Newton City Council postpones review of contracts with Hotel Maytag developer

Review of the City of Newton’s development agreement and loan agreement with the investors of Hotel Maytag is going to have to wait. Council member Randy Ervin this past Monday night received full support from his fellow elected officials to postpone two resolutions regarding Hotel Maytag until the next meeting.

When asked by council member Stacy Simbro to explain his reasoning, Ervin said there was extra information sent from the city administrator just before the meeting that he had not reviewed, and there were some discussion points he wanted to get some clarification on. Newton News asked for further clarification.

Ervin explained he was in contact with the new facility manager and felt it was too quick to bring it back for a vote. He also reasoned that council members should be given the opportunity to obtain more information before coming back to the dais for a proper discussion.

“I think it’s too soon,” Ervin said. “The last time it was here it got voted down. Now we’re bringing it back and I thought we need to not jump into that. It’s the ninth revision of their agreement. That’s a lot of revisions. Who else in town has been able to come back to the city nine times?”

Still, Ervin conceded the valuation of the Hotel Maytag property has, indeed, “skyrocketed,” but he argued the property valuations of every citizen have done the same thing. The challenge will be where the council draws that line. But Ervin does feel more comfortable this time around knowing who the facility manager is.

Mike Hansen, the new facility manager of Hotel Maytag, appreciated Ervin’s motion to postpone any council action on the city’s agreement with the apartment complex and event center in order to get additional information. He thanked the mayor and council members for previously visiting with him at the facility.

“I hope it was a learning experience for you all because it has certainly been a learning experience for me,” Hansen said. “…I will also tell you I have a whole new appreciation for people who own property and manage property and provide living places for people in our community.”

Hansen has been the facility manager of Hotel Maytag since September 2024. He acknowledged a lot of things need to be addressed, but he is also looking forward to working with the council on issues regarding the tax abatements and the investments that have already been made in the building.

The former Newton mayor’s involvement with the facility gives Ervin confidence in approaching this controversial topic that has drawn some scorn from residents.

“You’ve got Mike, a local person, running it. And that’s a step in the right direction, I think,” Ervin said. “He’s got a great love for that building, and if he hadn’t been involved I don’t know what would have happened. The fact that Mike is personally involved … absolutely makes it more palatable to me than it was.”

AMENDED DEVELOPMENT AGREEMENT DETAILS

Neither the public nor elected officials made comments during a public hearing on an amended development agreement with Hotel Maytag Investors, LLC. The investors requested the amendment due to the significant increase in taxable value over the amount anticipated by the minimum assessment agreement.

The proposed amendment adds a sliding scale tax rebate on the actual property valuation, which, again, is above and beyond the minimum assessment.

When the city and the developer first formed the agreement, neither entity had anticipated the property valuation would ever exceed $2.3 million.

Currently, the assessor lists the property having an approximately $3.3 million valuation. City staff recommends amending the agreement, saying Hotel Maytag is a prominent building in downtown Newton and that the tax rebate will provide necessary support as new management works to address critical issues.

Hotel Maytag has struggled with deferred maintenance and financial losses. Staff also addressed the number of times the agreement with the investment group has been amended. The city reasoned it is common for larger projects to undergo revisions, like the Project Fastpitch urban renewal areas.

Staff also said there is nothing in the amended agreement that would provide the developer any additional benefit than what was originally pledged. The city said the updated agreement actually provides less. Since council has denied 100 percent rebate proposals in the past, the city suggested a sliding scale.

The rebates begin at 90 percent in FY25 and decrease by 10 percent every year until it reaches 30 percent in FY31.

“This current proposal appears to strike a happy medium between having the building owner take responsibility for the project and having the city provide the project with incentives that were previously pledged to the developer and are needed to address critical deferred maintenance issues,” the city stated.

AMENDED LOAN AGREEMENT DETAILS

The city supported the Hotel Maytag project by entering into a loan agreement with Iowa Finance Authority. The city also entered into an agreement with Hatch Development to repay the city the loan payments due to IFA. The amended loan agreement gives Hatch Development the ability to pause reimbursement.

Specifically, Hatch Development would be able to pause the reimbursement for the principal amount of the loan payments and reimburse the city for the interest amount of loan payments in FY25, FY26 and FY27.

The city says this amendment provides a solution and protection for the city in dealing with a situation where Hatch Development has been challenged to make the payments. It also extends the current agreement by three years. The council would revisit the matter again in three years.