Champaign moved one step closer toward the creation of a downtown hotel and refilling a major gap in the city landscape.

During Tuesday’s city council meeting, the city council gave direction to staff on developing a development agreement with the property owner. The city plans to give $3 million in incentives for the project.

The hotel would be on the vacant lot on Church and Neil streets. The Metropolitan Building once stood there, until a 2008 fire destroyed it during a renovation project. The site has remained empty since.

The proposed project calls for a nine-story, 150-room hotel and parking structure for hotel guests. According to the project proposal, construction would begin in June 2012 with an anticipated completion date of July the following year.

Hans Grotelueschen, the owner of the lot, was in attendance and gave a basic overview of what the next steps are. The multimillion dollar project awaits Grotelueschen’s business, YG Financial Group PC, to relocate from a lot immediately west of Neil and Church needed for the project.

He said he hopes this remains a local project, despite the potential for out-of-town developers.

“Anybody from out-of-town or businesses we choose from out of town have to do superior work,” Grotelueschen said.

The hotel is a continued effort from the city in implementing the Downtown Plan, a measure passed in 2006 that established goals for infill development, increase in commercial and retail uses and improving downtown Champaign in order to attract more visitors.

There was some skepticism from the public that the city, already dealing with a strained budget, was using taxpayer money to help out the developers. However, councilman at-large Tom Bruno said the incentive situation is not as simple as it sounds.

“The city is not going to be writing checks,” Bruno said. “We simply turn back around taxes we would never get if there was no project.”

One of the main points made throughout the discussion was that the Neil and Church lot needs to be filled. Craig Rost, deputy city manager for development, said one of the most popular questions he hears from residents is, “When are we going to occupy the big hole down the corner?”

Champaign Mayor Don Gerard further added a downtown hotel would help facilitate lodging in a city that continues to draw high-profile events. In addition, he said a hotel in the heart of the city will help boost restaurants, bars and shops, among other businesses.

“This is not like staying at a motel by the interstate,” Gerard said. “This is having people stay in a micro-urban setting.”