Posted May 17, 2015 at 12:00 PM Updated May 17, 2015 at 8:45 PM
ROCKFORD — Gary Gorman asked for an audit on how much his company has invested into the vacant, asbestos-filled Amerock/Ziock building that he wants to turn into a $67 million Embassy Suites hotel and conference center.
The accountant’s report: $760,418.16, said Gorman, CEO of the Wisconsin-based company that bears his name. That’s what he’ll lose if the project dies.
That investment, which doesn’t include $75,000 to apply for a hotel franchise and staff time put into the project since 2012, will surpass $1 million Wednesday if, as expected, Gorman buys the property from the city of Rockford for $250,000.
“The concern I’ve heard is that Gorman is not committed to this,” he said. “I just smile when I hear this.”
But worried frowns and questions about Gorman’s commitment rose last week when aldermen considered changes to the company’s development plan. Those changes include a city waiver of $550,000 in fees for permits and utilities, a $3 million federal loan backed by the city and an option to sell the building back to the city for $250,000.
The City Council is expected to consider the changes Monday.Aldermen have questioned whether the changes to Gorman’s development plan are a sign that the deal, which relies on $25 million from Chinese investors, is “imploding,” as Ald. Frank Beach, R-10, put it.
Hardly, said Gorman, who has 30 years of putting together development deals and says they are prone to challenges and change.
“The real key in getting a project done is persistence, pounding away at it until it comes together,” he said. “And I’m betting an awful lot that (Amerock) will.”
So are taxpayers.
The Amerock deal has many parts. It relies on $16 million in city infrastructure investments; development of the $24 million Ingersoll indoor sports center; state and federal historic tax credits; EB-5, an immigration program that gives foreigners a green card for investing $500,000 in job-creating projects; a bridge loan for construction; approval of a hotel brand; and tight construction deadlines.
“This is a lot more complex than the average redevelopment deal that we have worked on,” said Mayor Larry Morrissey, who expects the amendments to be approved Monday.
Gorman Illinois Market President André Blakley met with aldermen last week to address their concerns and questions about the hotel project.
One question centered on why Gorman needs an option for the city to buy back the Amerock building for $250,000. The answer is EB-5, which Gorman hopes will help it raise $25 million from investors in China.
Gorman said he hadn’t anticipated buying the building until later this year, when what developers call the “financial stack” is in place: all of the financial elements — such as equity, loans, tax credits and outside investments — needed to finish a project