ECONOMIC DEVELOPMENT COMMITTEE MEETING

WEDNESDAY, JANUARY 28, 2015

Council Chambers – Countryside City Hall

Ald. Sean McDermott, Chairman, called the meeting to order at 6:30 p.m. He called the Roll of those physically present:

PRESENT: Ald. Sean McDermott, Chairman, Gail Paul, City Admin. Acting Treas. Steve Drazner, Ald. Robert Pondelicek, Ald. James Jasinski.

Also Present: Mayor Krzeminski, Clerk Sweeney, Atty. Erik Peck, Asst. Admin. Peterson, Ald. Michalczyk, Ald. Musillami, Ald. Von Drasek,

M. Carey, Deputy Clerk.

Approval of Minutes

Ald. Pondelicek moved to approve the minutes of November 12, 2014, as presented, seconded by Ald. Jasinski and carried by voice vote.

Presentation by Pearlshire Countryside Hotel, LLC, regarding their Property Improvement Plan and Consideration of their request for an Economic Incentive. Rehan Zaid spoke on behalf of Holiday Inn. New ownership took over the hotel in June 2014. He described where the project is today in three phases. IHG, the franchisor, provided them with the property improvement plan. The original short-term license agreement with IHG expires on March 5, 2015. The hotel was in dire straits when Pearlshire took it over. They are attempting to get a long-term 15-year lease with IHG; it would take 12-24 months to complete the scope of work involved at a cost of $6-7 million to secure the license and bring the hotel up to brand standards. IHG realizes that this location performed very well for the past 35 years. They have 85% of the work quantified at present. Phase 2 involves development of the west wing – which has been unused for the past 7 years, as an extended stay product. Phase 3 is redevelopment of Club 66 which is not operational at present. They are seeking a transitional, contemporary look for the hotel. He provided a slide presentation for the committee. He invited the City Council to take a tour of the property. They also wish to develop the pool area and address exterior fa̤ade work. The hotel rooms are outdated and in need of renovation, as noted.

They must finalize the short-term license agreement with IHG by March 5; they originally budgeted $2-3 million for renovations; due to IHG standards, they are looking at a budget overrun of $3-4 million; they are completing west wing work and addressing life/safety issues, which led to unexpected expenses. Due to the age of the property, constant overages were encountered as work progressed. An alternative solution is considering a second tier brand. The Hampton Inn was downgraded to a Best Western; that generally is a loss of 30-40% of revenue because the brand equity isn’t there. The Willowbrook facility lost its flag and lost 40% of its business. Pearlshire paid $4.5-5 million for the property. If they went down the second tier route, they would spend 50% less; it makes sense for them.

The upside is requesting 50% of the bed tax which will help them in completing the $6-7 million renovation. They know there was a plan in place with the Lennochs; they would like to create a similar type plan. He showed projections for room occupancy revealing an upswing in revenues, which will benefit the City as well. After extensive renovation they expect the market to respond by a15-20% increase in revenue – just by staying competitive in the market. That is the challenge they face on a daily basis. They will attract more corporate business from surrounding markets and Midway Airport demand. They estimate that bed tax would go up to between $290-315,000. The banquet /catering business (William Tell Restaurant) has been very successful. Most complaints are about the outdated look – they have lost business as a result. Renovation will address that concern.

Ald. Jasinski asked whether the west wing was included in the presentation. It was not – Mr. Zaid only discussed the operational wing, which is 174 rooms and the William Tell Banquet facility and the restaurant. The west wing renovation is a totally separate project. They are also seeking a national brand alternative (like Buffalo Wild Wings) to take over Club 66. Research indicates that corporate customers would prefer that type of service.

Chairman McDermott thanked him for the presentation; the committee will take this matter under advisement.

Public Comment

Al Arneson, 121 Constance Lane, seeks an update on the Indian Victory motorcycle store. The Mayor spoke to Gina Fisher who stated that the lease was not executed due to construction at the intersection of LaGrange Road.¹

Consideration of a TIF Incentive for the Renovation of the Continental Honda Dealership located at 5901 S. LaGrange Road.

Ms. Paul distributed a document to the committee. Estimated project costs are $1.9 million; some are TIF eligible, some are not. TIF eligible costs are $1,399,000; estimated TIF increment to be generated over the remaining life of the TIF is $1.4 million. Staff recommendation is to share in the cost of renovations; no sales tax rebate is recommended due to no new car lines brought in. This agreement is similar to Phelan’s deal – share in 50% of project cost, verified by paid invoices and the City would rebate 50% of cost from TIF revenue, which would take approximately 15 years to pay back the costs. That is the recommendation: no up front costs, no tax sharing; strictly tax increment financing. TIF is there to promote this type of development; they have never received an incentive from the City. Ald. McDermott thanked Ms. Paul for her efforts.

1These minutes were approved on 2/25/15 with the following correction.Ald. Von Drasek stated that the Mayor’s response to Mr. Arneson was omitted from the Public Comment portion on page 2, re: Indian Victory Motorcycles. Ald. Von Drasek stated that the Mayor stated that he had a discussion with Gina Fisher who stated that Autobarn did not execute the lease due to uncertainty about IDOT construction at LaGrange Road. Ald. Von Drasek stated for the record, Gina Fisher stated that that conversation did not occur. The Mayor stated it did occur. Ald. Von Drasek stated that Carm Scarpace was present and the conversation was not on that topic. Both parties asked to have those comments included in the minutes.

Consideration of Ordinance Approving a First Amendment to the RDA with Countryside Partners, LLC, for Lot 3B.

Ms. Paul stated that the developer has finalized the lease with Chick-fil-A, but Chick-fil-A will not execute the lease before they get through the PC/ZBA meeting, which is next Tuesday. The agreement is hereby extended for 45 days; all else remains the same.

Recess to Executive Session

There being no further business to discuss, Ald. Jasinski moved to recess to Executive Session under Section 21(c) and Section 2(c)5 of the Open Meetings Act for the purpose of discussing the sale/purchase of real estate and to review Executive Session Minutes from 5-5-14, 10-8-14 and 11-12-14, seconded by Ald. Pondelicek and carried by unanimous voice vote.

Chairman McDermott declared the meeting recessed at 7:00 p.m.

* * *

The Regular meeting returned to Open Session with the same members present at 7:29

p.m.

Ald Jasinski moved to approve the Executive Session Minutes of May 5, 2014, October 8, 2014 and November 12, 2014, seconded by Ald. Pondelicek and carried by voice vote.

Adjournment

There being no further business to discuss, Ald. Jasinski moved to adjourn the meeting, seconded by Ald. Pondelicek and carried by unanimous voice vote.

Chairman McDermott declared the meeting adjourned at 7:30 p.m.

Ald. Sean McDermott, Chairman

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