Hotel plan moves forward for Naperville's Water Street District
Plans to build a downtown Naperville hotel as part of the $93 million Water Street District project have taken another step forward.
The city council voted 6-2 Tuesday to tentatively approve a funding agreement for roughly $23.7 million in public improvements for the site.
Under the terms, the city will pay $18.4 million and the developer, Marquette Companies, will pay $5.3 million toward improvements such as a 520-space parking deck, Riverwalk connections, a traffic signal at Aurora Avenue and Webster Street and stormwater detention.
The completed agreement will be brought back to the council for a final vote, City Manager Doug Krieger said.
"Working together, we now have a viable development that people and businesses of Naperville can enjoy and be proud of," said Jeff Prosapio, director of property management for Marquette. "We have an agreement and a project that will benefit the entire community. Together, we may deliver on the promise of the Water Street District."
The financial terms tentatively approved Tuesday update a cost-split agreed upon in 2013.
Since the previous agreement, developers have changed their plans to build a Hotel Indigo instead of a Holiday Inn Express and to add a banquet facility instead of a two-story restaurant.
Under the new financial terms, Krieger said the city will gain full ownership of the parking deck.
"To get this fully into the city's hands was a really good decision," council member Steve Chirico said.
Gaining full ownership of the parking structure means the city has to pay an additional $4.5 million up front, bringing its total bill for Water Street public improvements to $18.4 million instead of roughly $14 million. But Marquette will pay back much of the city's upfront additional cost - $3.9 million - in annual parking fees over 30 years to rent the 120 spaces that will be designated for hotel guests.
Krieger said the city stands to benefit from one other change to the financial details of the Water Street District, which also will bring restaurants, shops and offices to the 2.4 acres east of the municipal center and south of the DuPage River.
The area was designated a tax increment financing district, or a TIF, in 2007. In a TIF district, the assessed value of land is frozen for the purpose of calculating how much property tax dollars local governments receive. As property values increase, the difference between what the governments collect and the higher taxes the land generates is put into a fund that helps pay for certain improvements within the TIF district, such as roads and other infrastructure.
The TIF was set to expire 23 years from when it was created, but now it will be extended an additional seven years to make up for delays in the construction of improvements along Water Street.
With the TIF allowed to continue until 2037, Krieger said the city will bring in an estimated $6 million of additional revenue to put toward the $18.4 million it owes for its share of Water Street infrastructure upgrades.
Council members Doug Krause and Joseph McElroy voted against approval of the financial terms, while council member Grant Wehrli, newly elected to the state House in the 41st District, was absent.
Water Street developers said they are in "closing mode" with lenders and aim to begin construction soon.