By Brian Leaf, Rockford Register Star, Jan. 31, 2015
ROCKFORD — If it were a boxing match, the hype would be huge at next week’s City Council meeting.
“In this corner of North Main and Mulberry streets,” a ring announcer might say, “weighing in at $14.5 million, with aspirations of turning a crumbling, two-story building back to life as a five-floor, 76-room boutique hotel, from Rockford, Illinois — Joseph James Partners.”
“And in this corner of Wyman and Cedar streets, weighing in at $64 million, a developer pining to turn an eyesore skyscraper into a shimmering waterfront Embassy Suites hotel, the cornerstone of a downtown revival. He’s backed by the world’s best-known capitalist, Warren Buffett. From Oregon, Wisconsin, ladies and gentlemen — Gorman & Company.”
Those ringside at City Hall on Monday will hear aldermen consider only a proposal by Joseph James to redevelop 134 N. Main St., where the advertising agency Trekk used to lease space. But a memo from the heavyweights, who plan to turn the Amerock building into a 150-room hotel, will also be on their minds.
CEO Gary Gorman shocked the city last spring by proposing a $53 million hotel and convention center downtown, the type of central city revitalization that generations of Rockford mayors have tried and failed to orchestrate. Gorman announced Thursday that a subsidiary of Buffett’s Berkshire Hathaway is investing $18 million in the project, which has swelled to $64 million. Plans for the hotel will be finished Friday and bidding for construction contracts will commence the next week, he said.
Gorman’s interest was catalyzed by the $21 million indoor sports center being built in another vacant factory across the Rock River from Amerock and the availability of state and federal tax credits worth up to 45 percent of construction costs. When the sports complex ramps up, proponents say, it will draw thousands of families, players and fans downtown for basketball, volleyball and other sports tournaments.
They’ll need a place to stay.
Joseph James, which is led by SupplyCore CEO Peter Provenzano, submitted its first hotel proposal in November 2013. It initially sought to develop hotel rooms in two buildings, then settled on one hotel with a restaurant in the former Trekk building.
Both hotel camps sent memos to aldermen and city officials this week.
Gorman said he’s concerned about too many new rooms in an unproven market.
“We have done our due diligence analyzing the market trends and data and consulted with our partners on this project and have concluded that another hotel in the downtown opening at the same time or sooner is a serious threat to the viability of our project,” he wrote.
Provenzano quoted a Jan. 24 memo from a hotel consultant hired by the city and Rockford Area Convention & Visitors Bureau, Hunden Strategic Partners of Chicago, that said there’s plenty of room downtown for both projects.
Provenzano said the sports complex is slated to open in June 2016 and he hopes to have his hotel open then. The Gorman project won’t be ready until early 2017, he said. Hunden said both hotels will have time to ramp up and succeed because there is a six-month gap between the scheduled openings. Branded hotels and boutique hotels also serve different types of travelers, the consultant noted.
Provenzeno said one could argue that his project will pave the way for Gorman by helping create a hotel market downtown. With no hotel rooms downtown, there’s a risk that demand will be satisfied by east-side Rockford hotels.
“I hope his project happens,” he said Friday. “We think these projects are very beneficial to one another.”
In 2011, Gorman and Mayor Larry Morrissey were part of an Illinois trade delegation to China, a country that is likely to produce most, if not all, of the 96 wealthy foreigners who will invest $46 million into Gorman’s hotel in a federal cash for a visa program called EB-5.
Morrissey, a three-term mayor first elected in 2005, campaigned on downtown revival. Provenzano, a longtime Morrissey supporter, rehabbed the former Pioneer Life building, 303 N. Main St., for his company’s headquarters and other offices.
Morrissey wants both projects to move forward.
“I’ve had a number of conversations directly with Gary Gorman,” he said. “I think he understands my position and I understand his. He’s got a project. He’s doing everything he has to do to manage it. I’ve committed to do everything I can to do to support his efforts.
“What I’ve explained to him and others is that we’re not just selling one project. We’re selling our downtown renaissance.”