The Yorkville City Council unanimously approved a development agreement Tuesday evening for a hotel planned for the city’s north side that includes a commitment of TIF district proceeds.
Sonny Shah of Kendall Hospitality LLC is proposing a four-story, 90-room, 54,000-square-foot hotel with an adjoining banquet and conference center in the Kendall Crossing development just north of the NCG Cinemas movie theater.
The area, which was the former site of the Countryside Center shopping center, has been in a tax increment financing, or TIF, district since February 2005. The TIF fund has a negative balance of $549,946, according to the city’s most recent annual TIF report for the property.
As part of the development agreement, the city has agreed to reimburse the hotel developer $700,000 in TIF funds when the hotel opens. The TIF funds will go toward the developer’s cost of acquisition of the property, according to a memo from City Administrator Bart Olson to aldermen.
Olson said that city staff would “conservatively expect that the hotel and banquet facility” to generate approximately $1.5 million back into the TIF fund over the remaining life of the TIF district.
“That figure would go to offset the $700,000 expenditure associated with the development agreement for the hotel and the ongoing TIF negative fund balance of the Countryside TIF fund,” Olson wrote.
To acquire the $700,000, the city could loan itself the money or seek a short-term loan, Olson wrote.
“Depending on the outcome of (fiscal year 2017 and fiscal year 2018) there could be a scenario where the city would be able to internally loan the funds for the payment to the TIF fund,” Olson wrote. “If the city does not feel that internal loans are acceptable at that time, the city could either issue a short term bond or seek a short term loan from a local financial institution (similar to the downtown bank building purchase). Any loan would have to match the existing term of the TIF, which goes through 2028.”
As part of the developer agreement, Kendall Hospitality LLC agrees to acquire the property before July 1, begin construction before the end of this year, and complete the project by the end of 2018.
Shah has said he aims to complete the project ideally by Memorial Day 2018.
After the meeting, Lynn Dubajic, the city’s economic development consultant, said Shah will be in the process of getting the brand of the hotel approved this month and then submit construction plans to the city.