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City nixes Gatehouse project

Hotel/conference center would have been built near Red Baron Arena

MARSHALL — A proposal to build a hotel and conference center near the Red Baron Arena and Expo won’t move forward, according to a news release from the Marshall City Administrator’s office.

The Wednesday afternoon release said the city of Marshall was unable to approve the proposal, after “in-depth discussions” with Gatehouse Capital on the financing structure of the project.

The announcement comes after months of discussion involving Marshall city staff, the Marshall City Council, and Gatehouse Capital, a Texas-based investment company that develops combined hotel/conference center projects. Last fall, the EDA presented an offer from Gatehouse to do a market study for a hotel and convention center on property next to the Red Baron Arena. The cost of the study was $20,000, which was funded by the EDA.

The city council approved the proposal and heard the results of the market study in December. Gatehouse then proposed a public/private partnership to build a 16,000 square-foot convention center and a 100-room Marriott hotel in Marshall.

After conceptual drawings of the proposed hotel and convention center were unveiled in April, Marshall city staff said the next step in the project would be to go over a more detailed financial proposal with city financial advisers.

In Wednesday’s news release, the city administrator’s office said the city had “ongoing discussions” with Gatehouse Capital on the financial structure of the hotel project and its impact on taxpayers. Gatehouse and the city looked for financing options that would be agreeable to both parties, the release said. However, he release said, “After in-depth discussions finished, the city is unable to approve the project.”

The release listed three key reasons why the city wouldn’t approve the hotel project. One reason was that the cost analysis for the city debt on the project would have had a bigger-than-anticipated impact on the tax rate and taxpayers. Another was that the type of debt the city would need for the project would not give the needed financial flexibility to ensure taxpayer confidence. Finally, the release said, a provision in law conflicted with the proposed financial structure for the project. The city and Gatehouse Capital weren’t able to come to agreement on how to resolve that conflict, the release said.

The release didn’t go into detail on what the cost analysis for the hotel project showed, or what the legal conflict with the proposed financial structure was. Messages to Marshall City Administrator Nicholas Johnson were not returned as of 6 p.m. Wednesday.

Under Gatehouse’s proposal to the city of Marshall, the Mariott hotel would have been privately owned, while the conference center would have been owned by the city. Gatehouse would provide 70 percent of the financing for the hotel, and the city would provide 30 percent through bonding. Gatehouse would pay the principal and interest on that bond. The conference center would have been financed by city bonding, with Gatehouse paying the principal and the city paying the interest.

The news release said the proposal for the hotel and conference center was worth exploring, as it could have created a conference center and event venue that would add to economic development in Marshall.

“The goal of the city was to ensure the impact to the taxpayer was minimized to an acceptable level” the news release said. “The conclusions of the analysis and the final financing details demonstrated key issues which were deemed not in the best interest of the citizens of Marshall.”

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