Show me the money

Mayor says only half of economic incentive total offered to Wyndham by previous mayor is available

The way Springfield Mayor Misty Buscher figures it, economic incentives available to the owner of the Wyndham City Centre hotel for a proposed $58 million renovation total about half of what the previous mayor estimated.

Rather than the $18.75 million in tax-related incentives described by former mayor Jim Langfelder, Buscher said the assistance package of property, hotel-motel and sales taxes instead would add up to $9 million or $10 million.

"The incentives that were offered before just simply are not there financially," Buscher told Illinois Times after a City Council meeting in June.

The reason for the math discrepancy is unclear. It's also unclear whether the reduced number is the reason Wyndham owner Al Rajabi and his associates at Tower Capital Group – also referred to as Sky Capital – haven't returned to the city with a reaction or counteroffer.

Rajabi and his firm, based in Texas, haven't replied to Illinois Times' requests for comment.

But the 30-story, 50-year-old downtown hotel at 700 E. Adams St. remains open. And Buscher said the Wyndham project will remain on the council's agenda, as it has since she was sworn in in early May, until Rajabi replies.

The council's lack of support for zoning approval that would allow Rajabi and others to remodel and convert the 369-room hotel into a hotel and market-rate apartment complex was a source of frustration for Langfelder, who advocated for more apartment options downtown and at the Wyndham.

When Langfelder was mayor, the council turned down three previous options that would have required approval because the options would have exceeded the current limit of 200 apartments at the site.

The council's resistance prompted New York-based real-estate developer David Mitchell of Good Homes to withdraw his offer to buy the Wyndham from Rajabi for redevelopment.

Council members expressed concerns that the options wouldn't preserve enough hotel rooms at the Wyndham to support future commitments for downtown conventions that want convenient hotel space.

The latest plan for the project involved an incentive package put together by Langfelder's administration in which a special tax-increment financing district would be carved out of the existing downtown TIF district and only include the Wyndham.

Under that scenario, Rajabi would convert the hotel into a 250-room Delta by Marriott hotel. The targeted TIF district would generate property tax proceeds over a 23-year period to offset some of the renovation costs by drawing from the incremental increase in property tax paid by the hotel.

The incentives also would include the city's pledge to give back some of the hotel-motel taxes and city sales taxes collected at the property over the 23 years.

Council members said before the mayoral election – in which Buscher, the former city treasurer, defeated Langfelder in his attempt for a third four-year term – that the council would wait to vote on the plan until shortly after the election.

After Buscher was sworn in as mayor, her administration's vetting of Langfelder's numbers led to a delay in voting when Rajabi failed to respond, Buscher said.

Rajabi "would have a decision to make if he was going to rehabilitate the hotel with the monies that are available," Buscher said. "He owns the hotel. It's operating right now. He's not threatened anything."

Rajabi told the council April 9 that he was upset about the delays and that the city didn't appreciate him as a downtown employer and his dedication to keep the Wyndham open during the worst parts of the COVID-19 pandemic.

Illinois Times requested, but hasn't received, a breakdown of dollar amounts for the incentives from the Buscher administration.

Langfelder said a breakdown of his estimates wasn't released to the public when he was mayor but was discussed in negotiations with Rajabi. Langfelder said July 11 that he didn't recall the breakdown and didn't have a copy of it.

Ryan McCrady, president and chief executive officer of the Springfield Sangamon Growth Alliance, who has been helping city officials evaluate Rajabi's proposed renovations, said he never received a breakdown of incentives from Langfelder.

McCrady said it appears, from his review of Buscher's numbers, that $10 million in economic incentives would be available over a 23-year period. Of that total, $7.06 million would come from the targeted TIF district, $2 million would come from hotel-motel tax rebates, and $1 million would come from sales-tax rebates.

McCrady said it appears it would cost Rajabi $70,000 to $80,000 per room for renovations and that Rajabi's cost estimates, which also include energy-efficiency and other infrastructure upgrades, are reasonable.

The top floor would be developed as a "sky deck" for tourists, as part of Rajabi's plan.

The hotel would continue to operate, hosting travelers and convention attendees, during the renovations, McCrady said.

Council member Lakeisha Purchase, who represents Ward 5, where the hotel is located, said she believes Rajabi remains interested in renovating the building. But Rajabi's demeanor, which has been less than respectful, "doesn't sit well" among council members, she said.

To secure council support, Purchase said Rajabi "would have to come to us with a great plan to execute this project ... from start to finish."

Here's a synopsis of former mayor Jim Langfelder's proposal for the city to work with the owner of the Wyndham City Centre hotel on a $58 million renovation of the property to update hotel rooms and offer market-rate apartments.

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