NORMAL — Owners of the Hyatt Place hotel in uptown Normal won't get a tax rebate from the town after all.
"The group has opted to withdraw the request in light of its very recent awareness that the town will lose an estimated $320,000 in revenue annually due to the new state sales tax collection fee," according to a town news release issued Monday. "Therefore, this item has been removed from the agenda for the July 17 meeting of the Normal (City) Council."
The ownership group, Uptown Circle LLC, sought the rebate, estimated at $264,000 over three years if the hotel's business doesn't improve, as part of a refinancing plan. The hotel has performed below expectations, putting its financing in jeopardy.
"The ownership group also indicated that it will attempt to restructure the proposed refinancing agreement with their lender," according to the release. "If that proves to be unsuccessful, the ownership group indicated that it will pursue alternative financing."
Mayor Chris Koos said it may be days before the ownership group finds out the consequences of not getting the rebate. He had not heard an update as of Monday night.
City Manager Mark Peterson said Friday losing the tax rebate wouldn't be a death blow to the $25 million hotel, which opened August 2015.
"Its performance isn't that bad, and the ownership group is absolutely committed to making this thing work," Peterson said, "but it certainly could impact its viability in the short term."
When asked if the ownership group withdrew its request due to political pressure on the town, Koos said ownership was reluctant to pursue the rebate to begin with. He noted no members of the public commented on the deal Monday night.
“The owners repeated their thanks for everything the town has done since the inception of the Hyatt Place and expressed sincere appreciation for our ongoing supportive relationship," said Peterson in the release. "They did not wish to do anything to add financial stress as the town addresses the challenges brought about the state’s budget decisions.”
The deal would have given the owners half of hotel/motel tax proceeds, which were $176,000 over the last year. If business improved, the rebate could have been much greater but would have ended after a year.
The town could also have paid 25 percent if business improved by a smaller amount.
"The Hyatt Place (will) implement new management and marketing strategies in order to increase its local market share," Peterson wrote in a memo to the council. "The Hyatt has struggled to meet initial performance expectations given the rather stagnant nature of the hotel/motel market within the Bloomington-Normal area."
The town gave developer Tartan Realty Group $5.1 million and donated the land at 200 Broadway Ave. to get the hotel built.