Worcester, WPI reach deal over controversial hotel purchases

Two hotel buildings side-by-side with a parking lot in front

Photo | Eric Casey Worcester Polytechnic Institute is moving forward with plans to convert two hotels into student housing.

Write a Comment

By Eric Casey

Following months of controversy over its purchase of two Worcester hotels with the plans to convert them to student housing, Worcester Polytechnic Institute and the City of Worcester have reached an agreement which will see the university make payments to partially offset the potential shortfall created by the potential certification of the two Gateway Park properties as tax-exempt.

The deal, revealed as part of the agenda for the Worcester City Council’s upcoming Tuesday meeting, will see WPI continue to pay property and hotel occupancy taxes until it converts the Hampton Inn & Suites at 65 Prescott St. into housing, a move expected to happen by 2026.

The deal signifies a potential end to the feud between the university and local political and business figures, which saw members of the City’s Economic Development Coordinating Council write a sternly-worded letter to the university, accusing its leaders of moving forward with its plans for the two properties without input from other stakeholders.

WPI will then move to certify the Hampton Inn property as tax-exempt, and if successful, has agreed to make payments through the end of June 2029 equal to the actual property taxes of the fiscal year prior to the conversion to tax-exempt status. From July 1, 2029 through 2034, WPI will then make payments to the City equal to 50% of that amount.

A similar provision for the other hotel property, the Courtyard by Marriott at 72 Grove St., will see WPI apply for tax-exempt status for that property no earlier than 2030. If tax-exempt status is received, WPI has agreed to make payments of 50% of the actual property taxes of the fiscal year immediately prior to the conversion.

“While the loss of the hotels will have an impact on the municipality, I am pleased that we were able to find ways to reduce it,” City Manager Eric Batista wrote in the letter.

In a Friday letter to the WPI community from Michael Horan, executive vice president and CFO of WPI, and Philip Clay, the school’s senior vice president for student affairs & enrollment management, celebrated the deal.

“For 159 years, WPI’s mission has centered on collaboration and cooperation, a shared commitment to creating value for all members of the community, and an enduring goal of fostering mutual success with our partners,” the two wrote. “One of the most prominent examples of this is the development of Gateway Park, where WPI has invested more than $140 million in the last two decades.”

Under the terms of the agreement, if WPI fails to receive tax-exempt status for either property, the City will meet to renegotiate the terms.

WPI has agreed to offer employment to hotel employees impacted by the conversions and will work with private developers to facilitate new hotel projects in Worcester.

The university agreed it will not use its other properties in Gateway Park, 10 Salisbury St. and 32 Prescott St., through 2039 and agreed to discuss any future plans for those properties with the City. WPI signed on to collaborate with the City on up to four projects per academic year focused on an area of need chosen by City officials.

Eric Casey is the managing editor at Worcester Business Journal, who primarily covers the manufacturing and real estate industries.