The city of Homewood is giving the developer of a new downtown hotel and retail project $10 million in incentives to be paid over 20 years.

Earlier this week, the Homewood City Council approved the abatement of 75 percent of new lodging tax generated from the new four-star Curio Hotel by Hilton to be constructed on about two and a half acres along 18th Street and 28th Avenue at the former location of Hatfield Auto Parts and Service and Little Professor Bookstore.

The former 6,500-square-foot Wolfe Camera store will be redeveloped, said developer Mike Mouron, of Capstone Real Estate Investments.

The hotel and 15,000-square-foot retail project will mean a $50 million capital investment in downtown Homewood, said Doug Neil, a consultant with Daniel Communities, who represents the city of Homewood. After it’s completed, the project will generate about $42 million in additional revenues for the city over 30 years.

The incentive is needed, he said, to help facilitate the economic viability of the project and to secure financing.

In the deal, Capstone agrees to pay Homewood $400,000 for the vacation of an alley right-of-way, which currently runs through the project site.

Homewood Chamber of Commerce Executive Director Meredith Drennen spoke in favor of the project and the incentive during a public hearing before the city council on Monday.

She said the development is in line with the strategic plan for Homewood, which included the survey of 500 members of the Homewood business community and other local leaders and residents.

Capstone initially submitted design plans for a seven-story Curio Hotel by Hilton in the summer of 2017. The Homewood Planning Commission denied the final design due to concerns over the height of the structure and insufficient parking spaces.

Current approved design plans call for a five-story, full-service hotel with 129 rooms and restaurant and bar. The hotel will have an expanded outdoor dining area and a second-floor terrace area with bar and private event space.

Mouron said he expects construction on the hotel to be underway by April 2019 with the hotel complete by late 2020. He said he expects much of the demand for the retail space to be from restaurants.

Capstone has five years to complete the retail portion of the project under the development agreement with the city of Homewood, he said.

Under the terms of the approved development agreement, to satisfy parking requirements, Homewood agreed to allow employees of the hotel and retail stores and the general public to park in the city’s below-ground parking deck located at Soho under the Homewood City Hall.