Third time isn't the charm

City council votes down Wyndham project again, citing concerns about losing hotel rooms

click to enlarge Third time isn't the charm
Dean Olsen
David Mitchell, a New-York based developer, addresses the Springfield City Council Oct. 18 about his proposed $40 million acquisition and renovation of Springfield’s Wyndham City Centre into 274 market-rate apartments and more than 100 hotel rooms.
New York-based real estate developer David Mitchell says he hasn’t closed the door on his proposed $40 million acquisition and renovation of Springfield’s Wyndham City Centre into 274 market-rate apartments and more than 100 hotel rooms.

But a 6-4 vote by the Springfield City Council on Oct. 18 to deny Mitchell’s GoodHomes company the required zoning variance for work on the 30-story hotel at 700 E. Adams St. was the third time the council said “no” this year to the latest version of the project.

“I love Springfield and would have loved to have done this project,” Mitchell said after the council’s more than three-hour debate and vote on the project. “We gave it our best shot.”

Council members voting to deny the zoning said they were concerned that a reduction in the 369 hotel rooms currently offered at the site – once called The Forum 30 and more recently carrying the Hilton brand – would devastate Springfield’s convention industry by dissuading groups used to booking hotel rooms across the street from the Bank of Springfield convention center.

Council members also said they doubted there would be a market for the relatively small housing units – 370- to 380-square-foot efficiency apartments – that would make up more than 80% of the units, in addition to one- and two-bedroom units up to 800 square feet. Mitchell disagreed, saying there’s a pent-up demand for market-rate housing downtown while existing complexes are more than 90% full. Units in the renovated Wyndham would rent for $700 to $1,200 per month.

Mitchell, Mayor Jim Langfelder and others on the council supporting the project said there are no other developers lined up to renovate the deteriorating Wyndham, which posts an occupancy level of only 27%. The hotel’s current owner, Al Rajabi of Texas-based Tower Capital Group, has said he can’t obtain financing to renovate the big-box hotel, a step that would boost occupancy, because of the COVID-19 pandemic’s lingering impact on the hospitality industry in Springfield and nationwide.

Langfelder, visibly frustrated after the council’s more than three-hour debate on the plan, said afterward that he now will try to work on other options with Mitchell and Rajabi.

It appears that the council’s rules would require an 18-month delay before any new zoning proposal could be considered. Langfelder said he wants to find out whether Rajabi or Mitchell would be willing to renovate the 49-year-old hotel – an iconic part of downtown Springfield – under existing zoning that would allow for up to 200 apartment units without council approval.

Mitchell said after the vote that his financial backers had based their commitments on operating about 275 apartments.

Council members who voted to deny the zoning were Chuck Redpath of Ward 1, Lakeisha Purchase of Ward 5, Kristin DiCenso of Ward 6, Erin Conley of Ward 8, Jim Donelan of Ward 9 and Ralph Hanauer of Ward 10. Voting in favor of the project were Shawn Gregory of Ward 2, Roy Williams Jr. of Ward 3, Joe McMenamin of Ward 7 and John Fulgenzi of Ward 4.

Purchase, in whose ward the Wyndham sits, previously voted for the project on Aug. 3, and Fulgenzi voted against it.

Purchase said after the meeting that she changed her vote because of widespread opposition to the project that constituents voiced to her after the Aug. 3 vote. She said constituents resented what they perceived to be preferential treatment of the Wyndham project proposal from city officials.

Mitchell presented an economic impact study he commissioned from the Walker & Dunlop firm in Chicago that showed consumer spending at a fully renovated Wyndham building – with $25 million in improvements in apartments and hotel rooms and the addition of a public food court and “world class” observation deck on the 30th floor of Springfield’s tallest hotel – would vastly exceed current spending associated with the beleaguered property.

Consumer spending at the current hotel was estimated in the study at $2.46 million per year, versus an estimated $9.5 million per year at the fully renovated property, an almost fourfold increase.

McMenamin noted that Rajabi has said he doesn’t want to sell the hotel to another operator and would obtain government financing to renovate the building for 200 low-income apartments if the council rejected the GoodHomes proposal.

Andrew Proctor, a former Springfield alderman who now lives in the Chicago area and is working as a consultant for Rajabi, said Rajabi recently paid a $1.5 million debt to City Water, Light and Power accumulated during the pandemic because of cash-flow problems.

Mike Coffey Jr., chair of the Springfield Metropolitan Exposition and Auditorium Authority Board that oversees the BOS Center, said he and the rest of his board unanimously oppose the rezoning plan. They don’t want to see hotel rooms leave downtown Springfield as the economy recovers and sport-related tourism is poised to rise with the future opening of Scheels Sports Park at Legacy Pointe, he said.

Coffey said one option for the council would be to wait until Rajabi sells to another buyer or allows lenders to foreclose on the Wyndham so lenders could look for a new buyer.

McMenamin said a downsized number of hotel rooms at the Wyndham would be better than the potential of zero hotels rooms there. “We all want to limit the impact on conventions,” he said. “I think we should aim for a compromise to do what’s best.”

Williams added, “We have a guy who wants to invest. That’s still better than going to zero.”

Mitchell’s latest offer would preserve 125 hotel rooms for convention-related and other clients. That’s an increase from the 100 hotel rooms he proposed in August.

Scott Dahl, director of the Springfield Convention and Visitors Bureau, said a reduction at the Wyndham to 125 rooms still could affect 17 conventions booked from 2023 through 2025 if planners from those organizations aren’t willing to house participants at other locations downtown or elsewhere in the community. A total of 65 conventions would be affected if no hotel rooms were available at the Wyndham, he said.

The CVB’s reputation would be harmed if the council voted for a project that would remove hotel rooms, Dahl said, while the bureau wouldn’t be blamed if Rajabi decided to close the hotel on his own.

In voting down the zoning, the council also opted not to consider an option floated by Langfelder at the end of the meeting. The mayor’s suggested amendment would increase the number of hotel rooms reserved at the property to 150, reduce the number of efficiency apartments and call for the zoning change to be rescinded if GoodHomes didn’t complete the project.

Dean Olsen

Dean Olsen is a senior staff writer for Illinois Times. He can be reached at:
[email protected], 217-679-7810 or @DeanOlsenIT.

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