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Should St. Charles protect Hotel Baker?

A hotel war is brewing in St. Charles. City officials may have the ability to negotiate an armistice. Finding that harmony will involve weighing the importance of a project dubbed as the crown jewel of the downtown against a business interwoven with the character of the city.

The first question is whether city officials should intervene at all.

Bob Rasmussen and the investment team behind the First Street Development II project want to put a five-story, 108-room hotel just to the north of the new ALE Solutions headquarters building. That puts it right in the sightline of the 53-room, 90-year-old Hotel Baker.

Joe Salas bought the iconic Hotel Baker at auction in 2003. The property sat vacant for more than year before his investment. And that was without a glossy, modern competitor less than 250 feet away.

"We are very concerned," Salas said of Rasmussen's plan. "It's hard to look at it and say it's not going to make a negative impact. New is new. We can't fight new. I don't oppose any new hotels in the area. But does it have to be right across from us in the downtown?"

For Rasmussen, the answer is yes.

"We are underserved right now in the hotel market," he said. "I don't see us as a competitor with the Hotel Baker. We would be competing against the Hilton Garden Inns, the Marriott Courtyards. I think this hotel would be an attribute to the Baker."

Rasmussen's hotel would feature a swimming pool and be geared toward families. Salas has more of a boutique hotel that caters to restaurant-goers and weddings. Hamburger joints and steakhouses both serve beef, but they don't draw the same clientele.

But Salas said even if Rasmussen's hotel siphons off 15 percent of the Hotel Baker's guests, it would be "a major problem."

"You can do all the studies in the world, but we know what our occupancy is," Salas said. "We're a smaller hotel. And we're not running at full capacity. There are significant down times. That's reality. So it's really hard when some study says it's not going to be competition. At the end of the day, dollars are dollars."

Rasmussen's hotel plan already received a favorable recommendation from the city's Historic Preservation Commission. A couple of commissioners expressed concerns about the potential negative impact the hotel could have on the Hotel Baker, and the lack of positive impact it may have on businesses like the Blue Goose Market.

"How many hotels can a small town handle?" Commissioner Craig Bobowiec said. "They claim it's going to attract out-of-town soccer moms with kids and some business travelers. Well, soccer moms and kids, if they are looking for cost, likely will not be able to afford Wok 'N Fire, Shakou, ZaZa's or others. If it fails, what do we do? Have an empty building we now need to retrofit into rentals?"

Rasmussen said the city doesn't need downtown apartments; it needs customers. He says the hotel would bring up to $13 million in new revenue to downtown businesses.

"That's spending, not hotel revenue," Rasmussen said. "If in that particular building you put 36 apartments, and get 54 people living there, how often are they going to shop at a store or eat at a restaurant? Certainly not every day. With a hotel, you have different people coming downtown every day."

There are other numbers to consider. City officials issued $30 million in bonds to help finance the First Street project. They recently refinanced that deal to push full repayment out to 2038. But a First Street failure puts local property taxpayers on the hook for that debt.

On the flip side, when the Hotel Baker won the business that became the celebrity wedding of Jenny McCarthy and Donnie Wahlberg, the hotel raised the profile of the city perhaps more than almost any other event in the community. The hotel, and consequently the city's downtown, is frequently featured on "Donnie Loves Jenny," the reality show of the celebrity lovebirds. The hotel was also the location of Wahlberg's after-party for his recent concert at the Arcada Theatre and hosted a cadre of National Football League owners for recent league meetings.

City Administrator Mark Koenen said it may be best to let the free market to decide what's more valuable to the city.

"If it's permitted under the law, we don't say you've got to be a Super 8 or a Hyatt," Koenen said of Rasmussen's plan. "It's just as if a new business wanted to come in next door to ALE Solutions. I think the Hotel Baker is special in that they are a boutique hotel. It would be difficult for anyone to compete against that. I think it serves a different audience. But that's what this process is for, to have a conversation about what's best."

Aldermen will get their first look at Rasmussen's plan toward the end of July.

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