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A state agency agreed Tuesday to loan a little over 40 percent of the outlay needed to renovate the Hotel Lancaster.
The Commonwealth Financing Authority will provide $6.25 million through the Building Pennsylvania loan program toward the $15 million overhaul of the hotel at the corner of East Chestnut and North Queen streets.
The project is being done in conjunction with the hotel’s planned conversion to a Holiday Inn. Two phases are envisioned.
In the first, the 134 rooms now in service will be renovated, the lobby expanded and a restaurant built. Then, after the expected rebranding in summer 2018, the 87 rooms not in service will be renovated and brought online in phase two, bringing the total room number to 221.
Developer John Meeder said Tuesday the project remains on target to begin by the end of the year.
The state loan “is an important piece of our financing package” and will help the remaining few elements fall into place, he said.
An investment group led by Meeder bought the hotel in 2014, the year after the group began leasing the property.
This year, the investors refinanced their acquisition and received approval to put the hotel’s eligible portion of City Revitalization & Improvement Zone funds toward debt service.
The property’s CRIZ increment will fund annual payments of about $515,000. If additional CRIZ money is available, it can be used to pay down principal.
The hotel’s south facade overlooks Lancaster Square. The square’s opposite side abuts the former Bulova building, where the 101NQ redevelopment project is now under way. The city plans to build a 290-space parking garage in the footprint of the abandoned “annex” between the two buildings on the square’s east side.
In 2015, the Commonwealth Financing Authority made a $3.2 million Building Pennsylvania loan to Rock Lititz, the entertainment production complex in Warwick Township, for Rock Lititz’ Pod #2, a $21.8 million project.