A new hotel and event center in downtown Racine will cost approximately $55 million, about $15 million more than originally anticipated.
The proposed financial model to fund the development was presented Tuesday by Chicago-based SB Friedman Development Advisors during a joint Redevelopment Authority and Common Council Committee of the Whole meeting.
Hammes Company, owner’s representative for the city, presented the proposed operations model.
The project includes building a 208,000-square-foot building that would include a three-story, 3,500-seat event center and a seven-story, 150-room adjoining hotel located at 322 Lake Ave.
The project cost could reach $61.2 million if 12 additional suites are added to the event center, and a high equipment bay is built to allow for large machinery and boats onto the center floor.
The development team is recommending paying for the project by bonding $39.7 million over 16 years, making annual payments of $2.5 million. In year 17, the unpaid principal would be refinanced for another 14 years with the annual payment dropping to $1.8 million.
The city would increase its property tax levy by $365,000 per year, requiring an increase in the property tax rate. For the owner of a typical home valued and assessed at $100,000, the resulting yearly tax increase would amount to $11.78 per year.
The project would also be paid for using hotel property taxes, hotel occupancy taxes, cell tower lease, building naming rights lease, anchor tenant capital contributions, intergovernmental funds and ticket surcharges.
The city has one confirmed tenant, a United States Hockey League team, which will sign a letter of intent when phase two of the project is approved.
The first phase of the project has been approved and will be paid for with the $600,000 budget approved by the city in March. Phase two would be included in Racine’s 2018 budget.
City officials believe there is potential to host another 100 to 175 events per year at the event center, which could include sporting events, ice-related events, concerts and special events including proms and weddings.
The city has contacted 30 hotel developers about the project and 10 have signed non-disclosure agreements, which is a first step in participating in a hotel selection process.
“As of June 27, 2017, the project team is seeking approval to finalize Phase I by recruiting and engaging with a hotelier and finalizing project financial partners,” said a spokesperson for the city. “We anticipate needing until mid- November to finalize those tasks.”
In December, the Redevelopment Authority and Common Council will be asked to approve funding to move forward with phase two, which includes developing schematic drawings and designs and working toward a guaranteed price for the project.
The Common Council and redevelopment authority are hoping to vote on the final design and financing package for the project in May 2018.
If the project stays on schedule, construction will be completed in 2020.
