A revised incentive package now worth $5 million for the developer of a downtown Marriott SpringHill Suites was given preliminary approval Monday by the Joliet City Council Economic Development Committee.
The city increased the incentives by $1.8 million so the developer could meet the prevailing wage standard required to get the incentives.
The incentive package will go to the full city council for final approval.
The plan is to open the hotel by March 2021.
The total cost of the project along with the city incentives went up since the committee two weeks ago tabled a vote to give the developer time to work out an agreement with building trades union. The unions contended the project would not meet prevailing wage standards.
Estimated to cost $15.9 million then, the city had planned to provide $3.2 million in incentives.
The city now is providing $5 million, mostly in tax breaks, to offset a project now estimated to cost $18.7 million.
Joliet Economic Development Specialist Derek Conley said the city incentives are needed to plug a gap between the $13.9 appraised value of the project and what it will cost.
Nearly $4.4 million of the incentives will come from new taxes generated by the hotel and paid back to the developer to offset costs. Property taxes will be rebated through the downtown Tax Increment Financing program, and all hotel taxes will be rebated in the first five years of business.
Another $450,000 will come from grants, and $173,000 will come from waivers on building permit fees.
The city expects over 20 years that tax rebates are in effect, it will also see $6.7 million in new tax revenue off the property because of the new use of what has been an idle building.
“That’s a huge increase,” Committee Chairman Larry Hug said.
City Center Hospitality is adding two floors to the old Barrett’s Hardware building, which has been empty for about 20 years, to create the hotel at 65 N. Ottawa St.
The hotel will include 82 rooms on six floors with a restaurant and 1,500 square feet of meeting space.
Developer Mike Patel said he expects to resume construction on the building in April.
Joliet has been trying to encourage downtown projects by providing incentives that cover costs developers otherwise could not finance through private lending because appraised values fall short of actual costs.
Conley said the incentives provided for the hotel project compare to the Barber Building redevelopment that converted the former office building on Chicago Street into apartments.