May 08--Another site has emerged as the possible location of a downtown boutique hotel and the city appears ready to help move the project forward.

Local developer Orlan Sorensen, owner of Landmark Builders, is under contract to purchase the entire block at Third Street and Spokane Avenue -- a site commonly referred to as Block 46. A portion of the block across from the Third Street Market has most recently been leased by the city as a public parking lot.

The proposed $11.9 million, 80-room hotel will feature indoor and outdoor swimming pools, a rooftop area, retail along Spokane Avenue, a restaurant and bar, and an open-air cafe.

The hotel design will cater to corporate travelers with a conference area and business center.

A parking lot with 71 spaces for hotel guests is planned, along with angled street parking.

Sketches and elevations of the hotel were to be presented to the city's Architectural Review Committee Tuesday morning.

"We are creating more of a destination resort," Sorensen said. "People will come here because of the hotel. This is a very classy hotel."

Sorensen considered going with a franchise design, but opted to keep the hotel a boutique brand.

"I wanted to design this my way," Sorensen said. "It's turned into a design that fits the town. It's unique."

Developers aim to break ground this summer and have the hotel completed by next June.

"We are on a fast track and in a crunch," he said. "There are some real time constraints to get this done."

About 30 new jobs could be created with the project.

Sorensen approached the city Monday about the possibility of using tax increment finance funds or resort tax dollars to assist with infrastructure projects.

In order to start the project, a sewer line which runs underneath the property will need to be relocated. Sorensen also asked the city about assistance with sidewalk, parking and street amenities surrounding Block 46.

Sorensen is requesting the city invest up to $543,345 for the infrastructure improvements.

According to city manager Chuck Stearns, the TIF investment would be repaid within three and a half years, assuming $155,000 of new TIF funds annually will be brought in by the hotel. A total of $930,000 in new TIF funds could be collected from the hotel project by the time the TIF sunsets in 2020.

"TIF is really the fund designed for and used to directly assist proposed development projects," Stearns said. "They are used to assist with infrastructure to help a project go forward."

Resort tax dollars were also presented as an option for funding assistance with the infrastructure upgrades.

Sorensen notes the hotel could add $150,000 or more annually to the resort tax fund.

"That's a low estimate," he added.

Councilors decided Monday a mix of resort tax and TIF funds might be appropriate to help fund the infrastructure projects. Stearns said he would open negotiations of a development agreement.

Mayor John Muhlfeld noted the project still has to go through ARC review, the planning board and final council approval before ground is broken.

In February, Averill Hospitality approached the city about possibly building a boutique hotel at the site of the city-owned public parking lot on Third and Central. Those talks are still ongoing.

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