Developer says economy stalling Des Plaines hotel project
Will Des Plaines finally get two Marriott hotels?
The answer is still up in the air, though city officials are optimistic the project eventually will materialize.
Oak Brook-based developer The Harp Group Inc. blames the economic downturn for stalling the project proposed for a site fronting Interstate 90 along Mannheim Road and Pratt Avenue.
Earlier this month, it seemed the property would be lost in a lawsuit.
Chicago-based New Century Bank filed a $7.5 million foreclosure suit against Harp Des Plaines LLC on Dec. 31 because the developer failed to pay back a 2006 loan or pay taxes on the property, and give a construction timeline. The bank recently withdrew the complaint.
"We have dismissed that lawsuit without prejudice," said Rosanne Ciambrone, an attorney for the bank. "We are free to file it again."
Harp Group Executive Vice President Tim Franzen said the bank issues have since been resolved, but the project is still stalled because of the national capital credit crunch.
"We have worked out the situation with New Century Bank and we look forward to getting the project started as quickly as possible," he said.
Yet, how the group, which recently opened an InterContinental Hotel in Rosemont and a Westin in Wheeling, intends to finance the roughly $57 million hotel project in Des Plaines is still unclear.
"There's extremely limited construction financing out there," Franzen said. "They (lenders) are just not taking any risk."
While the New Century Bank loan paid for the land, Franzen said the group is still seeking a lender to front roughly 60 percent of the construction cost. The city does not have any money invested in that project.
Franzen said he could not provide a construction timeline.
A second project to build two Hyatt hotels on Mannheim just south of the I-90 tollway is moving forward, however.
The city owns the land, which it purchased for $2.7 million and intends to sell to developer, Harlem-Irving Group, this summer.
Plans for that project are expected to go before the city plan commission on Feb. 9.
"And that's good news for the city," said Michael Conlan, Des Plaines director of community and economic development. "This is a prime area for hotel development."
The two projects are in a tax increment financing district, meaning increased property tax revenue from development which normally would go to taxing bodies such as schools can be used to defray some of the costs of redeveloping the area.
Construction on the Hyatt hotels is expected to start in April 2010 and completion is targeted for May 2011.
Should the Hyatt and Marriott projects be completed, it would bring $150 million worth of construction to Des Plaines, which would generate significant property tax and hotel/motel tax revenues.
"They are very important to what's become a hospitality industry cluster in that area," Conlan said.