Development of new hotels, convention centers begins

By Erin Renzas

The northwest corner of the south Neil Street and Kirby Avenue intersection does not look as it did six months ago. What was once the Chancellor Hotel in Champaign is now only a shadow of its former self.

By mid-2006 this block will be transformed, through renovation and reconstruction, into a brand new Hilton Garden Inn, convention center and Homewood Suites, courtesy of local developers Paul Tatman and Steve Horve Sr. of Illini Hospitality, LLC.

The Chancellor Hotel and convention center, 1501 S. Neil St., saw a downfall in business in recent years, said Colleen Braun, Champaign’s assistant to the city manager for development.

The lack of reputable convention space led to a loss of $964,412 in economic impact, according to the letter of support for the project from the Convention and Visitors Bureau submitted along with the project proposal to the Champaign City Council in July. The loss came from cancellations of potential meetings for lack of available space. These cancellations included 12 groups with an average of 4,995 attendees and 1,601 room nights.

“It didn’t have a modern feel to it,” Braun said. “The quality and service was not always that good. People didn’t always have the greatest experience, and so the Convention and Visitors Bureau was not always able to market the property or use it as an attraction to the city.”

In direct competition with Springfield, Bloomington and Peoria for convention business, an estimated $2 million would be lost in economic impact without the convention center.

“A large convention, for example, of say, 400 people has a $68,000 impact on the community and economy and that is a lot of money,” said Allen Worley, interim executive director of the Champaign County Convention and Visitors Bureau. “On top of that, you have to multiply that out because most of these facilities will have 20 to 30 conventions a year. We are talking about a tremendous impact if this convention center is lost,”

The convention center boasts 24,000 square feet for 16 meeting rooms, 7,000 square feet of theatre style space, and 7,000 square feet of banquet style space.

“The bottom line though is that the degradation of the property because of a lack of proper maintenance over the years was beyond repair,” Worley said. “When you get that kind of property replaced with a clean modern high quality facility on that same property, we have to look at it as a significant upgrade.”

Chain corporations, such as the Hilton Hotel chain, help maximize a facility’s ability to bring in visitors, Worley said. Large chains already have implemented marketing and advertising as well as have reputation, which draws consumers to their brand name facilities.

“The Hilton brand name gives the development and community a sort of credibility,” Braun said. “It helps bring in groups who are used to brand-named, chained hotels, like the Hilton or the Marriott.”

Additionally, a Homewood Suites would be added at the north end of the property, facing Kirby Avenue, with the building running east and west. Homewood Suites is another branch of the Hilton name and is intended for extended stay visitors. The facility will have 98 rooms, a registration lobby, a lounge and a pool.

“Independent hotels are wonderful, but they don’t have that large chain recognition that comes along with having a Hilton or Holiday Inn,” Worley said. “All those kinds of things help when you are trying to market a property like that, and it will be an amazing asset to the new Champaign location.”

The final stage of the project would be a retail center on the corner of the lot. Developers are currently in negotiations with Walgreen’s drugstore, Tatman said.

“When you add that location to the Hawthorn Suites, which is half a block down State Street, the restaurants and the accessibility to University facilities, I think we will see superb improvement and create a sort of synergy in that corner area,” Worley said.

Champaign’s new Infill Redevelopment Incentive Policy encouraged the development, predicted by both Worley and Braun to bring consumers to the area. The policy, implemented in June, supports redevelopment that results in a major improvement in a property of city-wide significance and which is not likely to occur without city assistance.

According to the June 9 report to the city council from the city manager’s office, the incentive policy grants reimbursement of new or increased city revenues generated by a project, only if those revenues materialize. The incentive could include property, hotel-motel, sales, and/or food & beverage taxes for a specific number of years.

“This program is very low-risk for the city,” Braun said. “We are able to provide incentives, but if the project makes no money, we are not really financially invested.”

The Hilton Garden Inn and conference center are projected to receive a reimbursement of $817,177 from hotel-motel tax revenues, Tatman said. The renovated section of the development also is eligible for 100 percent property tax abatement from the City of Champaign, the Champaign Park District and Champaign County as a part of the Commercial Enterprise Zone program.

Infill redevelopment is an economic development approach that promotes redevelopment on property in existing metropolitan areas. Infill replaces underutilized or dilapidated facilities with new structures and business.

“One of the council’s goals is to maintain a high quality of life in our community and have balanced and sustainable growth,” Braun said. “Specifically looking at how to achieve those goals the council wanted to find ways to encourage infill redevelopment.”

Infill programs have become much more popular in the past decade and even more so since 2000, said John Fischer, assistant director for retail development with the Louisville Metro Authority, Louisville, Ky.

According to Fischer, infill is most prevalent in cities with a high-density population, where most of the land has already been developed and they are looking towards the center of the city to jump-start revitalization efforts.

“Infill redevelopment is only beginning to be used on a wide-scale,” Fischer said. “Infill can be applied to any metropolitan area, and I think that as cities continue to push for the redevelopment of downtown areas and this urban core, we’ll begin to see it used on an even larger scale.”

In 2003 Louisville, Ky., was one of the first cities to fully implement a program to encourage infill redevelopment, Fischer said. Chicago, he added, also was one of the first cities to embrace the approach.

“I think we should applaud the City of Champaign and their development staff who had the foresight to recognize that opportunity and encourage infill through the tax incentives that they have provided for the developers,” Worley said. “This is prime farmland – it’s valuable – and if we can use the land that is inside the current city jurisdiction and expand in that existing property that’s better for everyone.”