Springfield hopes to finance Microtel with private investments

Motel would

have 30 rooms,

indoor pool

By FRITZ BUSCH

Journal Staff Writer

SPRINGFIELD -- Claiming a market study showed it will cash flow, Springfield officials presented their proposal for a 30-unit Microtel to the public Monday night at the Springfield Community Center.

An additional $500,000 in investments is sought by Springfield Lodging, L.L.C., a Minnesota limited liability company recently formed to construct, own and operate the $1.5 million motel with a 15x 28, heated, indoor pool this year.

The motel, to be built on Highway 14 at the site of the former Plains Motel, would include 30 guest rooms all with queen-size beds, seven suites, 16 doubles and seven singles. Suites would include a wet bar, refrigerator, coffee maker, full sofa, sleeper, and eating/activity area.

A minimum of 900 shares and a maximum of 1,450 shares are being offered at $500 per share in lots of five shares. Each investment would be at least $2,500.

Project financing includes a $250,00 investment from initial investors, $500,000 in bank notes, and $250,000 in tax-increment financing.

Using conservative projections, the project should be profitable in three years. Investors could not be held liable for any bank debt or operating loss beyond their initial investment.

Investors would not lose their initial investment if the project is not built. Dividends would be paid for net profits of the venture.

Plans call for the remaining $500,000 to be raised by May 1, 2004. Construction would begin late this spring. It would be complete by November 2004.

A conservative profit and loss statement reflects a 43 percent occupancy rate. The statement suggests a $48.11 per room charge for the first year of operation. Room rates would increase 5 percent per year while expenses would increase at 3 percent.

Springfield Lodging, LLC includes managing governors Jeff Kretsch, Lori Herfurth, Paul Pieschel, Curt Fredin, Jerry Kretsch, Mike Pieschel, Judy Rubey, and Jeff Carlson.

Brian O'Leary, Springfield Economic Development Authority President, said Springfield Community Center created the impetus to build a new motel.

"We need it and can support it," O'Leary said. "Almost everybody in town agrees we need it."

Paul Pieschel, Springfield Lodging Chief Financial Officer said the motel's break-even point is 39 percent occupancy. With local commerce, Highway 14 traffic flow, the brickyard, nursing home and other area attractions, he considered the need for motel rooms in Springfield to be adequate to support the project.

"Springfield has always been progressive," Pieschel said. "Other towns have always been envious of it. This project needs to happen."

Springfield Lodging attorney Paul Muske said many Springfield people have already put lots of time and money into the project that is "badly needed."

Other area attractions expected to draw people to Springfield include Riverside Park with the swimming pool and water slide, the Rothenburg Campground and canoeing, Riverside Days celebration, Jeffers Petroglyphs, Laura Ingalls Wilder Pageant, the Octoberfest, Heritagefest and Bockfest in New Ulm and Jackpot Junction Casino in Morton.