An 115 year-old building in the Loop being redeveloped as a Hilton hotel may earn landmark status and a $20 million property tax break over 12 years.
Despite some concerns about the destruction of certain architectural elements, the Commission on Chicago Landmarks gave preliminary approval for a landmark designation to the former headquarters of Chicago & North Western Railway at 226 W. Jackson Boulevard and a Class L tax incentive for the developers.
The 15-story building, designed by Frost and Granger and completed in 1904, was also the headquarters of City Colleges of Chicago. In September, Chicago-based developer Phoenix Development Partners purchased the structure for $32.7 million, according to Crain’s.
They plan to convert it into a dual-branded 349-room hotel, with a 135-room Hilton Garden Inn on the lower floors and a 214-room Canopy by Hilton above and a 4,800 square-foot rooftop restaurant and bar plus 2,100 square feet of outdoor terraces. The total cost of the project—including property acquisition—is estimated at $136 million. Construction is scheduled to start later this month and be completed in 2021.
Nearly $10 million of funding for the hotel was raised through the investment crowdfunding platform CrowdStreet, according to GlobeSt. The project was also able to secure $18 million in Federal Historic Tax Credits and a $91 million loan.
A Class L property tax break allows designated landmarks to have their property taxes set at a lower rate for 12 years if owners agree to invest at least half of the value of the building on an approved rehabilitation project.
Some members of the Commission on Chicago Landmarks said they were dismayed that the project wouldn’t preserve the historic building’s ornate cornices at a cost of $2 to $3 million.
“The point of these incentives is to make the impossible possible,” said Commissioner Mary Ann Smith. “Please go back and do your analysis one more time.”
Representatives from Phoenix and other partners claimed that “the dollars just aren’t there” for the cornices.
“We’d like to make this work. But this building was not well maintained, we’re putting substantial dollars into it... there’s lead-based paint in every windowsill and asbestos,” said John Mangel, CEO of Phoenix Development Partners.
The landmark designation and Class L tax incentive would need a final recommendation from the commission before moving on to the City Council.