Roughly 18 months after Racine officials scrapped plans for a $55 million hotel and event center, the city is eyeing a new pair of projects that are expected to help revitalize an “undervalued and underappreciated” downtown.
Between the two developments, two underused parcels on Racine’s downtown lakefront would see new apartments, two hotels and an expanded convention center.
The projects were announced one month apart from each other earlier this summer. The first, from Madison-based Hovde Properties, would consist of 190 residential units and a 100-room hotel at 233 Lake Ave. The second project comes from Dallas-based Gatehouse Capital, and would expand Racine’s Festival Hall convention center by more than 10,000 square feet and add a new hotel with at least 173 rooms at the corner of Festival Park Drive and Sam Johnson Parkway.
Racine Mayor Cory Mason said these projects could be a key in efforts to “rebuild” the city in that they would drive more people toward its downtown and lakefront.
“I think Racine’s downtown is one of the most undervalued and underappreciated between Milwaukee and Chicago right on Lake Michigan,” he said.
Together, the projects would essentially replace a proposed 208,000-square-foot development that included a 3,500-seat arena and a 150-room adjoining hotel. That project never moved forward. The Hovde project would be built on the same site as the canceled project, while the proposal from Gatehouse accomplishes Racine’s desire to expand its downtown convention space in order to attract more events.
In 2017, Mason vetoed a city funding proposal on the arena and hotel project. Explaining his veto, Mason noted he had a number of concerns with the proposal, including that it relied too heavily on city incentives.
“It cost too much money, the public really opposed the idea and arenas really have a history of mixed success across the country,” he said.
David-Elias Rachie, principal of Gatehouse in the firm’s Minneapolis office, said Gatehouse pitched an identical proposal when the city had originally sought developers interested in building an arena and hotel.
He said his firm proposed this project instead because it believed it did not make much sense to combine a hotel with an arena.
What’s more, the existing convention space was essentially built backward, Rachie said. Racine’s Festival Hall has its expansive great hall, but does not have much in the way of breakout rooms, ballrooms and nearby hotel rooms.
“Not being used is not a strong enough statement,” Rachie said of the convention space. “It’s such a fantastic facility, but they built phase two of the convention center before they built phase one.”
Mason pointed out that even with the nearly 300 additional hotel rooms between the two developments, the city would need to add even more to meet the demand they’re looking to create. The Gatehouse project would allow as many as 2,000 people at once.
“It’s a great problem to have to overcome,” Mason said.
If both move forward, the projects would have been made possible through significant involvement from various levels of government.
The former industrial site where the Hovde development would go up was sold to the Racine Redevelopment Authority by We Energies in 2015. Since then, the city has spent $500,000 to clean up the site and prepare it for redevelopment, the mayor’s office said. The developer has exclusive rights to the property through April of next year, during which time it plans to conduct due diligence such as geotechnical investigations and engineering studies.
The Gatehouse project would similarly be constructed on a city-owned lakefront site now used as a parking lot. However, it would need a change in state law in order to move forward, the mayor’s office said. This is because the site is governed by a lakebed grant, which restricts what can be built there.
The state legislation, which has bipartisan sponsorship, would allow the development on this site with a number of conditions, such as that the land remain publicly owned and that the city use at least 20% of the property taxes collected from the development to make improvements to the land that increase public lakefront access.
The first floor of the hotel would be owned by the city, and the city would lease the air space rights above that floor to Gatehouse.
Assuming that legislation passes and all local approvals are granted on the project, construction is expected to begin in spring 2020 and take about 18 months, Gatehouse said.