Virginia seeks gap funding for new hotel

VIRGINIA—A new hotel project in Virginia is inching toward construction after the City Council agreed Tuesday to apply for Minnesota Department of Employment and Economic Development Grant Program funding.

There was always a gap in funding the $23.4 million project and the grant will help make the bridge, said Mayor Larry Cuffe Jr.

The city will also make an adjustment to the already approved partial Tax Increment Financing for the hotel. He added that developer Virginia Hospitality, LLC, will be contributing funds to fill the gap, as well.

Virginia Hospitality has been working with the city for about three years to build a Marriott TownePlace Suites hotel just south of the Iron Trail Motors Event Center.

Cuffe expects footing and foundation construction for the 92-room hotel to start in October. An additional extended stay portion of the hotel would start at a later date. Completion of the hotel is expect to be about one year, he added, and no more than 18 months.

While there was always a funding gap, a delay in getting clear title to the property from the state the problem, Cuffe said. During the delay, material prices and interest rates both increased.

In addition, Iron Range Resources and Rehabilitation declined Virginia’s request for gap funding.

The mayor said the city will get the TIF money back over time and he believes the TIF funding is “an investment in our community for the future. I think this is a wise investment moving forward.’’

Large groups and events wanting to use the ITMEC have often expressed a need for hotel rooms on site, he stated.

“I think it’s pretty clear cut. We need a hotel,’’ Cuffe said at a meeting last summer.

Virginia Hospitality also owns the nearby former National Guard armory property.