Elk Grove promises TIF assistance for tech park hotel
This story has been updated to say Chicago-based Shapra Group II is the hotel developer and Schaumburg-based EquityRoots is its equity partner.
Elk Grove Village will reimburse a hotel developer in the Elk Grove Technology Park a portion of taxes over 12 years, under terms of a deal struck this week.
The village will use tax increment financing money to rebate some of the village hotel taxes on the Avid-branded hotel by InterContinental Hotels Group, which is proposed to be built on a 1.7-acre parcel in the 85-acre tech park.
Village officials in 2017 set up the TIF district - by which property taxes paid to local governments were frozen, and taxes collected above a set level started going to a special fund - just before Brennan Investment Group broke ground on the massive $1 billion tech park development.
The village board this week agreed to use TIF money to refund Chicago-based hotel developer Shapra Group II and its equity partner, Schaumburg-based EquityRoots, all of the hotel taxes in the first six years the hotel is open, half of the taxes in years 7 to 10, a third of the taxes in year 11, and one-sixth of the taxes in the final year.
For example, if hotel room occupancy in the seventh year generates $1 million in revenue, the village's 6% hotel tax would generate $60,000, and the village would reimburse the developer $30,000, according to the agreement.
But to get any financial assistance, the developer must submit building plans by April 1, and shovels must be in the ground by May 1, the agreement states.
If Shapra Group II and EquityRoots can't meet that deadline, the village has the right to acquire the property at the same price paid for it to ensure that it doesn't sit undeveloped, village officials said.
Plans for the 4-story, 79-room hotel in the northwest corner of the tech park were unveiled last July when the village board endorsed a Cook County Class 7B property tax break, which would allow the land to be assessed at lower levels over a dozen years. EquityRoots is leading a crowdfunding effort to raise initial capital for the $10 million project.
The venue, which proposes modern, smaller guest rooms and more public space, is being geared toward millennials and envisioned as a place for clients, vendors and visitors of the tech park. The hotel would join other businesses in the expansive park, roughly bounded by Higgins Road, Lively Boulevard, Oakton Street and Stanley Street.
Last week, the Daily Herald reported Microsoft Corp. closed on a $52.2 million purchase of some 36 acres in the park, along with T5 Data Centers' $29 million purchase of a 164,000-square-foot building. Both tech firms plan to operate data centers.
Brennan also inked a lease deal last summer with Broetje-Automation, a German aerospace manufacturing firm, for a portion of another building.