On March 12th I posted a scheduled article on this website to discuss the plans for the new downtown Champaign hotel at the SW corner of Neil & Church: http://www.halfwayinteresting.com/Pages/CityofChampaign/tabid/90/entryid/873/Downtown-Champaign-Hotel-a-Good-Plan.aspx
On Tuesday, the city council approved up to $3 million in tax rebates to assist the developer of the project. In my prior article, I said I was in support of the incentive package as long as there was proof of demand for the rooms. After further thought, I began to question the developer's experience and ability to attempt such a large project. I have seen more experienced developers fail at much smaller projects. However, do not be afraid my fellow citizens; I cannot come up with a legitimate reason why this incentive could "hurt" taxpayers. The developer has chosen a great "flag" for the hotel, a Hyatt Place. And if he is smart, he will partner with someone with significant development experience and partner with another or hire a manager who has hotel operation experience.
I know there are plenty of naysayers out there who have their reasons why they think the incentive is not in the best interest of taxpayers, but I have yet to hear one that is truly legit. Go ahead fellow bloggers, let's hear your reasons for why this was a poor decision on the part of your elected council.
The board picks Ileana Savely as the newest member of the Unit 4 school board and I touch on working cash bonds once again.
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Where do I stand on the bag fee?
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I will be available to the public today, at 6pm in Room 215 at the Champaign Public Library, to hear from you.
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This month I touch on the loss of Greg Novak and working cash bonds.
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In case you haven’t been paying attention, local businessman Hans Grotelueschen has revealed plans to build a hotel on the former site of the Metropolitan Building in downtown Champaign. (N-G article: http://www.news-gazette.com/news/business/economy/2011-09-02/new-owner-metropolitan-site-wants-hotel-there.html). In order to do so, he requested up to $3 Million in tax rebates from the City of Champaign which the council unanimously approved on February 21st. Mr. Grotelueschen purchased the vacant lots of the Metro site and also owns the adjacent storefront previously occupied by his company (YG Financial). The combined area of the three parcels totals 23,232 square feet (176’ x 132’) at the southwest corner of Church and Neil Streets.
Being that the property is privately owned, Mr. Grotelueschen has the privilege of building whatever he wants on the site as long as the use fits within the local zoning code (Central Business) and abides by local building codes. However, being that the site is at the center of the downtown business district and historic center of the community, one may argue that the developer must respect the input of local citizens. Some comments I have read on message boards go even further to suggest that downtown Champaign is somehow public domain and that the owner of the lot should build whatever is in the public’s best interest. While I object to that assertion, now that the City has agreed to provide tax rebates, perhaps we the people should have more say in the project.
Those supporting the proposed nine-story 145 room hotel say that a hotel in downtown Champaign is needed to attract certain events to the area and will provide an influx of new business for downtown bars/restaurants/retailers. Bruce Knight (Planning Director) points to other successful downtown districts and asserts that employment, entertainment, and residents are all required to create a “24-hour downtown”. A hotel, while not providing permanent residents, provides a constant flow of visitors to the downtown district and is towards the top of the list of priorities for the City.
Opponents of the project question whether it is worth “spending” tax dollars to promote a redevelopment while the city is having trouble balancing their budget. The vote for the tax rebate also comes on the heels of the approval of a 4 cent per gallon fuel tax which many citizens object to. Other opponents feel as if this is another case of “corporate welfare” and wonder when other citizens will get rebates on the real estate taxes they pay for their properties. I have also heard arguments that a hotel at this location will create too much vehicular and pedestrian traffic at this intersection.
So who has it right? In my opinion, both sides make some good points. City planners explain that without the project being built there would be no new food & beverage taxes, hotel-motel taxes, or real estate taxes generated, so therefore they are not “spending” any taxpayer money. I also agree with the other side when they make the point that a development not requiring tax rebates might be a better use of the site. Clearly the city council feels as if the hotel use being proposed now is better than waiting for a future development that does not require the rebates. Had I been sitting in a council seat, I would have posed the question of demand. Is there a study showing that there is demand for additional hotel rooms in the area, and if so, is there specifically demand for a hotel located downtown?
Being that Mr. Grotelueschen is a financial analyst, I would hope that he has studied the market to determine there is indeed demand for his $28 million hotel. If that is the case, then I am in support of the project and of the tax rebates. My reasoning is that if there is demand for more hotel rooms, then someone will build another new hotel somewhere in Champaign-Urbana. And being that it is much cheaper to build a hotel on a greenfield site on the edge of town than redevelop an urban site, there is a high likelihood that a developer without rebates would choose the cheaper site over the urban site. Since I support the further redevelopment of our downtown core, I view the rebates as a redevelopment incentive and nothing more. Recent commercial real estate periodicals I read have frequently been touting the improving hospitality industry, including the upward pressure on average room rates and increasing occupancy rates. Therefore, I believe that the city planners and council made the correct decision.
Matt Wavering is a commercial real estate broker with Coldwell Banker Commercial Devonshire Realty and can be reached at 217-352-7712 or mjw@cbcdr.com
The 2012 Summer Youth Employment Program is set to launch in June. Will we have the funds necessary for this program? It could be up to you!
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Champaign City Council has cleared its plate of issues from the beginning of the year and is ready to tackle the new ones!
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