Not all Park Ridge aldermen are convinced that the city should cover the bulk of an estimated $5.1 million “financial gap” reported by the developer of a proposed 108-room hotel on Higgins Road.
That was the opinion expressed by several elected officials as the council on Aug. 23 met to review updates to a proposed economic incentive agreement requested by the hotel development team, which is looking to construct the four-story, $23.1 million building at 1440 W. Higgins Road, the site of Mr. K Garden and Material Center.
Before reaching any decision on the economic incentives, the council reached a consensus for the city to hire an outside consultant to review the project’s current financials.
The study, which will cost approximately $12,000, will take about 30 days to complete, said City Manager Joe Gilmore.
The city is being asked to cover approximately 90% of the hotel project’s estimated $5.1 million shortfall, or $4.6 million.
That would be accomplished through the developer’s request for reimbursements in city hotel and property taxes over six years (totaling approximately $820,000), a cap on building permit and inspection fees, and city support of the developer’s application as a class 7B Cook County property tax incentive.
A Class 7B designation, if approved, would significantly lower the amount of property taxes the hotel pays for a period of 12 years, Gilmore said.
City staff, in negotiations with the development team, had eliminated the tax reimbursements, but kept the cap on permit and inspection fees and the city’s support of the 7B tax status, the city manager said.
“This approach would have the city covering approximately two-thirds of the estimated gap,” Gilmore’s memo to the council said.
The developer did not agree to this proposal, he said.
Aldermen were hesitant to move forward with the request of the development team.
“I’m not willing to give away the farm,” said 3rd Ward Ald. Gail Wilkening. “I think there’s a deal to be made here.”
Sixth Ward Ald. Rick Biagi expressed concerns that the developer might ask for more incentives if the city agreed to cover 90% of the reported financial gap, while 2nd Ward Ald. Fred Sanchez said he is “not a big fan” of the project itself or the developer’s request for tax dollars.
“If this project was a slam dunk, they wouldn’t be coming to us to help bridge that gap,” he said.
Zio Pekovic of Scarlett Hotel Group told the council that effects of the pandemic on the hotel industry and increases in the cost of materials grew the financial gap from $4.5 million to $5.1 million since the project was first approved by the City Council in 2019. An earlier economic incentive agreement, similar to the one before the council now, was approved by a different group of aldermen two years ago.
In July, Geoff Dickinson of SB Friedman Development Advisors, a member of the hotel team, called the economic incentives ” a third source of financing” needed for the project.
This is the second hotel plan presented by the development team since 2019. A preliminary planned development for a 112-room hotel was approved by the council that year, but the approval expired 12 months later when no further work on the project commenced. This led to new plans submitted by the developer in the fall of 2020.
Mayor Marty Maloney on Aug. 23 called the hotel an “extremely important” project for the city.
“If this falls apart — and if it does, it does; that’s life and the way of the world — but if it does, I know the next three developers behind them will be pushing for housing,” he said, referring to earlier proposals that had been rejected by the city’s planning and zoning commission, based in part on the impacts they could have on schools.
First Ward Ald. John Moran said he supported the city manager “continuing a dialogue” with the developer, but believes the hotel is the type of project that can generate much-needed tax revenue for the city.
“Over time, if this all works out, it’s a big win for the city,” he said.
