The city of Roanoke will loan $2 million to help offset design, surveying, inspection and other predevelopment costs for The Peabody Roanoke hotel.

Total predevelopment costs for the property are estimated at $4.5 million. The costs can include design fees, soil testing, environmental studies, surveying and inspections, Roanoke City Manager Scott Campbell said.

The city will make the $2 million loan to North Texas Hotel Development Group, which is developing the hotel. The group is expected to pay $1 million toward the predevelopment costs.

Nunzio Marc DeSantis Architects, the hotel’s architecture firm, will contribute $1.5 million.

Campbell said the city’s portion of the predevelopment costs will be repaid once North Texas Hotel Development Group finishes gathering financing for the hotel project. That is expected to occur in November.

In addition to offsetting these costs, Roanoke is extending tax incentives for the hotel. The city will collect a 7% hotel occupancy tax from The Peabody once it opens. Of that revenue, 6% will be used to pay down debt the city will issue to buy 25,000 square feet of event space planned at the hotel. Any taxes that exceed the debt payment will be returned to The Peabody.

Roanoke expects to finish paying off the debt within 30 years after the hotel is built. After that, the city will no longer give any of the hotel taxes to The Peabody.

Construction on the hotel is expected to begin by April 1, 2020, and be complete by April 1, 2022. Once finished, The Peabody will include 300 rooms, two restaurants, two bars, a spa and athletic club, and an open rooftop with a swimming pool.

The hotel will be part of Roanoke City Center, a mixed-use development at the southern end of Oak Street. The development is already home to Roanoke’s new City Hall as well as residential lofts and a parking garage.