UMW Secures $13M for Eagle Village Hotel

The University of Mary Washington Foundation has secured more than $13 million in financing to build a hotel as part of Phase II of the Eagle Village mixed use development. The UMW Foundation also formed a new company, Eagle Hospitality, LCC, which will own and manage the hotel. The foundation is still looking for a hotel franchise to operate at the planned facility. 

McLean based Cardinal Bank, owned by the Cardinal Financial Corporation, provided the financing. 

“Cardinal Bank has successfully financed more than $50 million in commercial projects in the Fredericksburg/Stafford region and is excited to be expanding this success with the University of Mary Washington Foundation’s Eagle Village hotel project,” said Todd Hewitt, executive vice president of the bank. 

“The UMW Foundation and Eagle Hospitality LLC are delighted to announce our fiscal partnership with Cardinal Bank,” said Jeff Rountree, executive director and CEO of the UMW Foundation. “Cardinal’s staff of project managers knows the hotel business well from both the banking and operational side of the house. They are a perfect fit for our hospitality development team, and we look forward to constructing and opening a first-class hotel property with them.”

The UMW Foundation is planning a four story, 96-room hotel on a two acre site between the existing Phase I of Eagle Village and the Giant Supermarket. The hotel would be located along a planned connector road to Sam Perry Boulevard. It is expected that the hotel will mostly serve the University and hospital communities as well as business travelers and other visitors. The hotel would be owned by the UMW Foundation but day-to-day operations of the hotel would be contracted out to a third-party management company.

The estimated $13-$14 million project would create approximately 55 full time jobs and 15 part time jobs. The UMW Foundations hopes to open the hotel around mid-21013.

The Fredericksburg City Council recently approved an incentive package worth up to $310,000 for the development of the hotel. The motion passed by a vote of 5-1, with Ward Three Councilor Fred Howe voting against the measure, saying that it was a misuse of the incentive program. 

"Due, in part, to the difficult economic environment, obtaining financial incentives for this project from the city of Fredericksburg is essential," said Rountree. "In order for us to proceed with this project, we definitely need to find ways to lower the costs of construction and/or lessen operating expenses in order to make our numbers work."

A memo distributed to City Council members projects average annual tax revenues of $327,000 from the hotel once it gets up and running. 

The incentive package would reimburse hotel operators all of the local sales tax revenues generated at the hotel for 10 years. In the end, the hotel owners and operators could expect to get approximately $31,000 per year back from the city. The proposed city incentive packages is capped at $310,000 over the 10 year span. 

Additionally, the hotel could qualify for a new state incentive package which went into effect on July 1. Under the new provision, the hotel can receive a 25 percent reimbursement of state sales tax revenues generated there. However, as part of a required local match, the project could only apply for the new state incentives once the city approved the local incentive package. 

Together, the two incentive programs are predicted to generate $620,000 in sales tax reimbursements for the project.

“The City of Fredericksburg’s economic incentive was essential in completing the finance package for the hotel with Cardinal Bank,” Rountree said in a press release. “The city’s incentive, coupled with a matching incentive from the Commonwealth of Virginia, adds up to a significant sum of $620,000.  This is truly a win-win situation for all parties involved, with the final outcome being a new business opening in the city and the tax income and job creation that will follow.”

According to the terms of the city incentive package, the UMW Foundation must open the hotel by Dec. 31, 2014. The project must also involve a capital investment of at least $11 million, create and sustain at least 40 permanent jobs, generate at least $130,000 in tax revenues for the city per year, and provide free space for rotating exhibits of local artists. The hotel must also file annual performance reports and stay in good standing with city laws, regulations and taxes.