Hotel Marion revitalization delayed

The historic Hotel Marion on North Magnolia Avenue in Ocala is being renovated, as seen on Jan. 7. [Bruce Ackerman/Ocala Gazette file photo]

The Ocala City Council postponed a vote on a $2.9 million incentive package for the Hotel Marion revitalization at its Nov. 4 meeting due to concerns over the transfer of a city-owned parking lot.

The $28.97 million project, led by Marion Opportunity Zone Investment I, LLC, and ARK Hospitality, aims to transform the historic 1927 Mediterranean Revival building at 108 N. Magnolia Ave. into a 59-room boutique hotel under Hilton’s Tapestry Collection, with completion slated for 2026.

The incentive package, funded by the Downtown Community Redevelopment Area (CRA), includes a $1.254 million conveyance of the 1.15-acre parking Lot 6 with a four-year right of reverter, allowing the city to repurchase it for a parking garage. However, Council President Kristen Dreyer’s unease about deeding the lot led to the item being pulled for further review, as confirmed by City Manager Pete Lee, who noted it will return as a new agenda item at a future meeting.

Dreyer’s concerns centered on the risk of relinquishing control of valuable downtown land without a guaranteed plan to build a garage within the four-year period.

“My concern is that we can’t meet that four-year deadline if it’s sooner than later,” she said at a CRA meeting, noting the city’s competing priorities and lack of budgeted funds for the $1.2 million repurchase. She questioned why the city couldn’t lease the lot to the developer, as has been done previously.

The city of Ocala aims to breathe new life into the historic Hotel Marion, a landmark that has sat largely dormant for years. The $2.9 million city investment, fueled by the Downtown CRA, will transform the six-story building. According to city documents, the project includes a full restoration of the National Register of Historic Places-listed building. The Mediterranean Revival gem will see its stucco façade, arched windows and standing seam metal roofs revitalized, alongside modern upgrades like energy-efficient systems and Ocala Fiber Broadband connectivity. The parking lot north of the hotel is expected to enhance guest amenities and anchor the project in Ocala’s courthouse district.

What’s a CRA?

The Downtown CRA, one of four in Ocala, is the engine behind this investment. Under Florida law, cities can designate Community Redevelopment Areas to address “slum and blight” conditions like outdated infrastructure, substandard buildings or economic stagnation. Ocala’s CRAs, Downtown (est. 1988), North Magnolia (1999), West Ocala (2015) and East Ocala (2016) are funded by Tax Increment Financing (TIF).

In a 2022 “Gazette” article, former Ocala director of growth management Ty Chighizola explained how TIF works. According to Chighizola, TIF captures the growth in property values.

“If Downtown was worth $1 million in 1988 and it’s $10 million today, that $9 million growth stays in the CRA for projects like Hotel Marion,” Chighizola said.

These funds, locked to their specific CRA, can’t be spent elsewhere in the city or county. City Council doubles as the CRA board to steer these investments, with Growth Management staff overseeing projects.

The Downtown CRA’s vision is to create a vibrant, mixed-use hub with dining, retail and cultural attractions. The Hotel Marion project aligns with this goal, tackling urban blight while boosting tourism and local spending.

The city’s investment

The city’s $2,896,670 contribution—exactly 10% of the project’s cost—breaks down as:

• $650,000 CRA Grant: Paid in five installments through 2039.
• $913,210 TIF: A 12-year program at 100% capture, adjustable to stay within the 10% cap.
• $1,254,000 Lot 6 Conveyance: Donation of the adjacent parking lot, appraised Sept. 19 by Albright & Associates (value may convert to TIF if a right of reverter is exercised, pending CRA extension).
• $79,460 Fee contribution: Reimbursement for permits and impact fees.

A fiscal impact analysis projects a five-year payback with a net present value of $726,959, assuming a 3% cost of capital. Annual revenues include $108,656 from the 4% Tourist Development Tax, $87,817 in TIF increments, $523,978 from Ocala Electric Utility (130,457 kWh, 896 kVA monthly) and $18,000 from Ocala Fiber Broadband.

Totaling roughly $738,451 yearly, revenues could reach $13 million over 20 years, driven by a post-construction taxable value of $8.765 million, which is a 400% jump from the current $1.61 million, per Marion County Property Appraiser records.

The project mandates construction starts post-approval, with completion by 2026, barring unforeseen delays. The developer covers all fees, utilities and zoning compliance, while the city ensures Lot 6 is lien-free.

Supporters of the project say the revitalized Hotel Marion, if approved, will expand Ocala’s tourism base, draw more retail spending and honor a historic landmark.

For more information about Ocala’s CRAs and redevelopment efforts, visit ocalafl.org/growth-management/cra-special-districts

Architectural illustration for the Hotel Marion. [Image courtesy city of Ocala]