A developer is proposing a new $57.1 million hotel and apartment building for downtown Peoria, with the city agreeing to reimburse costs through tax increment financing revenues.
The plan calls for demolishing the former Sully's bar and Illinois Central College Perley building to make way for a high-rise, mixed-use development that would include 140 hotel rooms, 50 apartments, a swimming pool, meeting rooms, fitness center, and restaurant and bar.
Peoria Mayor Rita Ali says mixed-use buildings like the proposed hotel is filling a growing demand for residential options downtown.
"We're seeing more interest in people that want to live downtown want to be near the riverfront," she said. "They want to be worth kind of where the action is in terms of entertainment, or social interaction activities."
Mayor Ali says the additional hotel space is also an advantage, as development continues to bring businesses, residents and events to Peoria.
"Expansion in terms of recreation and entertainment within Peoria will call for more more hotel space," she said. "We're running out, we run out and then people have to go across the river or to other places. So Peoria, I think we do have an appetite for that."
As part of the agreement, the city would agree to reimburse Keith Weinstein's Greystone Realty Group 100% of redevelopment costs of the property in the 100 block of SW Adams Street, but only through the TIF money generated by the site through the life of the current TIF district.
The city's Downtown Conservation TIF district is currently slated to end in 2036. That would mean only about 23% of costs would be reimbursed if the hotel opens on its current timeline before the TIF district expires. The Illinois General Assembly would need to act to extend the life of the TIF district for another 12 years. In some cases, the state legislature has moved to approve a second, 12-year extensions for TIF districts. The city hasn't had discussions to date about seeking an extension for the downtown TIF.
A TIF district collects new property tax revenue growth generated by redevelopment into a special fund that can be used to make additional investments in the TIF district. When a TIF district expires, the property taxes generated by the redevelopment are distributed back to local taxing bodies.
The proposed site is located within Peoria City Council member Chuck Grayeb's district. He says, after meeting with developers during the process of creating the proposal, he's excited to have something to show the city council, including the TIF plan.
"I think it's clear to most Peorians that, without some assistance, this project probably would not happen, given the length of time that much of that block has sat, empty and dilapidated," he said. "And one of the things I've heard since taking over as a councilman for the downtown is: when are we going to get our downtown moving again?"
The agreement differs from the city's past redevelopment agreements with the former owners of the Hotel Pere Marquette and adjacent Marriott on Main Street. In that deal, the city council approved $29 million in grants and a $7 million loan to help facilitate the $92 million project.
Developers Gary Matthews and Monte Brannan were later federally indicted for using that money to enrich themselves and their other businesses, rather than investing it into the hotel redevelopment as required. The city failed to recoup its $7 million loan when the property was acquired by lead investor INDURE Build-to-Core for $39 million.
If the Peoria City Council approves a redevelopment agreement with Weinstein's Fulton Hotel Development, LLC next Tuesday, the developer would be required to have construction plans completed by April 1, 2024. Construction on the new Adams Street hotel could begin in January 2025, with a projected opening date in August 2027.
The agreement requires the developer to hit each of those milestones to qualify for the reimbursements from TIF money. The city would have the option to extend those deadlines by up to six months.
Grayeb says these deadlines and the financing plan pose no risk to taxpayers.
"If the project is not completed or doesn't meet timelines, then, you know, we just don't have a project," he said. "But the tax increment, finance districts are all over town. And they're designed to stimulate development of this sort, which might not otherwise occur."
The proposed agreement also would allow hotel guests and apartment renters the use of the city's Niagara parking deck, at a cost of $3 per occupied room night on a monthly basis.
