Cape city council OKs deal for conference-center project

Approval unanimously granted Monday night by the Cape Girardeau City Council sets in motion an agreement that will bring a new conference center to the city.

The city will enter into a partnership with several hotel owners to support the construction of a new Drury Southwest Inc. conference center and hotel.

Featuring eight stories and 168 rooms, the hotel will replace the existing Drury Lodge at 104 S. Vantage Drive.

As Councilwoman Loretta Schneider said, the conference-center project "has been sort of on a dream list for some time," as the city has long had the interest in gaining such a facility but has been unable to make it happen financially.

A conference center with a hotel component was considered among the list of projects reviewed last year by the City of Cape Girardeau/Midamerica Hotels Corp. Feasibility Study joint committee last year. The committee ultimately chose an indoor sports complex as the next project to be funded by the city's 1 percent restaurant tax.

Hospitality research firm HVS conducted a study for the committee at the time and found a conference center would meet an "unaccommodated demand" in Cape Girardeau for large gatherings, and it estimated the city was turning away 27,000 room nights each year because of seasonal demands. The study also explained the project would not be profitable for a private developer or public entity alone.

The HVS study was conducted about the time Drury Southwest was considering how to move forward with the Drury Lodge. Rick Drury told the council the company already was looking at closing the lodge at the end of 2015 and redeveloping.

The company also had interest in a convention center, Drury said, and knew data confirmed a stand-alone facility would not be profitable. But to build a conference center and hotel with all the needed amenities and "do it right" would be costly, he added.

Recognizing an opportunity to work together on the common goal, the company reached out to the city to discuss a partnership. The final agreement on that partnership, as approved by the council, includes contribution from Drury Southwest, the city and other hotel owners in the city.

Participating hotel owners in the William Street and Interstate 55 area have volunteered to pay 1 percent of their hotel revenue for up to 20 years or until their combined contribution with the city meets $6.25 million, whichever comes first. The 1 percent will take the form of an assessment added to room sales at each participating hotel. Including the new Drury hotel, there are six hotels involved in the agreement, though others could join at a later date. Estimates from the city expect a contribution of $3.8 million from hotel owners.

Contribution from the city of Cape Girardeau is estimated at $2.45 million. Per the agreement, the city will pay an amount equal to 1.5 percent of the revenue generated from the conference center for up to 20 years, or when their combined contribution with the hotel owners meets $6.25 million -- whichever comes first. The contribution is equal to the 1 percent general sales tax and 0.5 percent capital improvements sales taxes, which the city said still will be paid by the new development. Payments will be made quarterly, as outlined in the agreement.

Finally, Drury Southwest will contribute a private investment of at least $4.75 million for the conference center. For the hotel and adjoining restaurant, Drury Southwest president Dennis Vollink said the cost to the company is estimated at nearly $25 million.

The agreement for the $11 million conference center will continue for 20 years or until the $6.25 million combined contribution is reached.

Mayor Harry Rediger called the agreement a "win-win" and said many -- from the hotels, restaurants and shops to residents of Cape Girardeau -- would benefit from additional tourism drawn to the city by the conference center.

"This is another example of a great public-private development," he said.

Councilman Wayne Bowen also expressed his support and asked Vollink and Drury whether the new project also would equal new jobs. They told the council about 80 additional people will be added to the staff compared to the team it employs at Drury Lodge. The existing lodge is two stories and has 140 guest rooms.

Vollink also said local suppliers and contractors would be used during construction.

Drury Lodge will close in January and demolition will begin immediately after. Ideally, the new hotel and conference center would be open in late spring or early summer 2017.

The city will not assume any operation costs or liabilities. It will, however, market the conference center through the Convention and Visitors Bureau, buy and install signs at intersections near the new conference center to inform the public of its location and work with the Planning and Zoning Commission to approve a zoning variance for the height of the hotel.

Per the agreement, it will work with Drury Southwest to transfer a portion of Vantage Drive near Percy Avenue from the Missouri Department of Transportation to the company to accommodate additional parking needed for the project.

To include the new hotel, restaurant and the conference center -- which will cover more than 20,000 square feet -- Vollink said the new project will cover twice as much area as the current Drury Lodge.

srinehart@semissourian.com

(573) 388-3641

Pertinent address:

401 Independence St., Cape Girardeau, Mo.

104 S. Vantage Drive, Cape Girardeau, Mo.