June 14, 2011--A Chicago-area developer hopes to begin work by August or September on an $18 million conversion of the historic Loyalty Building into a downtown hotel.

Stephen Schwartz, chairman of First Hospitality Group Inc., said Monday his goal is to have the office building converted into a 128-room Hilton Garden Inn by June of next year. He spoke after the plans were reviewed by Milwaukee's Historic Preservation Commission.

Schwartz said the project's $18 million to $20 million cost will be financed with a bank loan and federal historic preservation tax credits, as well as equity from the developer. The tax credits help pay for a portion of a project's exterior renovation costs as long as the historic restoration meets federal standards.

First MKM LLC, an investment group affiliated with First Hospitality, based in Rosemont, Ill., owns the six-story Loyalty Building, 611 N. Broadway.

First Hospitality also plans to use the nearby Grain Exchange Room at the Mackie Building, 225 E. Michigan St., as the Hilton Garden Inn's banquet and catering facility. The Loyalty Building would include smaller meeting rooms along with guest rooms and an atrium lobby.

First MKM in March bought the Mackie and Loyalty buildings for $1.7 million, according to assessment records.

First Hospitality operates about 40 hotels in the Midwest, including the Radisson Hotel in Pleasant Prairie. The firm also operates hotels in three historic buildings in Chicago, Indianapolis and Des Moines, Iowa, Schwartz said.

The preservation commission approved most of the Loyalty Building conversion plans, which include removing paint from its granite exterior.

The commission delayed granting approval for First Hospitality's plans to add a canopy and wheelchair ramp to the building's main entrance on N. Broadway.

Commission members want to see more details on how those features would be built, with some commissioners saying the tentative design would detract from the building's appearance.

The building was constructed in 1885 and 1886 for Northwestern Mutual Life Insurance Co. in the Romanesque Revival style, said Paul Jakubovich, city historic preservation officer.

"This really is one of the grand buildings of its kind left in America today," Jakubovich said.

The Hilton Garden Inn would be about two blocks from a 200-room Marriott, to be built near the southwest corner of E. Wisconsin Ave. and N. Milwaukee St. That project involves razing some 19th century buildings designated as historic by city ordinance, while preserving the building facades and blending them into the new hotel.

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