Plans to build a 62-room hotel with four stories at the corner of Egg Harbor Road and 12th Avenue in Sturgeon Bay are moving forward again after the Common Council voted Tuesday to amend the original development agreement approved in February.
The changes keep in place the city’s agreement to pay $1.2 million in financial incentives for the Cobblestone Hotel project, but instead of paying half of that amount within 30 days of the issuance of an occupancy permit, the city agreed to pay $810,000.
Of the remaining $390,000 in incentives, the city agrees to pay $26,000 per year over 15 years, starting in 2026. The original agreement called for paying the $600,000 remaining in incentives in 12 annual payments of $50,000.
To qualify for the financial incentives – which would be paid back in property taxes generated by the project in Tax Increment District (TID) #6 – the amended agreement now requires Cobblestone Hotels to guarantee a minimum assessed value of $6.21 million as of Jan. 1, 2025. The original agreement set the minimum assessed value at $6 million.
Anna Jakubek, vice president of development for Cobblestone Hotels, said the company faces increased costs for materials and labor, resulting in an increase in the project budget, which is now $9.616 million – up almost $200,000 from a year earlier.
Jakubek said Community First Credit Union required Cobblestone Hotels to put more equity down for the project because of increased interest costs. She said Cobblestone Hotels requested an increase in the upfront TID funding “to bridge the equity gap.”
Jakubek said Cobblestone Hotels would like to start the project by the end of the year, and it should take 12-14 months to complete.
“We will not start construction until we have all our permits, approvals and the bank loan closes,” she said. “Until everything is closed, we will not start digging.”
City administrator Josh Van Lieshout said he didn’t have any reservations about amending the agreement because no development incentives would be paid by the city until the Cobblestone Hotel is completed.
District 3 alderman Dan Williams, a Finance/Purchasing and Building Committee member who recommended amending the development agreement, said the changes are a “good situation for both the city and the developer.”
District 1 alderwoman Helen Bacon, who chairs the committee, called the amended agreement a “workable solution” for the project to be built.
Community development director Marty Olejniczak said the project’s finances are the “biggest hurdle” to being able to proceed, though the site and building plans still must be approved.
“We do have options for planned unit developments and variances if they’re needed,” he said. “It’s an infill site, so those [tend to] be a little bit more nuanced to be built, but we’re confident the plan will work.”
Olejniczak said the property is currently zoned for a hotel as a permitted use.