photo by: Journal-World

The Oread hotel, 1200 Oread Ave.

Though a Denver-based hospitality company has bought Lawrence’s The Oread, the tax incentives the City of Lawrence agreed to related to the hotel’s development will remain with Lawrence businessman Thomas Fritzel.

As the Journal-World reported last week, Mission Hill Hospitality announced that it has completed a deal to purchase The Oread, and will change the name of the property to the Oread Hotel, Tapestry Collection by Hilton. The Oread was created by a group of local investors led by Fritzel, and subsequently became the center of a tax scheme that led to Fritzel pleading guilty in 2020 to one count of criminal conspiracy and serving time in a federal prison. In a separate case, Fritzel was found guilty of three felonies related to illegal disposal of asbestos during a construction project at the former Alvamar Country Club, now known as the Jayhawk Club.

Economic Development Coordinator Britt Crum-Cano told the Journal-World that in the transfer agreement for the hotel, the seller is retaining the rights to the Tax Increment Financing and Transportation Development District reimbursements. Crum-Cano said the transfer agreement has the seller as Oread Inn L.C. and the buyer as MHH Oread Holdings LLC. According to the Kansas Secretary of State website, Fritzel is the registered agent of Oread Inn L.C.

TIF districts are established to aid in financing projects for substantial public benefit while TDD are set up to assist in financing public transportation improvements. The 20-year incentives agreement between the city and the hotel was intended to at least partially pay the developer back for the infrastructure improvements made to the area as part of the hotel’s construction in 2008.

Before the federal case against Fritzel related to the hotel, the city filed a lawsuit in 2016 alleging that Fritzel had engaged in a fraudulent scheme to generate undue tax rebates from the city via the taxing district. The parties ultimately reached a settlement, which provided $650,000 in damages to the city and included an amendment to significantly reduce the value of the hotel’s incentives agreement. Fritzel also had to resign his management position at the hotel for the remainder of the hotel’s incentives agreement.

In 2021, the sales tax distribution for the Oread’s TIF was $65,998 and the property tax distribution was $297,473, according to the city’s 2021 Economic Development Report. Since the TIF was set up in 2009, sales tax distributions have totaled about $1.98 million and property tax distributions have totaled about $3.39 million. In 2021, the Oread’s TDD distribution was $65,998, and those distributions have totaled $1.02 million since the TDD was set up in 2009.

Under the settlement, the threshold for when the city would begin receiving a share of tax proceeds from the hotel’s taxing district was reduced from $7.1 million to $5.75 million. In addition, the amount the city is required to reimburse the developer for infrastructure was reduced from $11 million to $8.5 million. The incentives agreements have a 20-year term.