TOPEKA (KSNT) - The Topeka City Council has approved half a million dollars to keep Hotel Topeka running.
Topeka City Council approved the Topeka Development Corporation's (TDC) 2024 operating budget for the hotel Tuesday evening and approved an additional $500,000 from the general fund to operate and maintain the hotel.
The TDC project manager and Topeka public works director Braxton Copley says the city has made it clear it wants to keep the hotel open, but costs are looming large.
"As items come up in terms of capital expenditures, life safety issues, we are spending money to quickly correct those items," Copley said.
Copley referred to Hotel Topeka as a ‘distressed asset.’ When the city bought Hotel Topeka in 2023 it was hemorrhaging money. That year saw an operating loss of $676,000. The last time the hotel was profitable was in 2019 when it earned $799,000 for the year. Current forecasts see the hotel losing $396,000 in 2024.
Before receiving additional funding on Tuesday, the city had invested a total of $8,145,662 into Hotel Topeka including its original purchase for $7,391,458. Now the total investment is over $8.6 million, with the additional investment approved Tuesday.
Operating expenditures, capital expenditures, city-paid legal and professional services and city-paid hotel systems assessment are part of the total investment, according to the city. The reality of this asset, according to Copley, is keeping it afloat until the TDC can find an external entity to come in and make it marketable.
Last year, the TDC hired a hotel industry consultant, RevPAR International, for over $516,300 to help optimize revenue and expenses while finding the most efficient way to revamp the hotel.
The TDC and RevPAR International presented city officials with a two-step process to sell the hotel. Step one involves reaching out to industry players to facilitate a sale. Step two, if that doesn't work, is putting together a Request for Proposal (RFP) to attract investors.
"An incentive package is going to have to be put together," Copley said. "And what that's going to look like is going to depend entirely on what owner/operator is willing to take this on and what the terms are they're willing to take. The conjecture on this part is if the city is going to recover that money or not."
Shawnee County Appraiser Steve Bauman said the previous owners appealed the appraised value for Hotel Topeka in April 2023, bringing the appraisal down to $3 million flat from $7,277,340. Channel 27 News asked if the reduced appraisal value would make it difficult to find buyers to recover the now $8.6 million investment.
"The appraised value that the county appraiser has is actually a good thing for the city of Topeka because that property tax amount is much less than what it was back in 2019 when the hotel was more profitable," Copely said.
The city is now seeking buyers, a process RevPAR estimates to take about 60 days.
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