New redevelopment agreement reached for Pere project
- Details
- Published on Wednesday, 26 October 2011 00:00
- Written by Paul Gordon
Project cost lower after developer fee shifted
Gary Matthews wants so badly to take the Hotel Pere Marquette/Marriott Courtyard project to completion he agreed to something few developers would do in order to save the project.
He agreed to wait and take his fee for the project at the end, from project profits, instead of up front. Without that, he said Wednesday, it's unlikely a new redevelopment agreement with the city would have been reached.
"Yes, it's that important to me," Matthews said at a news conference announcing that new agreement and its details. The agreement will go before the Peoria City Council next week for a vote.
"I have a lot of emotion tied into this project. The developers' fee is what helps developers develop. But I want to get this project going," said Matthews, president of EM Properties Ltd.
His decision to defer his fee to the end is only one of several changes in this agreement from the previous redevelopment agreement approved in May 2010, but it is the reason the total cost of the project dropped from $102.6 million to $92.8 million and enabled the city to lower the project grant from $37 million to $29 million.
The latter will reduce the debt service on the bonds the city will sell for that grant by $6 million to $13 million.
The new agreement also calls for the city to loan EM Properties $7 million at 7 percent interest over 25 years.
The new redevelopment agreement will result "in a much stronger position for the city to be in than before," said City Manager Patrick Urich.
Peoria Mayor Jim Ardis said the project has improved as negotiations on the agreement went on. "It's hard for me to control my enthusiasm. A lot has happened in the last couple months," he said.
What has happened the last couple months has been a scramble, mostly by Matthews, to save the project after Ardis and Urich informed him by a letter that the redevelopment agreement was being voided and the project scrapped because so much time has elapsed without forward movement. That letter further charged that Matthews had not lived up to the obligations put upon him, mostly financial ones, allowing the city to void the agreement.
Matthews disputed that, attorneys got involved and negotiations began on a new agreement.
The new agreement has the backing of Ardis and several other council members as well as city staff, Urich said, but approval by the council is not a given. He said he's confident of approval because staff listened to council concerns and was able to negotiation an agreement that lowers the city's risk "while still ensuring a high-quality project that will transform downtown Peoria."
If the agreement is approved by the City Council, Matthews and the staff will concentrate on getting final closure on the financing and on the Hotel Pere Marquette, which is owned by a Kansas company, by the end of the year.
If done, the Pere Marquette renovation portion of the project could be completed and the hotel reopened by February 2013. That will be done before the 116-room Marriott tower is completed, which would probably take another year. The two hotels would be connected to each other and to the Peoria Civic Center via an elevated skywalk, making the Pere/Marriott the official Civic Center hotel. Tourism and convention officials have said that will help Peoria land larger conventions.
There is something else in the new agreement the previous ones did not have — an out clause. The agreement states that if financing is not closed by Jan. 31, 2012, the redevelopment agreement will automatically terminate.
Matthews said he has no dates set yet to begin demolition of the properties surrounding the Pere Marquette or for closing the hotel while renovations are done. The hotel must be closed for some time because much of it will be gutted, he said, and because he intends to install all new electrical, plumbing and other mechanical works.
That will be the first part of the project and the first new construction will be the 400-space parking deck that will replace the existing deck.
When it reopens the Pere Marquette will be managed by Marriott.
Paul Gordon is editor of The Peoria. He can be reached at 692-7880 or editor@thepeorian.com
