Jul. 22, 2005 - CHAMPAIGN -- It's out with the Chancellor, and in with the Hilton. In fact, make that two Hilton hotels.

Local developer Paul Tatman said he and his business partner, Steve Horve Sr. of Forsyth, have settled on a $20 million redevelopment plan for the old Chancellor Hotel property at Neil Street and Kirby Avenue that will include two new hotels an upscale Hilton Garden Inn and a Homewood Suites by Hilton.

A new retail building right at the corner also is included in the plans.

The developers are on a fast track to get the hotels open by next spring.

Demolition is already going on inside the Chancellor's convention center, which will be salvaged to become part of the new Hilton Garden Inn, and demolition of the rest of the buildings on the property will begin in a few weeks, Tatman said.

To come down are the older part of the Chancellor, the former Aunt Sonya's restaurant and a small retail plaza.

Before the demolition can begin, Tatman said, nearly $500,000 worth of asbestos removal has to be completed.

"As soon as they're done with the asbestos, the building is coming down," he added.

Together, the two hotels will add nearly 200 rooms to the high-traffic corner that is within easy walking distance of the University of Illinois' athletic facilities. The Chancellor, which closed earlier this year, had 244 rooms.

The 99-room Hilton Garden Inn will have a covered pool, a restaurant and a bar, plus 25,000 square feet of convention space, Tatman said.

The 98-room Homewood Suites by Hilton will be geared to more extended stays, he said.

Tatman said he expects to get the Hilton Garden open by February or March of next year, and for Homewood Suites to open about two months later.

The most indefinite part of the project is the retail area, which will be 15,000 square feet to 16,000 square feet right at the Kirby and Neil corner.

While Tatman and Horve purchased the rest of the Chancellor property this past spring, they are leasing the section right at the corner, and Tatman said he thinks a national retailer will be able to work best with the leasing economics.

Tatman said he has talked to both Walgreens and Osco drug store chains, but doesn't have a definite tenant lined up yet.

Tatman and Horve on Thursday applied to the city for some tax incentives under the new infill redevelopment program which is designed to encourage redevelopment on in-town lots, many of which already have structures on them.

Under this program, the new hotels and retail space would stand to get back any new or increased tax revenues they generate.

There's no risk to the city, because a non-performing development gets nothing, and a performing one gets only the extra tax money that wouldn't have existed without the project, according to Colleen Braun, assistant to the city manager for development.

Braun said the city likes the idea of two new hotels for the Chancellor site, because it's so handy for fans visiting the UI for athletic events.

"There's really a demand for decent hotel space at that location," she said. "And anything to clean up that corner and put a fresh face on it would be great."

The two new hotels and the new convention space being planned for the Hilton Garden will expand Champaign's ability to attract larger convention groups, she said.

Both new hotels are close enough to work cooperatively with the existing Hawthorn Suites on Trade Centre Drive and the future hotel, restaurant and conference space planned by the UI and Fox Development to open late next year, just south of the Assembly Hall, Braun said.

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