Tax reimbursement paves way for Apple Valley hotel
From triathlons to soccer tournaments, air shows to concerts, Apple Valley sees as many as 65,000 visitors every year. Unfortunately, overnight accommodations can be as far as 25 minutes away.
To fill this gap in local hospitality, the Apple Valley Town Council has approved an incentive to a developer, the Desai Family Trust, to construct a 70-room hotel near Jess Ranch Marketplace just south of Bear Valley Road. This is good news for residents who clearly indicated business attraction and development were high on the list of priorities in a recent citizen satisfaction survey.
The agreement allows the Town to reimburse a portion of the Transient Occupancy Tax, commonly referred to as a hotel bed tax, back to the operator over the course of 20 years.
“Developing a hotel project in Apple Valley is a high-risk venture because it is an untapped market, miles from the visibility and traffic of Interstate-15, where nearly all hotels in the region operate,” said Assistant Director of Economic Development Orlando Acevedo, who noted the development will still require environmental and entitlement reviews before proceeding. “To provide leverage for additional financing, Mr. Mukesh Desai requested this reimbursement that effectively acts as a tax break and reduces operating expenses.”
“We had been tracking the location for several years, believing the 10-acre parcel would be ideal for a hotel,” said Coldwell Banker Commercial President Jason Lamoreaux. “After significant due diligence and market analysis, our client acquired the site in December 2016 and is looking forward to bringing this development to Apple Valley.”
Desai estimates the hotel will generate approximately $53.9 million during the first 20 years of operations including $3.76 million in hotel bed tax.
“Only two motels operate in Apple Valley and generate less than $6,000 in Transient Occupancy Tax annually. This is rather surprising considering Apple Valley first began as a resort destination at the Apple Valley Inn,” said Acevedo. “In addition to filling the underserved hospitality industry, this project will be a great benefit to our citizens by creating jobs, increasing property values and attracting tourism.”
The proposed 40,000-square-foot, three-story hotel is estimated to cost $8.8 to $10.5 million to develop, generating annual property tax revenues of $100,000 to the town, and employing 20 full-time jobs. The reimbursement agreement is not unique to Apple Valley. Loma Linda, Palm Springs and Cathedral City are just a few of the cities offering a similar rebate program based on hotel size and rating level.
Desai has more than 30 years of experience in the hospitality industry.