Developer seeks 10-year tax abatement to build 84‑room Hampton Inn by Red Baron Arena

Rebound Partners, a Northfield‑based developer, asked the Marshall City Council on Tuesday to set a public hearing on a proposed 10‑year property tax abatement and a business subsidy for an 84‑room Hampton Inn adjacent to the Red Baron Arena.

The request, presented by Scott Kester of Rebound Partners and introduced by Lauren Dites, the city's economic development director, would rebate a share of new property taxes for up to 10 years and includes a proposed $500,000 forgivable loan. Mikaela Hewitt, the city’s municipal adviser with Baker Tilly, described the abatement as a “tax rebate” based on incremental taxes the hotel would generate.

Kester said Rebound’s analysis shows the hotel would not be financially feasible without support. “We are asking for a 10‑year city tax abatement, and as well as a 10‑year abatement from Lyon County,” he said, adding the total development cost is about $16.1 million and that the project expects to raise roughly $3.35 million of private equity. Kester said the project would include a fitness center, indoor pool and some suites and that construction could begin in fall 2025.

Hewitt outlined mechanics and conditions for an abatement: the developer pays all taxes, and the city would redirect a portion of the city’s share of increased taxes back to the developer annually. She said the developer’s requested sliding scale ranges roughly from 85% to 65% of the city share over 10 years and estimated the city’s participation at about $518,000 under the developer proposal and about $480,000 under the staff recommendation.

Council members asked about safeguards on timing and performance. Hewitt said the council can include a clause in a subsidy agreement to condition abatement on a start date and other milestones and that the abatement can be capped by dollar amount or number of years, whichever comes first. Council Member John moved and Council Member Craig seconded a motion to call a public hearing for both the tax abatement and business subsidy; the motion passed.

The council’s action was procedural: it set the required public hearing rather than approving the abatement itself. The council will consider the abatement and business subsidy after the required public notice and hearing, when it will need to make findings about public benefits and the amount of assistance to approve.

If approved later, the abatement would not begin until after the property is fully assessed (the developers estimate an abatement to start in 2028) and any payments would be made on a pay‑as‑you‑go basis after taxes are paid. The council did not set the hearing date during the discussion; the hearing will be noticed in accord with state law.