'A good deal': New Pere Marquette hotel plan is approved. Here's what it includes

The Peoria City Council unanimously approved a redevelopment deal between the new owners of the Marriott Pere Marquette and the city that would see the developers receive significant tax incentives.

City councilmembers resoundingly applauded the "creativity" of the deal that would see the hotel's new owners, Shreem Capital, get tax rebates on hotel taxes, sales taxes, restaurant taxes and business development district taxes in exchange for buying the distressed hotel and agreeing not to protest its property taxes.

Shreem Capital purchased the Pere Marquette for $20 million in a deal that Peoria City Attorney Patrick Hayes said was a "distress sale" because the property was in foreclosure and not doing well financially.

"I'll give you an 'A' for being creative in this agreement," councilmember Denis Cyr said of the deal.

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The tax-increment financing agreement would see the city rebate 65% of the hotel taxes, 2% of the restaurant taxes, 2.75% of sales taxes and 1% of business development district taxes to the developer through 2028. From 2029 to 2043, the city's rebate on hotel taxes will drop to 50%.

"I like these sort of incentive structures — sort of 'eat what you kill.' I think that's good for everybody, and I do like the way it sounds like this contract is being put together," councilmember Mike Vespa said. "They're not going to challenge the assessed value — sounds like they're not going to appeal it — and in return they're going to keep getting a cut of the HRA taxes. That makes sense to me. I think this is a good deal, and I am supporting it whole heartedly."

City Manager Patrick Urich said the hotel will generate about $1.1 million in property tax revenue yearly which will be put toward paying the roughly $1.5 million annual bond payment the city must make on a Pere Marquette deal that was made in 2012.

Back then, Peoria issued $32 million in bonds to redevelop the Pere Marquette. That 2012 deal has been a historic headache for the city, one that is not forgotten by the council.

Councilmember Tim Riggenbach iterated a point that the developers were getting an incentive in this deal "not a handout" and called the Pere Marquette a "gift that keeps giving" in downtown Peoria.

Riggenbach was particularly happy with a clause in the deal that would incentivize the developers to fill commercial space in the building and adjoining parking garage, commercial space that could bring a family-style restaurant to the building.

Peoria will spend $800,000 of its American Rescue Plan Act funds and the developer, Shreem Capital, will match with an $800,000 investment for construction costs at 128 SW Monroe Street for commercial spaces.

"I think we're all also thankful for what the Pere Marquette means to downtown Peoria, and it's been a long road, it's been a bumpy road, but I will definitely be supporting this redevelopment agreement," Riggenbach said.

Former Pere Marquette developers Gary Matthews and Monte Brannan were found guilty of fraud in a case where prosecutors said they dipped their hands into the hotel's piggy bank while it struggled financially, and they fell short of meeting the requirements of their deal.

This time around, the council is confident the new developers will make a positive impact in downtown Peoria. Mayor Rita Ali said this is the type of deal she would like to continue seeing for downtown businesses.

"I have a high level of confidence that this is a new opportunity for this historic asset, the Peoria Marriott Pere Marquette," Ali said. "I think getting those rooms filled, getting a family restaurant underneath the garage area connecting with Civic Center events will help bring life to our city and this historic asset."

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