The Hays City Commission on Thursday expressed support for a proposed Hilton Garden Inn and convention center to be constructed near Vine Street and scheduled a public hearing for requested tax incentives.

Commissioners also gave city staff the OK to execute an agreement with developers that would relinquish the city’s 5-percent transient guest tax collected on site for a period of 20 years, also to help offset development costs. The 5-percent tax is expected to generate approximately $1.8 million during that time.

“Everybody’s really excited about this,” Commissioner Sandy Jacobs said, noting she has heard from several residents. “I have not heard one negative word about us doing anything with this, or the prospects. A $19 million investment in this community is pretty exciting for us right now.”

The rebated “bed tax” funds are to be used for convention center maintenance and upkeep. The request for this incentive was made early in the process to assist the developer in securing financing. The city has never granted this incentive before.

The agreement to relinquish the hotel guest tax will not be effective until the city enters a formal contract also detailing the requested TIF and Community Improvement District incentives. A requested 2-percent CID tax would apply only to customers of the new hotel and convention center. The 22-year CID is projected to generate approximately $3.11 million.

The Feb. 8 public hearing will consider a 20-year Tax Increment Financing district requested by Wichita developer Raju Sheth.

The TIF would collect incremental property tax revenues on a pay-as-you-go basis, meaning the developer is not asking the city for a bond issue. Developers project the requested TIF could generate approximately $3.7 million in revenues. The proposed TIF would not affect sales tax revenues or the school district’s capital outlay mill levy, said Kim Rupp, city finance director.

The legal process of granting economic incentives is lengthy, with final approval not likely until the end of April. With all three incentives combined, projected reimbursement totals approximately $8.6 million, with development costs topping $19 million.

The approximately 75,000-square-foot Hilton Garden Inn would feature 100 guest rooms and 8,400 square feet of convention/event space, as well as an on-site restaurant and lounge. The developers have expressed interested in a possible second project to develop a retail center and sit-down restaurant once the hotel is complete.

The development is to be located on 43rd Street just west of Walmart on undeveloped land recently annexed into city limits.

The city currently does not have a convention center, and also could benefit from additional hotel rooms, Rupp said.

“The city is in need of additional hotel rooms,” he said. “Many groups that have activities in the city, such as Special Olympics basketball, have expressed concern with the lack of available hotel rooms in the area.”

Commissioners also praised the city’s revised economic development policy, which initially was implemented last spring to help streamline the process for potential developers seeking incentives.

“People remember us losing a truck stop a couple years ago and the system in place at the time did not work,” Commissioner Lance Jones said, also noting the city had offered incentives in that instance, though the offers were rejected by a potential developer. “The system that we’ve worked on now and kind of tweaked for the last couple years has been flawless. … If things were in place two years ago like they are now, we would have a truck stop out on (Interstate 70) Exit 157. I hate to keep bringing that up but that’s what people are talking about around town.

“And they really do want a truck stop. And I hope somebody comes in and re-looks at this process and how easy it is.”

In other business, the commission approved a request to help fund a new facility in Veterans Park to display and protect a historic 40 and 8 Kansas Merci Boxcar. The boxcar, dating back to 1949, needed to be relocated due to a change in ownership and renovations to the former American Legion building at 13th and Canterbury.

The 40 and 8 veterans’ organization has been raising money to help offset costs to move and build a protective structure for the boxcar, collecting approximately $11,000 plus in-kind donations.

The city commission approved a request to fund the remaining costs up to nearly $13,500 to complete the project, as there is a need to protect the boxcar -- which doubles as a museum -- from winter elements.

City officials noted other Kansas communities had expressed interest in acquiring the boxcar, which was a gift to the state from France following World War II.

“Lots of communities would be very proud to have this in their community,” Jones said. “I know I’m proud to have it in our community. It’s something I’ve looked at several times.”