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The Racine Common Council and Racine Redevelopment Authority on Monday got a first look at a three-story event/arena and a seven-story hotel, but not a plan on how to pay for it.

That discussion comes next week. Administrators wanted the board to see renderings of the buildings. They also wanted them to understand the environmental issues, traffic patterns and parking needs around the site, according to city administrators.  

The total cost of the buildings is estimated at $43 to $49 million. However, the project hinges on having a hotelier buy and run the hotel from the city, which will offset the cost of the project.

Amy Connolly, development director for the city, said the city does not have a hotelier at this time, but they are just finishing a marketing study and they expect putting out the proposals next week.

“We think we have a very competitive proposal that will be something a hotelier will be very excited about because they would be able to build what is — in essence — a box and pay for the box,” she said. “The don’t have to pay for parking. They don’t have to pay for foundations. They just have to pay for a box.”

The city will build the hotel and sell that part of the building to a hotelier.

“We’re going to build it for them because it’s an integrated building, but we’re not going to pay for it,” Connolly said.

The tax increment for the hotel will then help pay for the bonds, which will offset the cost of the event center.

“But we’re building this for a hotel because it helps generate room nights, traffic and helps them book up their rooms,” she said. “So the reason why we’re doing the events center is so that we can have a hotel that is successful in the downtown.”

The hotel and event center project comes with about 300 to 350 construction jobs for about 12 to 18 months, 100 full-time hotel jobs, and 130 to 150 full-time jobs to event center. Staff also expect $7 million in new spending and 50,000 new visitors annually.

The 150-room hotel will feature rooms looking out toward Main Street and Lake Michigan, a 5,400 square-foot restaurant and fitness room.

“That’s not counting indirect and induced jobs,” Connolly said. “Jobs, tourism and quality of life — those are the whys… why are we doing this.”

Land Contamination

Last owned by We Energies, the 3.5-acre property is contaminated with benzene and naphthalene. According to the EPA, naphthalene is a possible human carcinogen and benzene is a known human carcinogen.

Bill Scott, an attorney that specializes in environmental law and licensed professional geologist for Mallery & Zimmerman, explained that the contamination has been contained in a cement monolith, which acts as a cap for the contamination. Several groundwater monitors have also been placed on the site. Even though We Energies no longer owns the property, several covenant restrictions require the city to gain approval from We Energies to develop the property because they are still responsible for the contamination. The building project calls for replacing the cap with a better cap.

Alderman Sandy Weidner questioned why We Energies still had a role in the development.

“It’s We Energies responsibility to take care of the groundwater, unless we exacerbate the problem,” Scott said.

The city intends to ask We Energies to revise those restrictive covenants, Scott said.

“As we bring an actual proposal forward, we would modify those agreements to remain protective of the environment, but allow the RDA a little less cumbersome process of redevelopment.”

Those covenants also require the DNR to approve the development once a full concept has been finalized.

Concerns Raised Over Lack of Financial Information

Another area of concern centered around the lack of financial information and what to tell the public with regards to cost.

“How do you explain to them that there is revenue coming in generated by the events being held there?” Asked Alderman DeHahn. “I think if we can cross that bridge, we can convince a few of them. Is there an answer for that?”

Connolly assured DeHahn that staff plan to outline the financial model at the next meeting on Tuesday.

Alderman Q.A. Shakoor also questioned why the financial cost was “to be determined” and wondered if the first phase, which is costing the Common Council $600,000, would carry them through to December when they have to make a final decision on the project.

“Are we spending more money along the way?” He asked.

City Administrator James Palenick explained that staff only had two hours to explain the project to the Common Council.

“We decided to focus on design, programming and those issues,” he said. “But we’re going to talk about all of those issues next week. No we do not expect you to spend any more than the $600,000 before you have a complete comfort level… that you want to move forward with any additional expenditures or to continue in any possible way.”

Dickert: Time is of the Essence on Hotel and Event Center

Racine isn’t the only community looking at a hotel and convention center.

Oak Creek is doing a study on a convention center and hotel, and Kenosha County has purchased nine properties and set aside TIF money for a potential activity.

“I think if you look at the studies, they will show you two things, that southeastern Wisconsin can support one of these and that the numbers aren’t there for two or three in southeastern Wisconsin,” said Mayor John Dickert. “The second things is… We’re first at the table. So is there a sense of urgency? Yes. Are we going to do our due diligence? Absolutely. Do we need to show you the numbers to see if we can make this work? Yeah. Do we need partners? Sure. But as they stated in the first part of this, this is what downtowns are doing to revitalize.”

Denise Lockwood has an extensive background in traditional and non-traditional media. She has written for, the Milwaukee Business Journal, Milwaukee Magazine and the Kenosha News.