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Dueling projects

Councilman John Lee reacts as it became apparent there weren't enough votes to pass the Gatehouse downtown development proposal on Nov. 27, 2017.  After an unusual series of events, the City Council voted 5-0 to go with G8 Development over Gatehouse to build the hotel, despite having cast G8 aside twice and having negotiated with Gatehouse for the past several months.  Lee abstained from the vote.

MASON CITY | The Mason City Council selected G8 Development of San Diego to develop a downtown hotel as part of the River City Renaissance project. 

The final vote -- 5-0 with Councilman John Lee abstaining -- came late Monday night after an earlier vote in which the council voted 4-2 against the G8 plan.

When it appeared the council was headed for3-3 vote on the Gatehouse Mason City LLC plan, Councilman Bill Schickel, who voted against the G8 proposal, asked that it be brought back to the table.

He said he still favored the Gatehouse plan but said it was more important to move the project forward. So he changed his vote to yes on G8.

Lee said he too favored the Gatehouse plan and could not bring himself to vote for G8. So, to keep the vote unanimous, he abstained.

G8's proposal to build a downtown hotel contained many savings to the city compared to Gatehouse's proposal. 

Both parties took part in a "bid-off" Monday morning in which G8 representatives made specific changes in proposed costs. Gatehouse made no changes in its latest proposal but questioned whether G8 was a responsible bidder.

The bid-off was required because G8 submitted its proposal moments before the deadline last week and City Council considered it a competitive bid.

Major points in the two proposals:

• G8 is proposing a loan from the city of up to $3.7 million, instead of $4.2 million in the Gatehouse proposal. The loan would be paid off in intervals rather than at the end of 20 years.

• Gatehouse is asking for $750,000 in non-refundable pre-construction costs. G8 is asking $500,000 and guarantees repayment if the project does not go through.

• Gatehouse has not identified a lender. G8 has a commitment from an out-of-state lender as well as a letter of support from First Citizens Bank in Mason City.

• Gatehouse has received interest from Hyatt. G8 has a franchise agreement with Marriott.

In an email to city officials, attorney Rick Kopf, representing Gatehouse, pointed out G8 was previously under contract with the city on another project, and despite three extensions, did not meet deadlines and was terminated. G8 President Philip Chodur then sued the city, Kopf said.

G8 has agreed to drop the suit if Chodur's latest proposal is accepted.

Kopf said Gatehouse has a memorandum of understanding with the Mason City Foundation which operates The Music Man Square. G8 does not.

Kopf claims Hyatt's commitment to Gatehouse is the same as Marriott's is to G8 and that the financial commitments are essentially the same.

Also, Kopf said G8 does not have the resources to get the hotel project done on time and on budget.

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