ASHLAND — Ashland City Council agreed to a unique and “very aggressive” tax incentive Tuesday for a planned hotel in the so-called Pump House District.
Council unanimously agreed to a 100% property tax abatement over 15 years on Pump House Hospitality LLC’s planned renovation of the vacant Pump House office building along Orange Road.
The deal means property taxes will not be owed until approximately 2041, assuming the hotel is operational in 2026.
“Now, someone might think that’s very aggressive — it is very aggressive,” said Ashland Mayor Matt Miller. “But let me remind you that that building has now sat vacant for almost a decade. And before that, even when it was occupied, we have not collected any taxes on that property for decades.”
The $21.5 million project, bankrolled by Home 2 Suites by Hilton, calls for renovating the Pump House office building that has sat vacant for years. It includes an addition totaling 68,078 square-feet, and 94 “suite-style” rooms, according to the city’s ordinance outlining the deal.
It will also feature “a market place, a conference room and guest laundry,” according to the city’s ordinance.
Miller said the hotel is expected to create up to 15 full-time positions and 10 part-time employees, creating a $1.1 million yearly payroll.
He said there will be plenty of tax revenue from the project, even without the property taxes.
“(The CRA) does not apply to the sales tax, it does not apply to the bed tax, it does not apply to the income tax,” he said. “So it’s not as though there are not any taxes going to be paid.”
A one-of-a-kind deal
CRAs are common throughout Ohio. There are currently 397 across the state, according to the Ohio Department of Development. Franklin County leads the state with 39 of its own agreements.
There are 21 commercial CRAs in Ashland currently, according to Cameo Carey, director of Ashland Area Economic Development.
One of those belongs to another hotel: Hampton Inn & Suites, along U.S. Route 250. The city entered into the agreement with the hotel chain in August 2015; its 60% abatement expires in 2027.
But this agreement with Pump House Hospitality LLC is one of a kind, Carey said, for two reasons.
First, this deal marks the first time the city has agreed to a CRA that cuts 100% of property taxes. Miller said that’s because the project’s financial plan relied heavily on the tax incentive.
“They have never renovated a building for one of their hotels,” the mayor said of the hotel developer. “Part of the reason is because of the cost of renovating a building, especially an old building … is expensive.”
The mayor said other private donors from the area have invested in the project as well, though he didn’t identify them.
Commercial CRAs in Ashland, explained Carey, are typically a 50% abatement over 10 years. Before 2023, CRAs in Ohio didn’t have to seek school board approval when deals offered exemptions of 50% and below.
That threshold is now 75% thanks to a law Gov. Mike DeWine signed in January 2023. Because this deal cuts 100% of property taxes for 15 years, both Ashland City Schools and Ashland County West Holmes Career Center had to approve.
Ashland City Schools unanimously approved of the deal last week.
Miller praised the school districts’ involvement, calling the deal a “wonderful, real-life demonstration” of a public-private partnership that “moves the community forward.”
The second unique part of the deal involves payments in lieu of taxes. According to the agreement, Pump House Hospitality LLC will pay ACSD $20,000 a year and the career center will get $2,000 a year, for 15 years.
Timeline
Ownership of the vacant building has belonged to the city since January 2023. The city agreed to purchase it from the Ashland County Board of Commissioners in October 2022 for $300,000.
That’s around how much the county had pumped into the space between September 2020 and May 2022, an Ashland Source investigation found.
The hotel developer agreed to purchase the property for $400,000, but Miller said this price tag might change as everyone gets closer to a closing date.
Miller said the developer could be ready to close on the property in the coming weeks. Construction is set to begin in September, with a completion date of January 2026, according to the CRA.