Lack of hotel project updates leads to frustration for Elkader Council

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By Willis Patenaude, Times-Register


“The public would like to know,” Elkader council member Deb Schmidt said during the questions and concerns portion of a recent council meeting. It was quickly met by council member Peggy Lane replying that the public “might not need to know.”


“Well, they’d like to know something,” Schmidt said in return. 


The something Schmidt is advocating for is an update on the city hotel project, which has been on pause since at least April of this year. A status update was provided to the council via email at that time by Elkader Special Projects Coordinator Samantha Baumgartner, who stayed on to oversee the project she has been heavily involved in dating back to June 2021, when she was Main Street and Elkader Economic Development Director.


Since then, according to Schmidt, there has been no report on the progress of the project, leading to what she called countless “vague answers,” which aren’t “satisfying to the public.” 


Schmidt expressed further frustration in a separate exchange.


“I’m tired of giving an answer to those asking that avoids direct questions,” Schmidt said.


During the meeting, Schmidt continued to question the lack of information, wondering out loud whether or not the city is going to get a hotel or not, discussing the current pause, potential meetings with investors and what specifically is being done. 


Schmidt was not alone in her questioning, as council member Randy Henning questioned Baumgartner’s current involvement.


“Samantha really shouldn’t be meeting with them anymore, anyway,” he said. “It just doesn’t look right, having her doing something when we have [current Main Street director] Sheila [Bergan] that can step up,” Henning said.


Schmidt also commented on the situation, acknowledging why Baumgartner was kept on, having experience with the project and relationships with investors as well as potential hotel chains.


One of the reasons Baumgartner was retained for special projects, especially the hotel project, according to Elkader City Administrator Jennifer Cowsert, was the “continuity of staff.” At the time, it was felt that was the “best course of action” given Baumgartner’s involvement and relationships.


In response to Schmidt’s comments about the lack of information, Cowsert pointed out at the meeting that the property owner is in control of the current situation, and that “poking and prodding doesn’t work.” 


However, details regarding the property owner and how those discussions have been proceeding were not provided, either by Cowsert or Baumgartner in separate interviews.


What was provided, though, was the reasoning behind the pause and the current state of the project. According to Baumgartner, it was the developer who chose to pause the project until August. 


One of the reasons was the rise in construction prices and other “lingering details,” such as an updated pro-forma, investor meetings, attracting additional investors, estimating costs, land and site prep work, selecting the brand and, at some point, presenting it to the council.


At the top of the list is the pro-forma, a written prediction of future revenues and expenses based on past experiences and future projections.


“It outlines a budget for the project, projected expenses and revenues and return on investments,” Baumgartner said.


The pro-forma is what the site owner and development team will look at when everyone reconvenes sometime next month. It will prove vital to the project since it will be shared with investors and determine “their commitment level to the project,” as well as give Baumgartner some idea of how many more investors will be needed. Currently, Baumgartner remains “unsure about if [they] have enough investors.”


On the investor front, Baumgartner explained that, for a project like this, it requires “thoughtfulness in the approach.” 


The group of investors needs to be able to work together, make decisions and trust one another. Then you need to look at the reason people are investing. For this project, “You need people who are investing for the primary purpose of the betterment of the town, not solely for the purpose of getting a large return on their investment,” Baumgartner said. 


This is important because the return on investment predicted in the pro-forma won’t be as high as other investment options, almost necessitating, in Baumgartner’s view, an investor group that has “a strong love for Elkader’s growth.”


“We’ve identified a list of potential investors with these qualities in mind and I’ve been initiating contact to gauge interest,” Baumgartner said.


Apart from investors, the project also has a vetted developer who has invested personal funds into the project. More importantly, this developer has connections with the hotel chains Baumgartner and the investor group have contacted. 


According to Baumgartner, multiple chains have already expressed interest and have come for in-person visits, though specifics about who the developer and investors are, or the interested chains, remains confidential. 


As for the lack of information being shared about the project, Baumgartner mentioned most development projects have a quiet phase where work is being done behind the scenes in anticipation of the actual progress, which will be visible to the public.


A project this size takes time, intentional planning and patience, Baumgartner said.


“The quiet phase is a necessary step in getting us to the public celebration phase of nearing ground breaking. Good and necessary work is and has been done during this quiet phase. It may not look like much to the public eye, but it is work that must be done to get us to a ground break,” she added.


Outside the meeting, Schmidt offered some additional comments about the council’s right to ask for progress updates and the lack of information coming in about the project. She also stated, “I trust Samantha’s expertise on this. She knows the investors and hotel, knows the timing of when they all seem to be working together for the best ground breaking news.”


Meanwhile, in an email exchange, both Elkader Mayor Josh Pope and council member Tony Hauber noted how this current project has gotten further than any previous hotel project.


Pope stated, “We have gotten further with this potential hotel than we have in the previous 15 or so years…So I am grateful [Samantha] has time to continue to help us with this project.” 


Hauber commented, “The hotel project has progressed further than any similar previous endeavors.”


Though there is no timeline for a potential hotel as of yet, Baumgartner stated “the likelihood of a hotel looks very good for Elkader with the steps we’ve taken so far and as long as things continue the way we expect.”

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