Developers and city at impasse over predevelopment fees as hotel MOU negotiations continue

Developers working on a proposed downtown boutique Marriott and an extended‑stay conversion of the Auburn Herald and adjacent properties told the commission they have advanced due‑diligence work for about a year and a half and asked for limited predevelopment reimbursement and consultant compensation so they can deliver final drawings and pricing to potential lenders.

Developer representatives said they seek reimbursement of approximately $57,237.19 for prior out‑of‑pocket costs and proposed a consultant/advisory fee arrangement for the predevelopment phase; they characterized the outstanding difference as roughly $180,000 between what staff is willing to fund and the developer’s requested $780,000 phase‑1 budget (including state historic‑preservation work). City staff identified three outstanding issues: (1) the development fee and whether it should be payable if the parties do not reach a final agreement; (2) the advisory/consulting fee level (disputed roughly $90K–$105K); and (3) how historic‑preservation costs and scope will be handled to protect eligibility for state and federal historic tax credits.

Commissioners pressed both sides: several emphasized the need for architect-produced drawings to obtain a guaranteed maximum price (GMP), lenders’ confidence and clearer state historic‑tax‑credit guidance; others urged compromise given the downtown revitalization goal. City staff said they would bring a revised package back for a vote on April 28 (or the next meeting) with the two items staff identified (reimbursement approach and historical‑work delineation) addressed. The commission discussed the option of reimbursing some prior costs and structuring future payments and reiterated that any funding decisions would require a formal vote and budget action.

Provenance: long, multi-hour discussion in the work session during which staff, the developer team and outside counsel negotiated but left several financial and risk-allocation questions open.