The Festus City Council has approved a deal involving tax abatements for a developer to build an approximately $16 million, 92-room Hampton Inn & Suites hotel in the Festus Commerce & Business Center on Shapiro Drive next to the Texas Roadhouse restaurant.
A similar deal was reached between the city and Crown Hospitality (formerly called Festus Hospitality) in 2019 but elapsed after COVID halted the project.
“We need another hotel,” Mayor Sam Richards said after the council voted on the matter.
City Administrator Greg Camp agreed.
“There’s no doubt the community, the area, needs additional hotel space,” he said. “With the growth we continue to see and the growth that we anticipate is going to continue to come, the addition of another hotel brand is important.”
Nick Hartzler, project manager for Steadfast City, a company representing Crown Hospitality, said those behind the project see Festus as a prime location for a Hampton Inn.
“(Crown Hospitality) views Festus as a vibrant, growing community,” he said. “The city’s got strong community spirit.”
Hartzler also said the site’s location next to I-55 is ideal.
Council members voted 6-0 April 28 to approve a memorandum of understanding with Crown Hospitality. Jim Collier of Ward 1 and Kevin Dennis of Ward 3 were absent from the meeting.
The deal calls for the city of Festus to issue $14.5 million in Chapter 100 industrial revenue bonds, which would provide funding for the city to provide Crown Hospitality with tax abatements, reducing the developer’s overall cost for the project.
Camp said the use of such industrial revenues and abatements is often needed to attract business interests like those behind the Hampton Inn project.
The developer’s real property investment for the project would be about $14.5 million, he said.
Camp said the developer would invest another approximately $2.1 million in personal property, and the tax abatements would not apply to that.
The deal calls for the property’s real estate taxes to remain the same for 10 years, despite an increase in the property’s value because of the addition of the hotel.
Camp said the Chapter 100 program allows for the city to assume ownership “on paper” of the property involved. Once that happens, the property becomes tax exempt, with the city “more or less” leasing the property to the Hampton Inn owners.
After the 10 years, the lease deal expires and Crown Hospitality would take ownership of the property, which would be assessed and taxed at its full rate, he said.
The deal ends on Dec. 31 of the 10th year after the project is transferred to the city, according to the memorandum.
Camp said other governmental entities that will be affected by the tax abatements, like the Festus R-6 School District and the Joachim-Plattin Ambulance District, have been consulted and support the deal.
According to the deal with the developer, Festus will continue to receive the same amount of tax revenue from the property based on its current assessed value, with some small increases, over the 10-year deal, foregoing the additional tax revenue the property would generate based on its increased value due to the addition of the hotel. That means the city will receive a total of $11,592 in taxes over those 10 years for that property instead of the projected $173,215 it will bring in without the tax abatements. Under the deal, the city will ultimately forego a total of $161,623 in additional taxes over the 10 years, according to information supplied by Steadfast City on the Chapter 100 agreement.
After the 10 years is up, then the city will receive all tax revenue for the property based on its higher assessed value.
Festus schools
The Festus School District will receive a total of $78,580 over the 10-year deal, based on the property’s base value, and the district will forego the additional $1,095,697 it would bring in based on the improvements.
“While there may be a minor financial impact on the district in the short term, we understand that strategic growth initiatives such as this are intended to spur long-term economic development within our community,” Festus R-6 Superintendent Nicki Ruess said. “The city of Festus has consistently been a strong partner to the school district, and we value the ongoing collaboration between the city, local businesses and our schools. We remain committed to supporting responsible development that contributes to the vitality of our city and ultimately benefits the students and families we serve. We are appreciative of our shared partnerships and look forward to continued cooperation as our community continues to grow and thrive.”
JPAD
While the city and school district will forego 100 percent of the real property tax revenue based on the increased value for 10 years, the Joachim-Plattin Ambulance District will forego just 50 percent of the additional revenue the improved property will generate due to a state statute that allows ambulance and fire districts to opt out of such deals at up to 100 percent. JPAD chose to opt out of 50 percent.
As such, JPAD will forego $15,619.50 over the 10 years because of the deal. This amount is half of the $36,069 it would receive based on the value of the property with the hotel improvement, or $18,034.50, minus the $2,415 base value.
Other governmental entities foregoing additional tax revenue over the 10 years of the agreement include Jefferson County Parks, for a total of $6,814; Jefferson County Health Unit, $26,686; Jefferson County Disability, $22,799; Jefferson College, $82,846; Jefferson County Mental Health, $22,799; Festus Special Road, $45,337; state of Missouri, $7,982; surtax, $63,852.
In 2019, the deal between the city and the developer called for the city to issue $10 million in industrial revenue bonds. The $14.5 million figure in the 2025 deal reflects increased prices for materials and construction, Camp said.
Personal property taxes are not affected by the agreement, Camp said.
“It is worth noting that the new hotel would add conservatively an additional $138,000 annually to Festus Tourism,” Camp said.
The Festus Tourism Commission receives funding through a 5 percent hotel-motel tax charged to those who stay in the city’s motels and hotels.
Financial incentives for hotel construction to finish by fall 2026
Festus council members asked Crown Hospitality to agree to pay penalties if it does not meet hotel development deadlines since the hotel project was delayed for so long after the original deal was made with the developer in 2019. No such penalties were included in the previous deal.
According to the memorandum, the company must obtain a commercial building permit for the project by Sept. 1, 2025, and a certificate of occupancy for the project by Nov. 1, 2026, and if it doesn’t meet those deadlines the company will lose a $20,000 deposit, plus a year of the property tax exemption for each failure.
Hartzler said developers intend to hit the ground running on the project this time.
“The developer has already submitted all of its plans to the (Festus) building division program, so as soon as building permits are issued, shovels will hit the ground,” he said.
Hartzler said the construction will take about 15 months.
“We could be opening as early as late summer 2026,” Hartzler said.
Camp said the developer has given him every indication it will rapidly move forward with the project.
“We’re excited that they’re excited to get going,” Camp said. “Their willingness to accept an agreement that puts a little pressure on them to get this done; at the end of the day, that’s all we wanted.”