Again, city council thwarts potential sale of Wyndham. Here's what's next

For a second time in a little over two weeks, the Springfield City Council rejected a zoning variance that would have paved the way for the sale of the Wyndham City Centre to a New York developer.

On Wednesday, David Mitchell, representing the proposed buyer of the city's tallest building once known as The Forum 30, sweetened the pot, saying the group would add 20 hotel rooms to the 80 already proposed, while keeping 300 rooms as apartments, mostly the studio-size variety.

The current owner of the hotel, Al Rajabi, previously told the city council that he has a bank note due on Aug. 10 and had plans to eliminate hotel rooms and instead develop 200 rooms for government-assisted housing.

While Mayor Jim Langfelder and at least one alderman said the move would be "devastating" for the downtown area, Ward 8 Ald. Erin Conley switched to a "no" vote on the zoning variance.

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Four aldermen, Shawn Gregory of Ward 2, Roy Williams Jr. of Ward 3, Lakeisha Purchase of Ward 5 and Joe McMenamin of Ward 7 and Langfelder voted for the variance.

Chuck Redpath of Ward 1, John Fulgenzi of Ward 4, Jim Donelan of Ward 9 and Conley voted against it.

Ward 6 Ald. Kristin DiCenso and Ward 10 Ald. Ralph Hanauer, both "no" votes from July 19, were absent from the meeting.

The variance needed seven votes to pass because not enough members of the Springfield Planning and Zoning Commission supported it earlier.

It was needed because Mitchell's plan called for a number of apartments over what zoning allows in the building.

Conley switched her vote because Mitchell's plan would have meant "a significant loss of hotel space for the city," she said.

Reminded that a "no" vote would have meant the elimination of all hotel rooms under the current owner's plan, Conley said she wasn't convinced that would happen.

"I think the building is of more value as a hotel and not 200 Section 8 apartments, which would require a significant amount of conversion work to get them to be something suitable for habitation full-time," she said.

Conley said she wasn't sure if Rajabi was bluffing about the government-assisted housing, "but I'm hoping common sense will (win out) and the hotel will be allowed to be sold to someone who will make an investment and actually run it as a hotel."

Rajabi, who lives in San Antonio, Texas, was present at Wednesday's meeting but unlike at the July 19 meeting, he didn't speak.

Outside of the city council chamber, Rajabi declined comment on the council's vote and on a lien the city has put on the building for non-payment of utilities.

While some city council members have cited a figure of over $1 million that Rajabi owes to the city, a document obtained by The State Journal-Register last week showed the figure to be just over $839,000 dating back to last fall.

Any potential buyer would have to pay the lien, said Langfelder.

Tower Capital Group purchased the hotel in foreclosure in 2019. Rajabi said he had planned to turn it into a Marriott Grand Hotel when the COVID-19 pandemic struck seven months later.

At the July 19 meeting, Rajabi contended he wouldn't let the property go to the bank.

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Langfelder said he assumed that Rajabi could only get the property refinanced as apartments, not a hotel, which would be riskier for the bank.

Rajabi said on July 19 he didn't want to go the government-assisted housing route, which would be a 40-year commitment, but that his options were "limited."

While diverging on their votes, Donelan and McMenamin both said they were frustrated about the potential loss of downtown hotel rooms. The Wyndham currently operates about 370 hotel rooms.

Scott Dahl, the director of the Springfield Convention and Visitors Bureau, reiterated the city has 26 conventions with peak room nights, over 300 rooms, booked from 2023 to 2025. In that period, downtown alone has 56,000 room nights booked.

“I’m very concerned about the impact of any major reduction in the downtown hotel market and the impact on conventions,” Donelan said. “I just feel that if we are to lose a great number of hotel rooms, we are never going to get them back downtown.”

"If the zoning doesn't go through," McMenamin added, "and (Rajabi) goes through with his plan to have zero hotel rooms and have subsidized housing, I think it's a devastating blow to our downtown, to our reputation, to our conventions, to everything. I think it's a death kiss."

Mitchell claimed to have surveyed five apartment complexes in downtown Springfield and told the council that of the 615 apartments available there, only three are "move in" ready.

Mitchell's plan would have put 100 hotel rooms on floors 2 to 7. The rest of the apartments, ranging from studio efficiencies to two-bedroom, would have been on floors 8 to 29.

The project would have included a 30th floor observation deck and a food court, Mitchell said.

Mitchell earlier said the project was pegged at $40 million with a substantial renovation of the inside of the hotel.

Ryan McCrady, the president and CEO of Springfield Sangamon Growth Alliance, said he talked to colleagues about Mitchell's group's work and in Wednesday's meeting addressed its veracity.

"Mr. Mitchell and his team are legitimate developers," McCrady said afterward. "They've done a lot of projects. I've been able to talk my colleagues in other places about their projects. I thought it was important for the council to know that. That's always a question: can this developer deliver on a project."

The council, McCrady said, was "obviously very concerned about the loss of the hotel rooms and the impact on the convention business. It's a really tough decision for the council. Land use decisions are probably some of the toughest things they have to do because when you make a decision on land use, your constituents drive by (the project) every day, so they're constantly reminded of it."

Kayla Graven, the executive director of Downtown Springfield, Inc. who also spoke at Wednesday's meeting, said the group supported the mixed use of apartments and hotel rooms and had earlier voted for the contingency zoning.

Langfelder said Mitchell presented "the best option moving forward."

Langfelder said he had contacted council members about amending that option, adding perhaps more hotel rooms, but none of them moved that way.

"That tells me something else is at play," Langfelder said. "I understand people want the hotel rooms, but there has to be a balance because you have a hotel that could be in collapse, according to the current owner, so that's very concerning if you're going to stand by and roll the dice and take your chances. I hope it comes up boxcars instead of snake eyes."

Asked if the vote was some sort of political ploy, Langfelder said he hoped not.

"Anyone who jeopardizes what's in the best interests of the city, anytime, then they should not be around the horseshoe," Langfelder said. "That's why you get to the point where you think it's as best as it will get moving forward, for your best opportunity for success. If the council members didn't feel that way, they should have amended it and offered that option to the investor. Right now what they've told (Mitchell) is, no, we don't want it."

Dahl said he believed Rajabi and Tower Capital's intentions were good at the outset. They just ran onto some bad luck, Dahl said, with the pandemic.

Dahl added that Rajabi now is in a similar position to what he was in 2019. The good news, Dahl said, is that post-pandemic numbers are encouraging. In June, the city, he said, set a record for conventions with 66% hotel capacity citywide while running $100 in average daily rates.

On the horizon, Dahl said, is sports tourism with the opening of Scheels Sports Complex in either late 2023 or early 2024.

"I would encourage him to take a strong look at renovating the property and moving forward as he was in 2019," Dahl said.

Contact Steven Spearie: 217-622-1788, sspearie@sj-r.com, twitter.com/@StevenSpearie.

This article originally appeared on State Journal-Register: A potential sale of the Wyndham hotel in Springfield, IL, is off