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City wants insurance policy for its investments in Lake Lawn project

DELAVAN — Lake Lawn Resort officials say they are committed to the $390 million renovation and expansion proposed a few years ago, but the city wants that commitment in writing before the project goes any further.

“The money is in the bank,” said Thomas Ruhs, CEO of Delavan Resort Holdings. “With the money we’ve already spent on plans, we would have to be crazy not to think we’re going to move this forward.”

But Alderman Dave Kilkenny wants a new developer’s agreement to guarantee the city’s investment—the tax incremental finance district that includes Lake Lawn—isn’t for naught.

“I don’t think intending is good enough,” Kilkenny said. “Let’s ensure that it’s really going to happen. The city shouldn’t be exposed to all the risks. (The city) has invested a lot of money (in the project).”

The city council in September 2005 approved a general development plan for the proposed renovation and expansion, including:

 Renovating 222 guest rooms, meeting rooms, main lobby, restaurants, bars and bathrooms.

 Building 130 two- and three-bedroom condominium units in five buildings, known as the Villas at Harbor’s Edge, near the marina on Delavan Lake.

 Moving the resort’s main entrance from Highway 50 to North Shore Drive.

 Building the Grand Delavan hotel and conference center.

 Building an indoor water park.

The remodeling is complete, but Lake Lawn’s expansion plans have stalled before the city council because some aldermen have said the plans don’t resemble those originally approved.

The original plans placed more emphasis on the hotel, conference center and water park, but Ruhs said the emphasis was moved to the villas because it makes more financial sense.

“When you have real estate so close to so many people in the Chicago and Milwaukee markets ... and you have real estate on a lake that’s affordable, it’s a wonderful idea,” he said.

Lake Lawn has been taking ownership reservations for the units since October. The units would be priced between $500,000 and $1.2 million. Owners of the units could rent them out as hotel suites when not in use.

Construction of the villas would be phased, Ruhs said, beginning with the two eastern-most buildings. Pending approval from the city council, construction could begin in July and finish in February.

Ruhs said he understands the city’s concern, but it already is reaping the benefits of its investment.

“We’ve already paid off the TIF,” he said.

Lake Lawn guaranteed the city a $35 million increase in property value following the renovation of the existing facilities. That number is approaching $85 million, according to company estimates.

“We’ve more than doubled it,” Ruhs said. “(The renovation) project alone is paying off the TIF.”

He said with the addition of the villas, the TIF will be paid off even faster.

The city stands to reap benefits beyond increased property value and real estate and room taxes, Ruhs said.

“We’re providing jobs. We’re providing payroll. We’re doing everything we can to spend our money locally,” he said.

The city council June 2 laid the framework for a new developer’s agreement, and Ruhs said Lake Lawn is working through the city’s long list of conditions.

Kilkenny said a new developer’s agreement would help the city and Lake Lawn move forward “all on the same page.”