LEDA signals intent to renew funding agreement for downtown convention center

Lawton Economic Development Authority has signaled its support for a new 10-year license agreement with the entity that operates the Hilton Garden Inn Convention Center in downtown Lawton.

The original agreement was signed more than 10 years ago with Lawton Lodging LLC as part of a plan to give Lawton its first dedicated convention center, a facility that was part of the Second Street development project. As with the original, the new agreement centers on the fee Lawton Lodging LLC pays in lieu of the hotel occupancy (hotel/motel) tax that normally is collected from those who rent rooms, with provisions allowing Lawton Lodging to recover two-thirds of that fee.

The decision made Thursday by Lawton Economic Development Authority (LEDA) members was approval of the basic terms of that function space license agreement and a directive to LEDA Executive Director Richard Rogalski and attorneys to negotiate a new agreement. That completed agreement will be brought back to LEDA for final approval, Rogalski said.

LEDA Chairman Fred Fitch said the decision changes action earlier this year to allow the original 2014 agreement to expire on March 21. Since then, discussions about tax reimbursements and delayed matching economic development payments pledged by the State of Oklahoma have made it clear an agreement being in place would help that situation.

“This makes us a whole lot better off,” Fitch said, of the fact the State of Oklahoma has been slow in reimbursing the city those state funds.

The original agreement specified Lawton Lodging had 10 years to recover $3.5 million of its development costs through those fees, with payments to stop when the entity reached $3.5 million or 10 years had lapsed, whichever came first. Lawton Lodging was expected to recover $2.5 million by the time its agreement expired in March 2024, officials said in 2023 when the entity first asked for a 10-year extension.

Rogalski said officials claimed an operating loss of $2 million in the first 10 years, due in part to the economic effects of the COVID-19 pandemic and to a decision to add a less-expensive hotel on Fort Sill for Army families, drawing business away from hotels in Lawton. Hilton Garden Inn had struggled with its occupancy rates, but that no longer is an issue, Rogalski said, adding that as hotel occupancy rates have increased, so has the amount of revenue being generated by customers.

Fitch said the hotel is proving its recovered health, running occupancy rates of 85-95 percent Mondays through Thursdays.

Rogalski said there is another issue at play: convention centers typically don’t generate revenue themselves; their benefit comes from the out-of-town guests they lure, people who will spend money in multiple areas of the city. He said that is why cities typically run convention centers themselves, or supplement the entity running it. Lawton Lodging has indicated it wants to continue to be that entity for the Lawton convention center, the reason it wants to extend its function space license agreement.

So do LEDA members.

Rogalski and Fitch said the hotel-convention center is filling its role, by being responsible for 1.2 million visitors to Lawton between 2014 and 2024. Rogalski said activities have ranged from military balls and conferences to the Starlight Foundation Gala that was so successful, it raised $300,000. The center hosted more than 100 events in 2023, he said, with a direct economic impact on the community in that decade of $46.3 million and an indirect impact of $100 million.

Rogalski said the renewed agreement makes sense if Lawton wants to keep its convention center.

“It certainly has significant value,” he said.

Fitch said the hotel/convention center lends to the success of the entire Second Street redevelopment project. He said the 15-square-block area generated about $258,000 in annual ad valorem taxes before its development, a figure “now in the millions.”