Bennigans part of $28 million Des Plaines redevelopment project

  • A sketch shows a proposed $28 million development at Mannheim and Higgins roads in Des Plaines that includes a hotel, gas station and restaurant.

    A sketch shows a proposed $28 million development at Mannheim and Higgins roads in Des Plaines that includes a hotel, gas station and restaurant. Courtesy of City of Des Plaines

 
 
Updated 1/15/2016 4:42 PM

Des Plaines aldermen will vote Tuesday on an economic incentive deal and sales contract that would pave the way to a $28 million redevelopment of long-blighted, city-owned property near O'Hare Airport.

The 4.5 acres of vacant land is wedged between the Jane Addams Tollway and a McDonald's restaurant at the northeast corner of Mannheim and Higgins roads.

 

Pearlshire/Bask Development Group is proposing to build a five-story, 120-150 room hotel, gas station with convenience store and car wash, and free-standing restaurant -- potentially a Bennigans, according to project documents released by the city Friday.

The city plans to sell its land to Pearlshire for $1.5 million, up from the developer's initial $1 million offer in July. The city council has been meeting behind closed doors with Pearlshire officials for several months, after selecting their proposal from a total of three.

Four groups initially responded to the city's request for proposals last April, offering between $500,000 and $2 million for the land.

In addition to the sales contract, Des Plaines aldermen on Tuesday night will also consider granting the developer an option to purchase a neighboring 3.7-acre vacant parcel for $600,000 to make it part of a larger development.

It's possible the extra land could be used for parking or stormwater detention, officials say.

The council approved a $600,000 purchase of that land last month from the Rosemont Park District.

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Des Plaines officials believe making the land part of a larger, unified development will maximize tax revenues.

According to Pearlshire's development plans, the nationally-branded hotel will cost $18 million to construct. Addition of a restaurant inside is still under negotiation.

The developer plans to lease the free-standing restaurant building to a national chain, and Bennigans has "expressed a strong interest," according to plans.

The gas station, proposed as a BP, would be open 24/7 and have 32 fueling stations, including diesel. A separate compressed natural gas fueling station would be located next to a tunnel car wash. The 4,000- to 5,000-square-foot convenience store would include a Subway and coffee/doughnut shop.

City officials estimate the project will generate $39 million in property tax, fuel tax, food and beverage tax, and hotel tax revenue through 2038 -- the year a tax increment financing district is due to expire.

                                                                                                                                                                                                                       
 

The city created the new TIF 7 last year by carving land out of the indebted TIF 6, in hopes of spurring redevelopment of the land.

The restructuring means a lower base property value was established in TIF 7, and incremental property taxes generated above that level are intended to be reinvested back into redevelopment projects.

The council Tuesday is expected to vote on an agreement that would provide three incentives to the developer:

• 25 percent of the annual TIF fund dollars, up to $2 million over 20 years, in order to reimburse redevelopment costs;

• 25 percent of annual sales tax revenues collected from the property, up to $2 million through 2038;

• 40 percent of hotel tax revenue, up to $3.5 million through 2038.

Des Plaines officials have been trying to develop the property for years.

A proposal to build a seven-story parking garage, nine-story hotel and 4,000-square-foot fast food restaurant fell through in 2012 after the developer backed out, citing high Cook County property taxes. An earlier proposal to build two Hyatt hotels, restaurants and shops was withdrawn in 2010.

If aldermen give the latest redevelopment proposal their OK, officials plan to close on the deal in May.

The project would still need city zoning approvals, and permits from other local and state agencies.

Construction on the gas station and restaurant is scheduled to start in June and be complete by November. Construction on the hotel is scheduled to start in September and be complete in March 2017.

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