MARSHALL — A request for a tax abatement for a proposed 84-room hotel in Marshall took a step forward on Tuesday. Members of the Marshall City Council voted to approve a request for a maximum $480,000 abatement.

However, Marshall Mayor Bob Byrnes said, “There are a lot of other things that the private developer needs to do to have this project come to fruition.” A business subsidy agreement will need to come back to the council for approval.

Northfield-based development firm Rebound Partners is proposing to build a Hampton Inn on land near the Red Baron Arena and Expo. Earlier this month, Scott Koester of Rebound Partners told council members the developers were requesting a commercial tax abatement and business subsidy for the roughly $16.1 million project.

“Our last hotel was built in 2014. That was the Sleep Inn, built around the time when the Red Baron opened,” said Marshall EDA Director Lauren Deutz. Since then, there had been three different studies indicating a need for additional hotel rooms in Marshall, she said.

There had also been past proposals to build a hotel near the Red Baron Arena, Deutz said. “We have had some previous requests for tax abatements dating back to 2018 and 2019. Neither of those were passed by the council.”

Rebound Partners purchased the land for the proposed hotel in 2022, Deutz said.

Rebound had initially requested a property tax abatement of 85% for 15 years, which came to roughly $1.1 million, Deutz said. “Staff took that request and looked a couple different options, and today the developers come forward with a slightly different request of 85 to 65% for 10 years,” she said.

City staff’s alternative to that request was an 80% abatement on the city’s share of property taxes for the first five years, and a 60% abatement for years 6-10. The alternative also included a $480,000 cap on the tax abatement, in addition to a $500,000 forgivable loan, Deutz said.

“This loan is coming out of our unobligated pool TIF funding. So we were able to free up this money from our pooled increment, and it is to be used to provide loans, rate subsidies and other assistance to developers,” Deutz said. “The caveat to that is that funding needs to be spent by the end of 2025.” Deutz said expenses like site preparation and purchasing the land for the project would be eligible for that funding.

Koester said Rebound Partners would also be requesting a property tax abatement from Lyon County. The abatement would help “bridge the financing gap” to build the hotel, he said. In addition to the abatement and forgivable loan, Rebound would also raise private equity for the project, he said.

Mikaela Huot, of municipal advisors Baker Tilly, said the tax abatement was based on the performance of the hotel project. “The way that it is structured eliminates any risk from the city in financially providing assistance,” she said.

A few different people, including representatives of local amateur sports groups, spoke in support of a proposal to build an 84-room hotel near the Red Baron Arena and Expo. A lack of hotel space in Marshall has been putting limits on athletic tournaments and other events, speakers said.

“We’ve had to utilize hotel rooms outside of Marshall several times,” said Ryan Stelter, a member of the Marshall Amateur Hockey Association board of directors. A lack of lodging had kept some hockey associations from participating in Marshall tournaments, he said.

Council member James Lozinski said he was wary of using TIF funds toward the hotel project. But after further discussion, council members voted to approve the 10-year tax abatement request with a maximum total amount of $480,000. In a separate motion, council members voted to authorize city staff to draft a business subsidy agreement that would need to come back to the council for approval.