|By John Sharp, Journal Star, Peoria,
Ill.McClatchy-Tribune Regional News
May 26, 2010 --PEORIA -- Gary Matthews recalled Tuesday his first visit to the Hotel Pere Marquette, a trip down memory lane he took earlier in the day with his sister.
He was 5 years old when he first walked into the hotel built in 1927. He said it was a cold November afternoon during the Santa Claus Parade.
"Our parents brought us to the Pere Marquette," said Matthews, president of EM Properties. "That was my first trip and I'll tell ya, that is a trip I won't ever forget."
He's about to make many more as the owner of the hotel and developer of a public-private $102 million Marriott Hotel project.
By a 7-4 vote Tuesday, the City Council endorsed a redevelopment agreement after a nearly four-hour discussion and debate on such topics as the hotel's developers fee, construction costs, concerns about tax incentives, protections for the taxpayers and the potential savings in a state tax credit.
The approval, according to Mayor Jim Ardis, could help Downtown Peoria regain some of the confidence it has lost over the years as surrounding cities like East Peoria have seen growing development.
"Tonight's about Peoria and what we can do," Ardis said. "We should be proud to say we are going to do this."
Voting "yes" were Ardis and council members Barabara Van Auken, Clyde Gulley, Timothy Riggenbach, Eric Turner, Ryan Spain and Bill Spears. Voting against the project were council members George Jacob, Dan Irving, Jim Montelongo and Gary Sandberg.
The council's vote allows for the reconstruction of the 284-room, full-service Pere Marquette and the construction of a 10-story, 117-room Marriott Courtyard.
The entire project will be attached via a climate-controlled skywalk enclosure to the Peoria Civic Center. That attachment is viewed as a significant addition that could help generate extra conventions and events to the Downtown sports and entertainment complex.
Construction is expected to begin soon, with demolition work occurring to the nearby parking garage. The hotel could open during the first quarter of 2013.
The public's cost for the project is about $67 million including interest until 2032, according to estimates from an analysis paid for by the city.
To some council members, the costs -- and the risks of bonding for the project over 23 years -- make sense. Others had concerns about the public's involvement.
"We set the precedent on the growth cells north where the developers have come forward to guarantee the bond payments if there is a shortfall," said Irving, the council's 5th district representative. "I just think we possibly could have found a better way to protect the investment of the taxpayer and have a little more accountability for this project."
During the discussion, council members grilled Matthews and members of the city's administration about a project Matthews said is "a dynamite project that will flourish and create the domino effect in Downtown."
Matthews, after the vote, said the outcome was a "relief."
Questions emerged about Matthews' proposed $9.2 million developer's fee, which is something that David Richardson, with the St. Louis law firm Hush Blackwell, said is in line with other redevelopment projects of historic buildings.
"If you build in a green field, it's a smaller fee as opposed to an urban redevelopment in a downtown," he said. "Developer fees are much higher."
Council members also asked Matthews if their portion of the project will go up or if his developer's fee changes. Matthews replied that his costs, as proposed, are established and will not change.
However, the city's costs could go down, according to Ardis. During the council discussion, Ardis announced that the Illinois House voted 115-3 in support a state tax credit for rehabilitation projects to historic structures, which potentially could save the city $4 million from its $37 million investment.
Also, Finance Director Jim Scroggins said the city's investment will be handled through a general obligation bond, which is a cheaper alternative than a revenue bond. He said the bonds will be repaid through increases in valuation through property tax-increment financing, a tax incentive that helps generate interest in development within a designated area.
This is the second time Matthews has come before City Council with the project. The first time was in December 2008, when Matthews wanted a 475-room Marriott Hotel project approved.
But the project's design changed over the course of the past two years, especially since the costs to rehab the Pere Marquette increased. The design is different as well, changed into a 10-story, bricks-and-mortar structure from the previous glass-encased look.
Those changes prompted Sandberg to question why the city's $37 million investment doesn't go down more when the number of overall hotel rooms decreased from 475 to 401.
"Why should we reduce $2.5 million, our investment, when you aren't reducing (your developer's fee)," Sandberg said to Matthews.
Matthews replied, "Then vote 'No,' Mr. Councilman."
Matthews still needs to get approval from the Illinois Finance Authority next month.
For now, a majority of the council is happy to see it go through as they are excited to see the potential of adding more conventions and events to the adjacent Civic Center.
"Merry Christmas to all of you, as Christmas has come early on May 25, 2010," 1st District City Councilman Clyde Gulley said.
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