Wyndham’s future up in the air

Renovation plan fails to pass City Council, owner says he will convert it to low-income housing

Wyndham’s future up in the air
The City Council rejected a plan to convert most of the Wyndham City Centre's 400-plus hotel rooms into market-rate apartments
It is uncertain whether or how long the downtown Wyndham City Centre will remain a hotel after the Springfield City Council rejected a proposed zoning variance July 19 to convert most of the 30-story building’s 400-plus hotel rooms into market-rate apartments.

The building’s current owner, Al Rajabi of San Antonio, Texas, and David Mitchell, spokesman for the proposed new owner and developer, New York-based GoodHomes, left City Hall almost immediately after the 5-5 vote.

As the men stood in an elevator to leave, a visibly upset Rajabi would only say to reporters, “That’s the city’s leadership.” He and Mitchell declined further comment.

Rajabi told the council during more than 90 minutes of debate on the plan that the panel’s failure to pave the way for GoodHomes’ proposed $25 million in renovations to the 49-year-old building would leave him no choice but to use current zoning to renovate the structure for low-income, government-subsidized housing.

Existing zoning allows for up to 200 dwelling units. Mitchell said GoodHomes needed the zoning variance to renovate the building for 320 studio, one-bedroom and two-bedroom apartments and charge rents of $700 to $1,200 per month.

Under GoodHomes’ plan, and as a contingency required if the zoning plan had passed, at least 80 rooms would be renovated and operated as a hotel to support the city’s convention business. Convention space inside the building would be retained and updated as well.

A smaller number of apartments than 320 wouldn’t generate enough revenue to make the renovations worthwhile, Mitchell said. However, several council members said they doubted GoodHomes’ plans for expanding apartment living downtown would generate enough interest.

Voting for the zoning variance were council members Shawn Gregory of Ward 2; Roy Williams Jr. of Ward 3; Lakeisha Purchase of Ward 5 – the ward in which the hotel sits; Joe McMenamin of Ward 7; and Erin Conley of Ward 8.

Voting “no” were Chuck Redpath of Ward 1; John Fulgenzi of Ward 4; Kristin DiCenso of Ward 6; Jim Donelan of Ward 9; and Ralph Hanauer of Ward 10.

The proposal needed a supermajority of seven “yes” votes for approval because the project failed to receive enough votes from the Springfield Planning and Zoning Commission, an advisory group, to result in a positive recommendation to the council.

Several City Council members said they were concerned when Scott Dahl, director of the Springfield Convention and Visitors Bureau, told aldermen that downsizing the number of hotel rooms available at the Wyndham from more than 400 to 80 would make it harder for Springfield to accommodate peaks in the number of convention visitors downtown over the next two years. However, Dahl took no stance on GoodHomes’ zoning proposal.

Rajabi said failing to accept the GoodHomes plan to buy and renovate the hotel – and include a new amenity for tourists, an observation deck on the top floor – would result in him closing the hotel, closing down the Starbucks he owns inside the building and renovating the building for the only other apartment option supported by his lender – up to 200 low-income apartments in an arrangement with the federal government that would be locked in for decades.

Rajabi didn’t say when those changes might take place. He said he wasn’t willing to give up the hotel and allow it to revert to his lender so the bank could continue to operate it as a hotel temporarily and potentially sell it to a future hotel operator.

Ward 1 Ald. Chuck Redpath said Rajabi’s argument to the council sounded like a threat.

Rajabi responded, “I apologize if it comes across as a threat,” noting he had limited options in the current climate for the hospitality industry.

Continuing to operate the Wyndham as a full-service hotel wouldn’t work financially because of a downturn in occupancy related to the COVID-19 pandemic, he said.

The Wyndham fell on hard times and was purchased by Rajabi’s company, Tower Capital Group, in 2019 for $7.4 million after a foreclosure proceeding.

Rajabi said Tower was 70% finished with a design to renovate the hotel and convert it into a Delta by Marriott hotel when COVID-19 hit in early 2020. Average occupancy at the hotel plummeted from 42.6% before the pandemic to 22% currently, Rajabi said.

He said he hasn’t been able to find a bank or other lender willing to finance renovation of a “big box” hotel like the Wyndham in the current climate for the hospitality industry.

Mitchell told the council before the vote, “Our goal is to be your partner in revitalizing downtown Springfield.”

He said the entire project would cost GoodHomes about $40 million, which includes purchase of the property, design costs, environmental studies and other non-construction expenses. The company might pursue tax-increment financing funding from the city to help offset some expenses, he said.

DiCenso said she doubted Mitchell’s estimate that there were 54,000 workers employed within a one-mile radius of the Wyndham, and his claim that plenty of the workers would jump at the chance to live downtown in apartments with 350 to 700 square feet and pay the rents Mitchell would charge for the ability to walk to work.

“This isn’t Chicago,” she said. “We’re a different demographic. We need the hotel rooms, but this is a tough one for us. … We’re a corn dog and doughnut type of town. Visitors come here because we’re affordable.”

Williams said he supported the zoning proposal because retaining 80 hotel rooms would be better than losing all hotel rooms at the site.

About The Author

Dean Olsen

Dean Olsen is a senior staff writer for Illinois Times. He can be reached at:
dolsen@illinoistimes.com, 217-679-7810 or @DeanOlsenIT.

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