Oak Creek extends hotel developer's stay - for now
City officials express concerns, but still wants project to succeed
Oak Creek - The Common Council on Tuesday voted 4-2 to give the developer of a proposed Four Points Sheraton Hotel and parking structure until Sept. 4 to satisfy the city's need to protect its investment of a $4.5 million tax incremental financing district that supports the project.
The vote came after an hourlong debate and a previous 45-day reprieve sanctioned by the council in June.
Voting against the extra time proposed by Alderman Dan Jakubczyk were Aldermen Tim Michalski and Michael Toman.
Before the vote, city staff including Administrator Gerald Peterson, Director of Community Development Doug Seymour and Finance Director Mark Wyss recommended that the city withdraw its TIF commitment.
Important risk factor
In a written summary, they said the lack of guaranteed safeguards for the $4.5 million was "an unreasonable risk for public dollars."
Each alderman expressed concern over the lack of protection for the city's investment. Several also commented that the hotel project at the southeast corner of Howell and College Avenues would be a positive development.
The city has worked for more than five years with developer Greg Trapani of the Syner G Investment Group. The $27.2 million project includes a 107-room hotel and 1,800-space parking structure.
In May of 2011, the Common Council approved the plan that also increased the city's original financial commitment of $1.5 million.
"The way this financing is structured the primary lender and others have priority position currently over the city," Peterson said. "So if there is a default, we have no assurances."
He also said the city is satisfied with the project's basic financing
"There is no doubt that we have financing in place. What we are saying is that there are no guarantees that the city's money is protected," Peterson said.
Wants everyone to win
Trapani said that legal teams connected with his company and the city will have to iron out the guarantee.
"We understand," Trapani told the council Tuesday. "We want this to be a win-win. I've been here for five years. I do think we have a quality project that we have all worked on. We're looking to continue."
City officials have said they want the project to succeed because it will generate more development in a prime area near Mitchell International Airport.
Trapani has indicated that a successful construction of the hotel and parking structure would be the first phase similar development.
Creation of TIF districts provide financing that allows a developer to receive money from a community, using new tax dollars generated by the development itself, and pay it back over a period of time.
The city began using TIF districts 25 years ago.
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