|By John Sharp, Journal Star, Peoria,
Ill.McClatchy-Tribune Regional News
Oct. 27, 2011--PEORIA -- The Hotel Pere Marquette could be closed for most of next year while it's renovated into a Marriott hotel, if the City Council approves the Downtown project's new redevelopment agreement Tuesday.
The 84-year-old, 284-room hotel has to be completely shut down during construction, though project developer Gary Matthews of EM Properties declined to say Wednesday when the closure might occur. The hotel is scheduled to reopen in February 2013.
Next year's closure is aimed at getting the Pere Marquette renovated into a luxury, four-star hotel that is part of a $92.8 million project financed with a $29 million city bond and a $7 million loan to Matthews. The project includes a 10-story, 116-room Marriott Courtyard hotel to be built next to the Pere.
Matthews is expected to close on purchase agreements for the hotel project by the end of this year, but no later than Jan. 31, 2012.
"We made that decision (to shut down the Pere) because of the magnitude of what we're doing," Matthews said at a news conference detailing the latest redevelopment agreement between his firm and the city. "We're gutting the whole first floor. It would be too dangerous and difficult to work in those conditions and still have guests."
The possible closure could affect the Illinois High School Association's annual boys state basketball tournaments. The hotel is a popular gathering spot before and after games as participants and fans alike point to the short walk between the hotel and Carver Arena as a major asset to the Downtown setup.
The IHSA, since coming to Peoria for the tournaments in 1996, has occupied the hotel for two weekends each March. The organization provides hotel rooms to each of the eight teams that make it to the finals each weekend, and IHSA staff and tournament officials stay at the hotel as well.
"I do think, as we look at this year's March Madness in 2012 with the IHSA basketball tournament, the Pere might be closed," City Manager Patrick Urich said. "I think it all depends on the day when (Matthews) is closing on the property and, ultimately, when he starts construction."
Urich said he is confident there are enough hotel rooms in the area to accommodate the tournament without the Pere.
"I think we have to be creative," he said. "From a community standpoint, we certainly have the hotel rooms (to host this year's tournaments)."
But local tourism officials have other concerns.
"Our biggest concern about the Pere Marquette closing is losing our current clients to our competitors," said Leslie Williams, spokeswoman with the Peoria Area Convention and Visitors Bureau. She said the bureau will help relocate clients if need be.
"We have worked very hard to get those clients, and more so to keep those clients satisfied during their stay," Williams said. "We don't want to see them take their business outside of Peoria."
The overall cost of the hotel project is down from the longtime $102 million price tag because Matthews' $9 million developer's fee has been removed.
Urich said Matthews will only get a developer's fee if there is a profit made on the project. The 2010 agreement between Matthews and the city had required a $9 million developer's fee paid through the city's bond.
"If he takes a developer's fee, it comes out of the operating profit from the hotel," Urich said.
The $7 million city loan to Matthews is a new financial twist in the nearly three-year saga of the hotel project. It was included in the financing package as a way to drive down the city's financial obligation. Urich said the loan gives the city better security, as well as $3 million in interest earnings that will be paid to the city.
The previous redevelopment agreement in 2010 would have cost the city $67 million in principle and interest.
"What this means is, instead of having what amounted in previous terms of $67 million of principle and interest payments to finance the deal, we are now looking at having (to pay) $54 million to $61 million in principle and interest," Urich said. "We'll see additional revenue (with the interest payments) we didn't see before."
The project's scope and design is relatively unchanged from the 2010 agreement. The Pere Marquette will be renovated first and the new Marriott Courtyard will be built next to it where Big Al's strip club and adjoining businesses are located. The Courtyard is not expected to open until 2014.
The council also will be asked Tuesday to approve an agreement with the Civic Center to allow for a skywalk, which, along with the parking deck, costs $6.3 million. In addition, the council has to reapprove the final design of the project, and a new property transaction with Big Al's owner Al Zuccarini, who has to relocate to make the hotel project happen.
Zuccarini is slated to build the new Big Al's on a city-owned parking lot across Jefferson from the Civic Center. Zuccarini's previous deal to purchase that lot from the city expired at the end of July.
"I'm freaking excited, I can't even see straight," said Zuccarini, whose current property along Main Street will be acquired for around $10 million, plus moving expenses. "The ball is (in the council's) court."
John Sharp can be reached at 686-3282 or firstname.lastname@example.org. Follow him on Twitter @JohnSharp99. Greg Stewart contributed to this report.
(c)2011 the Journal Star (Peoria, Ill.)
Visit the Journal Star (Peoria, Ill.) at www.PJStar.com
Distributed by MCT Information Services