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Hilton Garden Inn and Convention Center

Run down, ignored, abandoned, underutilized and absent tax revenue used to be the best (or only) way to describe downtown Lawton, Oklahoma. For more than 10 years, investors, developers, city, and county officials worked towards one purpose-creating and executing a plan which would transform and revitalize the downtown area into a destination mixed use site promoting business expansion. Sounds amazing (or Great plan)! ...The problem(s)? Who wants to be first? What type of anchor project can catalyze adjacent development? How do the economics work?

Construction of Hilton Garden InnInvestors and developers were unwilling to move forward in Lawton due to the fact that the risk was high and the potential reward was negligible. Loans at the market rate combined with standard debt to equity requirements from banks forced developers to think outside the box. Even with a city and county loan program, the returns did not line up with market expectations.

What if this project was in an area (low income census tract) where the poverty rate was over 30% and the unemployment rate was at least 1.5x the national average? This would mean the project potentially qualifies for New Markets Tax Credits (NMTCs). NMTCs are allocated to Community Development Entities (CDEs) by the US Treasury Department. NMTCs allow investors to recover part of the cost (39%) of starting (or running) a Qualified Active Low Income Business (QALICB) over 7 years.

New Markets Redevelopment (NMR) joined a team that included funding from the Lawton Economic Development Authority, Comanche County Industrial Development Authority and another Oklahoma CDE. The ability of NMR to find banks that would provide access to below market interest rates (40-50% below) and allow higher debt to equity ratios (30-50% higher) on commercial loans combined with an investor in need of tax credits preempted the announcement of a Hilton Garden Inn and Convention Center in late 2012.

Construction of Hilton Garden InnThe Hilton project expects to produce 315 construction jobs and create 65 permanent jobs thus directly lowering the unemployment rate and the poverty rate. The added jobs together with the hotel and convention center results in higher foot traffic to businesses (demand) and increased property value which both serve as positive externalities to surrounding property owners. In fact, after the start of the Hilton construction another developer completed its agreement with the city to add several high profile national retailers to the adjacent property. The revitalization occurring in downtown Lawton has increased the income level (or reduced the poverty level) in this Low Income Community (LIC) coupled with increased sales tax revenue and higher property taxes will further help bring life to a long blighted area and has already catalyzed adjacent development.

New Markets Redevelopment, LLC
5801 N. Broadway Extension, Suite 120
Oklahoma City, Oklahoma 73118
405.842.0100, Fax 405.848.8248