The Peoria City Council unanimously approved an agreement Tuesday night with Fulton Hotel Development to build a new downtown hotel.
The old Sully’s building and the former Illinois Central College Perley building will be demolished for the project. Both buildings are vacant.
The new Hilton Garden Inn will be “mixed use," including 140 guest rooms, 50 residential apartments that will be leased out, conference rooms, a restaurant, and a swimming and fitness center.
The project is estimated to cost over $57.1 million.
Peoria attorney Tom Leiter, who is representing Fulton Hotel Development, said at the council meeting that the project has been under development for several years.
"The developers have invested millions of dollars…in the development of architectural plans (and) engineering plans, in contracting with professional management companies and market research companies, and have a contract to purchase the ICC Perley building," he said.
Per the redevelopment timeline, Fulton Hotel Development must submit construction plans by April 2023. Construction is slated to begin in January 2025, with the hotel's opening date targeted for August 2027.
Leiter said the hotel will be different from other downtown Peoria hotels, such as the Pere Marquette or Sheraton.
“(It is) limited service — it doesn’t have a ballroom or convention facilities. It has some meeting rooms (and) a restaurant, but it’s intended to hit a price point that is different from a full-service hotel," he said.
At-large council member Beth Jensen asked if Peoria needs another hotel.
“Because of COVID and other (factors), we’ve had a lot of vacancies in our hotels downtown. I think the public and myself are concerned as to whether or not we really need this hotel,” she said, also questioning whether the Hilton's new residential units were necessary.
Leiter said recent market studies indicate the planned hotel is expected to sustain itself off of a 70% occupancy level, and that there is a need in Peoria for a hotel “of this type." He also said a Tracy Cross Real Estate Marketing study found the Warehouse District could absorb “200 units a year of new apartments downtown."
The project will be located within downtown’s TIF district. Qualified redevelopment costs would be reimbursed back to the developer through the tax increment over the remainder of the TIF, which expires in 2036. The TIF is set to expire before the qualified redevelopment expenses would be fully reimbursed.
Downtown resident Anthony Carter was skeptical of the agreement.
“This redevelopment agreement provides very favorable terms to the developer in an area with a 55% hotel occupancy rate, one of the lowest in the state. We question why this project is deserving of 100% of the TIF increment, when other projects in the Warehouse District have historically been limited to 50% of the TIF increment, despite likely greater need,” Carter said during the council meeting.
Carter also said residents are concerned about the height of the building, and wanted to have more input before the agreement was approved.
Second District council member Chuck Grayeb, whose district includes downtown, assured residents the council is “addressing the infrastructure and security issues downtown."
"If we were to say that no building could conceivably block the view of anyone living in any one of our buildings downtown, this would put Peoria in a straight jacket. What I’m hearing from people who live downtown,” he said, “is that it’s time to get our city moving again.”
The Sully’s building is currently recognized as part of the Peoria Historic District, and is a recognized building on the National Register of Historic Places. Under the current TIF provisions the proposed Hilton development zone falls under, reimbursement to developers for certain costs are prohibited if such costs were initially used to demolish or substantially modify a historic resource.
However, there’s an exception: the prohibition applies only if there is no “feasible alternative” to demolition. According to City Manager Patrick Urich, the hotel developer has submitted documentation stating the buildings are in such a state of disrepair that no feasible alternative exists.
Per the redevelopment timeline, Fulton Hotel Development must submit construction plans by April 2023. Construction is slated to begin in January 2025, with the hotel's opening date targeted for August 2027.
