A hotel developer said he might have to pull the plug on building a Hilton hotel on Higgins Road if the project can’t get certain economic incentives from the city of Park Ridge.
Minhaz Lakhani, a representative of MDSA Properties LLC, the development group that received approval from the city council to build a four-story Hilton Hotel at 1440 Higgins Road, Park Ridge, made his case to the City Council at its Monday meeting for MDSA to receive $7.5 million in economic incentives from the city. City staff and aldermen, however, were steadfast in their refusal of the proposal.
Lakhani said he came to the City Council at a “critical decision point” on whether or not the development group will continue with the Tru by Hilton Hotel project in Park Ridge and that $3.5 million has already been invested in the project. He proposed that the city approve a Class 7B designation for the project, under which, according to the Cook County Assessor’s website, a 12-year temporary property tax reduction could be available. If the city approves the property as a Class 7b property, the property’s tax assessment would be reduced by 60% for the first 10 years, 40% in the 11th year, and 20% in the 12th year.
Lakhani’s proposal also included an allowance for the city to create a 9% hotel tax, but for the hotel to be reimbursed that amount for seven years after the hotel opens — which means the city would not receive that revenue for seven years. The third request is for the city to waive $75,000 in construction permit fees.
In return, the city would benefit from (eventual) hotel tax revenue, an opportunity to widen Peterson Avenue, storm water detention being brought up to code, new traffic and site fencing, 25 to 30 jobs at the hotel, and a $25,000 contribution to the city’s monument sign fund, Lakhani said.
Lakhani previously presented the same proposal to the City Council in July, but at that time he offered six feet of right-of-way for Peterson Avenue to be widened. His second attempt at a deal included giving up 16 feet of right-of-way, but the rest of the deal remained the same.
Park Ridge’s Public Works Director Sarah Mitchell said the additional 10 feet would not be large enough for the creation of a parkway or sidewalk along Peterson Avenue, and that the city would need an additional 33 feet to add those to the street.
City Manager Joe Gilmore said Lakhani and the developer should seriously reduce some of their asks.
“The message for the last month has been very clear. This is too much of an ask,” Gilmore said.
Lakhani said the project needed those economic incentives because the work site had high costs for development. The challenges for the project would be burying utility poles, working with the Illinois Department of Transportation because Higgins Road is under IDOT jurisdiction, working with the city of Chicago for a sewer connection and and working on contaminated land.
“I discouraged this meeting tonight, but you know that,” Gilmore continued. “I didn’t think that any progress had been made. In fact, you could argue it went backwards. So, I really didn’t think this was a good idea tonight and I made that abundantly clear. There’s no way that was miscommunicated.”
“If (the economic incentives) can’t get any better, then maybe we don’t have anything here… I don’t know how else to explain it. It’s black and white in my mind,” Gilmore said.
Mayor Marty Maloney said the city has supported the hotel project by and large because creating a hotel instead of a residential building in that area would create new revenue for the city without burdening the school districts in the area with new students. “That’s my word, not the school districts’. They love all their students, but all their students cost them money,” Maloney said.
“I trust that (city staff and administration) will be as creative and aggressive as they can be to help find something that works for you guys, but that they’re comfortable with,” Maloney said. “My understanding is we’re not there yet.”
Maloney also said he was not in favor of the city implementing hotel tax only to wait seven years to see revenue from it. “That’s a long time. It’s a long time for anybody who is sitting up here (in city council chambers), I’ll tell you that.”
The City Council did not take any official measures to approve or reject the deal, but when asked for consensus, aldermen individually said they were supportive of a hotel being built at the Higgins Road site, but that the economic incentives requested were too much.
The City Council had previously approved plans for a hotel and $1.6 million in tax rebates for a hotel operator in 2019, but plans for it were scrapped by October 2020, partly because of the COVID-19 pandemic.
“If we can get to the right place, like we did before, you’ll see that support (of the hotel) here and it’ll be a win,” Maloney said.