By Bill Guida, Kenosha News, September 15, 2014
It’s by no means a done deal, but an offiicial with Gorman & Co. was confident Monday the historic former Elks Club/Heritage House is on track to become a boutique hotel
Ted Matkom, Gorman’s president for Wisconsin development, said First Ring Industrial Redevelopment Enterprise Inc. has agreed to sell $10 million in federal “new market” tax credits to help support the proposed project, potentially providing Gorman with $2.7 million equity in the project.
The public-private organization run by the city of West Allis, is allocated some $150 million in federal new market tax credits to boost redevelopment projects meeting certain criteria in Milwaukee, Racine and Kenosha counties.
Patrick Schloss, FIRE vice president, confirmed the board’s approval.
However, Gorman first must execute “a number of significant steps in the closing process” to secure the property and the financing needed to complete the estimated $20 million proposal. The plan is to transform the venerable building and property at 5706 Eighth Ave. into a 65-room hotel, Schloss said.
Matkom said FIRE, which doesn’t make direct loans, plays an important role in negotiating for a buyer of the tax credits.
Because Gorman also has some $4 million in historic tax credits to revitalize the building, Matkom said it will be best if the buyer of the new market and historic credits is a single entity.
In addition, Gorman will seek $10 million in conventional lending to finance construction, with that loan money to be replaced with low-interest financing under the federal EB-5 program.
That program invites foreign investors to put their money into American economic development and awards them by providing them with visas after five years.
Matkom said he now has to find financing sources to make up the remaining estimated $4 million to fund the project.
Some of that could come from the Kenosha Area Business Alliance in the form of a loan, as well as from the city of Kenosha, possibly through creation or expansion of a tax incremental financing district.
KABA and the city have expressed support for the project, and both parties have discussed the proposal with Gorman.
“KABA could be another lender for the project, but we haven’t approached them formally yet. They’ve been very supportive — extremely supportive in bringing users (of the proposed hotel) to the table,” Matkom said.
“I think we’re going to get there because there is a lot of momentum for jobs, and it keeps people downtown.
“In order to revitalize downtown Kenosha, you need more people to live there and (seek recreation) there. You have jobs down there, but you need more jobs. You need more services,” Matkom said.
According to Matkom, Gorman is targeting March 31 for closing and hopes to open the hotel in spring 2016.
“That’s driven by all the parties. We want to hit the summer running, and we want to open a year later, potentially by March or April (of 2016),” Matkom said.