Ottawa city commissioners approved an ordinance 5-0 Thursday that imposes a 1 percent sales tax for visitors of a new hotel.

The sales tax would only affect guests at the city’s future Holiday Inn Express and Suites, not regular residents, Wynndee Lee, director of community development for the city, said.

“For a hotel, those folks are coming here, they’re making a decision to stay there that really has nothing to do with the tax base, and for them to help cover the cost of that opportunity to be here would seem to be appropriate,” Lee said.

A CID [Community Improvement District] sales tax is a tax that is self-imposed by the property itself. There was already a 1 percent CID sales tax for the future adjacent retail or restaurant site.

According to the City of Ottawa’s Facebook page, just like any business, the hotel would have to pay all costs and property and sales taxes.

“The incentive related to sales tax is to allow an additional tax to be collected from their guests to help with the costs the business is incurring through the acquisition, demolition, site clean-up and construction,” the City of Ottawa said on its Facebook page. “Building on an existing site can be more expensive than a ‘greenfield’ site, but is the best for everyone. In fact, this project is also building a road to help serve not only their development but adjacent land as well.

“They will also receive a Tax Increment Financing repayment of their expenses as eligible, but only after all the currently collected taxes are disbursed to the city, county, and school district. So, unless you or any citizen actually stays there, you will not being paying for improvements.”

The project, being developed by Ottawa Lodging LLC, would be located in the city’s recently created tax increment financing (TIF) district, known as the NW I-35 and Princeton Redevelopment District. The district encompasses land between 23rd Street on the north, I-35 on the south, South Princeton Street on the east and the Prairie Spirit Rail Trail on the west, according to Herald archives.

The city has approved the site plan for the hotel and currently is in the process of approving the final plat.

“From our standpoint, they’re pretty much ready to go, besides getting what they need from the state in order for us to allow them to start the dirt work,” Lee said. “Then they’ll do their demolition and start their infrastructure. It’s in good shape.”

If construction remains on time, Holiday Inn is expected to open in May 2018.

Susan Welte is a Herald staff writer. Email her at