January 8, 2016

Panel backs city funds for Elks Club

Mayor expects to close with developer in March

By Terry Flores
Kenosha News

The Kenosha Plan Commission on Thursday night approved the addition of up to $500,000 to help fund the development of a proposed boutique hotel at the former Elks Club/Heritage House building at 5706 Eighth Ave.

The city funds would be added to a $2.6 million cash development grant to developer Gorman & Co. that was approved by the city last year. Gorman is expecting to spend $20 million on the project.

The city still owns the building, however; a transfer of ownership is expected by the summer. The City Council is expected to take up the financing later this month.

In approving the additional money, the commission voted 9-1 to amend the project plan for the tax incremental financing district it created for the project. Plan Commission member Anita Faraone cast the dissenting vote.

According to city documents for the TIF district, Gorman’s plans are for renovation of the former building and construction of a new, attached building for a 75-room hotel at the site. A restaurant, bar and ballroom is also planned.

Grant fell through

The change to the project plan was necessary after the city was denied a $500,000 Wisconsin Economic Development Corp. grant that would have completed the project’s complex financing package.

The added costs would extend the term of the TIF by four years, to 2033.

At the public hearing Thursday, Zohrab Khaligian, community development specialist for the city, told the commission that Gorman may not need all of the additional funds, depending on the amount of money from other financing sources — including tax credits — it is able to obtain.

Dissenting voice

Faraone said the city was already giving the developer “plenty of money,” and that the developer had already been given ample opportunity to come up with the money.

The property, she said, is in disrepair and would be better off with something other than a boutique hotel. Faraone said she also believes the TIF district could have been expanded to include something other than what was proposed.

Faraone also noted that, from a historic preservation perspective, only the exterior of the building and the ballroom would be maintained for such purposes.

“To me, that’s not keeping a historical building intact,” she said.

March 31 closing expected

Ald. Scott Gordon, who also sits on the commission, asked about the “drop-dead” deadline for the project to come together or the for the building to be razed. Gordon said he sees the benefit of the project for the downtown area.

Mayor Keith Bosman, commission chairman, said that city and Gorman are expected to close on the deal by March 31.

“At that point ... if we don’t consummate it by March 31, then we’re probably looking at a raze sometime this year,” Bosman said, noting the city would then be responsible for demolishing the building. Razing the building would cost about $500,000, he said.

Bosman said that while the proposed project isn’t the “panacea” for revitalizing downtown, “it’s the catalyst to get projects going.”

“If it falls apart between now and March 31, we have to spend a half million bucks and have nothing,” he said.

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