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Columbia group announces support for long-term land lease to build hotel and convention center

UM-Columbia officials joined community leaders Friday, Jan. 23, to announce plans to seek approval by the General Assembly for long-term lease of land currently owned by the University of Missouri. Because it is considered a conveyance of state property, UM must seek approval from the General Assembly to proceed. The University wants permission to seek requests for proposals from private bidders for a 50-year lease of about seven acres of land near the corner of College and Stadium for construction of a hotel and conference center, which would be built, owned and operated by the private bidder. Proceeds from the lease would be applied toward costs of a performing arts center to be constructed nearby. Private contributions would complete the performing arts center project. The citizens group, Community Leaders Supporting Cultural and Economic Growth, was on hand Friday to announce its strong support for the project. Resolutions seeking approval to enter into a long-term lease will be introduced in the legislature in the coming days. The project involves no state funds, and group leaders emphasized that it would generate considerable revenues through hotel and property taxes as well as additional economic activity resulting from conferences, meetings and additional guest stays.

This proposal will allow the University of Missouri to enter into a long-term lease of land with a private developer for construction of a hotel and conference center in Columbia. The University will issue a request for proposals, and any private developer may respond to the request. The University will not run the hotel, nor will it subsidize its operation in any way. Proceeds from the lease arrangement will be used toward building a new performing arts center at UM-Columbia, with the remainder funded by private donations.

Q: What are the terms of the lease arrangement?

A: The resolution will give the University permission to request proposals for a long-term lease for this property. Any private developer could compete for the proposal. The tract of land to be leased would be up to 7 acres of the land southeast of University Hospital. The resolution provides for a 50-year lease. After 50 years, the hotel and conference center could become University property or the lease could be renewed.

Q: Will the State own this hotel and conference center?

A: No. The facility will be owned and operated by the private developer. The State will not own the facility.

Q: Will taxes be paid on the property?

A: Yes. All applicable local, county, state and federal taxes will be paid. It is estimated that the property tax alone would exceed $400,000 per year on the hotel and conference center space. The owner also will pay a room tax, utility taxes, and sales taxes.

Q: Will it cost taxpayers anything?

A: No. There is no request for funds from the state. All costs associated with the building and operation of the hotel and conference center are the responsibility of the private developer. All lease payments will be made to the University of Missouri and will be used toward the new performing arts center, which would be located adjacent to the hotel and conference center. The University will raise private funds for the rest of the cost for the building. It is important to note, too, that the performing arts center will not be constructed using state funds.

Q: Isn't this unfair competition?

A: Any private developer can compete for this project and the University will encourage broad participation in the request for proposals process. The location could be advantageous, but opportunities for such developments are not limited to this one parcel of land. Other property in the same area has been available in the past, and might be again in the future. There is nothing keeping another developer from trying a similar project across the street. Such a development would enjoy the same benefits of location. This is healthy competition.

Q: Is there a need for another hotel and conference center?

A: Several experienced hotel operators have expressed a very strong interest in getting into this market with such a facility and they certainly know the market as well as anyone. And many meeting organizers have indicated they have had difficulty scheduling conferences in Columbia because of a lack of quality space.

Q: Will the University “drive” its hotel, restaurant and conference business to this new facility?

A: No. The University does not require or encourage any of its departments or employees to use University facilities for this type of activity.

Q: A hotel and conference center appears to be an odd addition to an academic institution. How would it contribute to the academic mission of the University?

A: The conference center will give the University an opportunity to host academic meetings and conferences here so that we can bring in individuals from other institutions on a state and national basis. Because of limited conference resources in Columbia, we have had to turn away potential academic meetings and conferences. This facility would contribute to meeting the academic goals on campus while also increasing visitor traffic for Columbia.

Q: Why doesn't the University just sell the parcel of land?

A: This is an important tract of land, and the University does not want to lose the flexibility of owning this area in the future. In 50 years, if the hotel lease expires and reverts to the University, it then has the option of re-leasing the facility or tearing it down and using the land for other purposes. Selling the land would take away those options.

 

Q: How do you know the value of the land?

A: Upon approval of the resolution, the University will have the land appraised and ensure that any accepted bid exceeds the value of the land. If no bids come in above the appraised value, the lease will not be awarded.

Q: Will UM-Columbia students staff the hotel?

A: There will be no special arrangement for UM-Columbia students, faculty or staff to work in the facility as part of this bidding process. Currently, students in the hotel and restaurant management program (and other students, for that matter) are employed at hotels throughout Columbia. This facility would not be treated any differently.

Q: What will happen to the student housing located on the site now?

A: The family housing facilities on the site in question are nearly 40 years old and in disrepair. The University had already planned to phase out and raze the housing facilities in the near future regardless of the outcome of the lease arrangement. Future students who might have lived in this area will be absorbed into the Columbia community as there is sufficient apartment and rental space for them. More than 1,000 new units and apartments have been added to the Columbia market in the last 24 months alone. No one would be displaced.

Q: Are there other examples of such long-term leases?

A: Yes, the University of Missouri System owns the Weldon Spring tract of land in St. Louis and has received legislative permission for several long-term leases in that area. These include a golf course and several for-profit enterprises. UM-Kansas City also leased land to the Kauffman Foundation through a similar resolution in 1996.

 

Q: Will the state incur any costs since two state highways border the property?

A: No. It is anticipated that any development costs associated with the facility will be the responsibility of the developer. Most likely, access to the property will not be directly off of the state highways that border the site, but from the secondary roads (Monk Drive and Hospital Drive) that border the other two sides of the property.

Q: Will the lease pay for the new performing arts center too?

A: The University anticipates applying the lease income toward the costs of constructing the performing arts center and will raise private funds for the remaining costs. It is estimated that the cost of such a facility will approach $40-$50 million.

Q: What is the timeframe for the project?

A: If approved by the legislature, the University could begin the request for proposals process later this year. Timeframe beyond that would be up to the private developer selected for the project.