Elk Grove promises TIF funds for new tech park hotel
Elk Grove Village has promised a developer more than $1 million in tax increment financing funds and additional hotel tax rebates to open a lodge on the north end of the Elk Grove Technology Park.
The TIF reimbursement and redevelopment agreement between the village and Hiten Patel of Chattanooga, Tennessee-based Rivermont Hospitality replaces a similar deal inked in January 2020 with a different developer.
That project, led by Chicago-based hotel developer Shapra Group II and equity partner Schaumburg-based EquityRoots, fell apart amid financing troubles and the pandemic. Rivermont recently purchased the 1.7-acre parcel within the 85-acre tech park along Higgins Road.
"The biggest problem now is no one's building hotels. The biggest problem is getting the financing," said Mayor Craig Johnson. "They did have difficulties."
Rivermont has proposed a 79-room Hilton Home2 hotel that would cater to visitors to the tech park and surrounding village industrial park. The previously proposed hotel was to be an Avid-branded hotel by InterContinental Hotels Group, with the same number of rooms.
As in the last agreement, the village has agreed to refund the developer all of the hotel taxes in the first six years the hotel is open, half 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 generated $1 million in revenue, the village's 6% hotel tax would bring in $60,000 and the village would reimburse the developer $30,000, according to the agreement.
But under the new pact, the village also agrees to pay Rivermont $1,150,000, which represents a portion of the developer's $1.8 million acquisition cost. The agreement calls for the developer to spend at least $8 million in private funds and to start construction by April 2022.
The public money will come from a village-controlled TIF fund that was set up in 2017, by which property taxes paid to local governments were frozen and taxes collected above a set level were set aside for economic development purposes.
The agreement says Rivermont will get the money only if the hotel is open by April 2024.