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Janesville aims to build two hotels

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Jake Magee
Friday, October 6, 2017

JANESVILLE—If all goes according to plan, a downtown parking lot could soon be home to a 53-room hotel with an indoor pool, restaurant and exercise facility.

The Janesville City Council on Monday will consider two tax increment financing development agreements to build two hotels.

The downtown hotel would be located at what is now a parking lot just west of the Rock River at 20-28 W. Milwaukee St., according to memos to the council.

The other hotel would be built near the former Menards along Pontiac Drive.

Janesville Hotel Group has expressed an interest in constructing a four-story, 33,000-square-foot hotel in the downtown space. If approved, construction would begin in the spring and finish by December 2018, said Dayna Sarver, economic development coordinator.

The business would be run by Cobblestone Hotels, which has been in operation for almost 10 years and has 134 hotels open, under construction or in development in 17 states, she said.

There's a market for hotels in Janesville. Average annual occupancy in the city was 41 percent when a market analysis was done for ARISE, the city's effort to revitalize downtown Janesville. Average annual occupancy has since increased to about 70 percent but is even higher in the summer, Sarver said.

"During the summer months, some of our guests staying for youth sports or coming for the Rock Aqua Jays, they have to find lodging elsewhere …" Sarver said. "We can capture what's leaking to other communities, or at least some of it."

At the same time, Janesville occasionally gets overflow from Rockford, Illinois, and other areas. That limits the city's ability to lodge local visitors. More hotels would alleviate that, said Christine Rebout, Janesville Area Convention and Visitors Bureau executive director.

Downtown Janesville has venues for events such as weddings and businesses that might want to fly in executives and investors. Having a hotel downtown would be more convenient than sending guests to hotels along the Interstate, Sarver said.

"I think it's a big deal. I think it can have significant impact on the downtown," she said. "We don't have a downtown hotel, and I think with the programming coming with ARISE, it would be a tremendous asset."

In the proposed deal, Janesville would offer the parking lot and up to $800,000 to be paid upon occupancy to see the hotel developed. If a hotel is never built, Janesville would get the parcel back, Sarver said.

That means there's no real financial risk to the city if a hotel is never built. A parking study shows there's ample parking options throughout downtown and that the loss of the lot wouldn't be significant, Sarver said.

The hotel would generate about $4.7 million in taxable value, which would likely make it the highest assessed property downtown, according to the memos.

The city and Pontiac Place Hotel Developers also are proposing a hotel at the site of the former Menards, which is being converted into a shopping center with several retailers.

"Although the city has entered into an agreement to redevelop the former retail building, underutilized land to the south of that structure is available for redevelopment," one memo reads.

The hotel at 2706 Pontiac Place would be a 52,000-square-foot Marriott Town Place Suites hotel. It would be the only "all-suite/extended stay" hotel in Rock County, according to the memos.

The hotel would use the adjoining retail center for vehicle access through an aisle along the edge of the parking lot, according to the memos.

For this project, the city would use a pay-as-you-go approach to incentivize the developer. How much the city pays the developer would depend on the hotel's performance, limiting the risk for the city if the hotel fails, according to the memos.

The hotel is expected to create more than $6 million in taxable value, according to the memos.

"The city believes the proposed agreement creates a win-win for the developer and the city and will significantly improve a highly visible entryway property for the city," a memo reads.

The Cobblestone would be the first new commercial development downtown in more than 10 years. It or the Marriott would be the first hotel built in the city since 1996, according to the memos.



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