receive funding. Smith said the Development Authority should pay special attention to specific factors when evaluating the project, such as whether the hotel will fill a tourism void and what that means.
“The question I think is most important is this one around tourism void. I think that’s a fundamental question,” Smith said.
He said that has been an area of focus for city staff since the application came forward.
“One of the things you’ll hear a lot more about is trying to make the program more objective and less subjective,” Smith said.
The City Council is using the Smith Travel Accommodations Report, a revenue management tool that differentiates hotel flags within the industry, for input on the question, he said. The report has also been given to the Authority.
A city staff report determined the project meets city and state criteria for the tourism financing program, including a minimum capital investment threshold and the creation of at least 50 full-time jobs. The one criteria still under consideration, according to Smith’s presentation, is whether the hotel fills a deficiency in the tourism marketing plan.
The Virginia Beach Hotel Association has sent letters to city staff opposing the project, Smith said.
The association has said the Hyatt would not fill a tourism deficiency void and that public funding would create an unfair advantage over existing hotels. The association also has said that supporting the 27th Street project would “open the floodgates for subsidized redevelopment,” according to Smith’s presentation.
The Development Authority’s role in the process, should it support the project, would be to create and execute a performance agreement with the developer.
Dot Wood, chair of the authority, told the board in the meeting there is no rush.
“We don’t have to decide in June or July,” Wood said.
If the city and authority move forward with the project, the next step would be City Council approval. That would permit a 1 percent sales tax from the hotel to be applied to the funding. Next, the authority would draft a performance agreement to be presented to the the Virginia Tourism Corporation and, ultimately, the state comptroller for approval.
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