Springfield council rejects variance that would have eased Wyndham sale to NYC developer

The third time was not a charm for New York City developer David Mitchell.

The Springfield City Council denied a "variance for density" for the 30-story Wyndham City Centre in downtown Springfield in a 6-4 vote, capping a debate that lasted a little more than three hours.

Ward 1 Ald. Chuck Redpath, Ward 5 Ald. Lakeisha Purchase, Ward 6 Ald. Kristin DiCenso, Ward 8 Ald. Erin Conley, Ward 9 Ald. Jim Donelan and Ward 10 Ralph Hanauer voted to deny the variance.

More:David Mitchell, GoodHomes look to leave imprint on other projects across the country

Ward 2 Ald. Shawn Gregory, Ward 3 Ald. Roy Williams, Ward 4 Ald. John Fulgenzi and Ward 7 Ald. Joe McMenamin. voted for the variance.

Both Purchase and Fulgenzi flipped their votes from Aug. 3, with Purchase becoming a "no," and Fulgenzi becoming a "yes."

The variance was needed to aid any sale to Mitchell's company, GoodHomes Communities, LLC, because the building is only zoned for 200 apartments. Mitchell wanted to refurbish 275 rooms as apartments while keeping 125 hotel rooms under a flagship name.

The variance had gone down to defeat before the city council twice needing a supermajority of votes or seven "yes" votes. This time, it only needed a majority of votes.

The owner, Al Rajabi of TowerCapital Group in San Antonio, Texas, said his options were "limited" financially and that he planned to eliminate the hotel's rooms and develop 200 apartments for government-assisted housing.

Rajabi wasn't at Tuesday's meeting. He was represented by former Ward 5 Ald. Andrew Proctor.

Proctor, during a presentation, said that Rajabi paid off a $1.5 million utility bill due to City Water, Light and Power on Tuesday.

A spokeswoman for the city confirmed Wednesday morning that the city's treasurer's office had received payment from Rajabi. The bill covers electric, water, city sewer and sanitary district.

Rajabi had said in the past that he had funds to stave off creditors and that he would not let the hotel go into receivership.

Mitchell has had a history of taking distressed hotels and converting them into urban "workforce housing," appealing to younger professionals. He claimed this is the first time one of his projects has been rejected.

"I love Springfield and I would have loved to have done this project," Mitchell said after the vote. "We gave it our best shot. We were trying to listen hard and tried to adjust to accommodate, and I felt we did."

Asked if he would make another run at the deal, Mitchell said "we're waiting on Springfield. I've done everything that's been asked."

Mitchell said under his model, he would have created $5.6 million more in economic impact for Springfield. That came from an economic study by Apprise by Walker & Dunlop, a Chicago group.

Rajabi had championed the sale of the hotel to Mitchell. Mitchell wanted to install a 30th floor observation deck and a food court as part of a $40 million redo.

Joe Petty of JH Petty & Associates, who worked with Mitchell on the project, admitted in a presentation that the hotel wasn't in very good condition.

"It's a cool, unique building," Petty admitted, "but it needs some serious attention."

During the run-up to the vote, Fulgenzi asked if the city council boosted the number of hotel rooms to 150, "would that be acceptable?"

Mitchell said "in my world, residences get financed," though "I'm not saying 'no' to more hotel rooms."

Mitchell was later pressed on the same question by DiCenso.

Afterward, Mitchell said he would have to talk to Petty about the viability of that change but noted that his financial people were watching the meeting.

Langfelder said the vote was "frustrating" and he planned to reach out to Mitchell and Rajabi Wednesday.

"What we don't want is the hotel closing and that's what I'll try to prevent," Langfelder said. "My nature is to try to fix things.

"We don't have a large number of people lining up to buy the Wyndham and do the remodel it needs to bring it up to standards. Everybody wants the hotel."

Hanauer said he was concerned about the full financial picture not being brought up by Mitchell.

"They know what the numbers are. They don't want to tell us until they get the building," Hanauer said. "Ultimately, we will not be able to match what they need because it's going to take a substantial investment in that building and I am concerned the city will not be able to give them the money they need and the whole project will go belly up. Then we will have zero hotel rooms without getting anything back."

Purchase, reached Wednesday morning, said the deal has been the "number one issue" raised by constituents and businesses Ward 5, where the Wyndham sits. That feedback, Purchase said, centered on Mitchell's misreading of Springfield.

"We're not a Chicago, we're not a San Francisco, we're not a New York City. We're Springfield with a little over 115,000 people here," she said. "The ecosystem that David Mitchell is thinking will take place is here is not what Springfield is (about)."

Purchase said she didn't know what to make of Rajabi's plan to turn the hotel into government-assisted housing, but that the downtown business district "was not too thrilled to hear about it."

"The biggest pieces out of this are communication and education," she added. "That would be my goal moving forward, educating the community and listening to the community."

Fulgenzi said he voted in favor of the zoning in hopes that it could ultimately move from 125 to 150 hotel rooms. Langfelder proposed an amendment to up that total, but since the first vote failed, the amendment never got to a vote.

"I didn't want to see the hotel go away completely," Fulgenzi reiterated.

Scott Dahl, director of the Springfield Convention and Visitors Bureau, said his group spent years prospecting 26 conventions that were booked with at least 300 peak room nights (56,000 room nights altogether) using both the Wyndham and the President Abraham Lincoln Springfield DoubleTree Hotel between 2023 and 2025.

In a presentation before the vote, Dahl told council members that if hotel rooms went away, his services department and sales team would reach out to any conventions or shows that might be impacted.

"We don't know how (these conventions) are going to react," Dahl said. "Certainly (the city's) reputation would be at stake."

Dahl reiterated Tuesday that "the location of hotel rooms" in Springfield was key, especially shows and conventions that want to be in the downtown area and use the Bank of Springfield Center.

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

This article originally appeared on State Journal-Register: Springfield council denies variance that would have eased Wyndham sale