Cobblestone and City Start Negotiations on a West Waterfront Hotel

The proposal to put a hotel on prime city real estate again draws opposition – as it did back in 2014

Cobblestone Hotels still wants to construct a four-story, 62-room hotel in Sturgeon Bay, but the proposed site for the project has changed to the West Waterfront.

The proposal drew opponents to the city’s Finance/Purchasing and Building Committee meeting Tuesday evening, March 26, where committee members discussed a possible development agreement between the city and developer.

Previously, Cobblestone Hotels was looking to build at the corner of Egg Harbor Road and 12th Avenue, and had until May 31 under a development agreement with the city to acquire the property near the new event and entertainment venue, Door County Boardwalk. If that date wasn’t met, that development agreement worth $1.2 million in incentives would be null and void.

Cobblestone Hotels informed city staff that the hotel chain was unable to finalize a deal with the property’s owners, Steve Estes and Scott Virlee, to purchase the vacant site at Egg Harbor Road and 12th Avenue.

Anna Jakubek, vice president of development for Cobblestone Hotels, sent an email dated Feb. 26 to community development director Marty Olejniczak expressing interest in locating the hotel in the West Waterfront area at the site off East Maple Street in Tax Increment District (TID) #4, where the city previously approved plans for a 53unit apartment building that was never constructed.

Jakubek said the estimated price to build the hotel at that site is $11,166,000, and with Community First Credit Union committing to a loan of $7,816,200, there would be a financing gap of around $3.3 million that she proposed the city offset with financial incentives.

City staff put together possible incentives that the city’s committee members took a look at Tuesday evening. Those included the city providing the parcel for $1 – which had also been offered to the apartment project that didn’t happen – along with a total of $1.32 million in incentives: $600,000 paid at the time of occupancy and the remaining $720,000 paid in 12 annual payments of $60,000, with the company guaranteeing a $7 million minimum assessed value.

This drawing shows the proposed layout to build a Cobblestone Hotel along Sturgeon Bay’s West Waterfront. Submitted.

Olejniczak said the city would also agree to install a new public parking lot in that area and allow its non-exclusive use by hotel guests. 

The committee voted 2-1 to have city staff review the financial figures to see if they made sense for future negotiations. Committee member Seth Wiederanders cast the dissenting vote, saying he was “shocked” to find out last week that the matter would be on the agenda.

Committee member Dan Williams said the city needs development in TID #4 to help recoup the $4 million in debt the district has before it closes in 2040, but he wasn’t excited about the parameters brought before the committee.

“I would push to have staff go back to the table, get more information about what this really means, give an opportunity to hear a little bit more from our community and look at this in a little bit longer time frame that would allow us to provide better answers to some of the questions,” he said.

This isn’t the first time in recent years a hotel has been proposed in the West Waterfront area. In 2014 Bob Papke sought to develop a 90-unit hotel closer to the water with similar city incentives, but that project ignited a legal battle over the waterfront that took years to settle. Opponents sued to stop the development, and in 2018 the city paid Papke a $360,000 settlement.

Opponents Speak Out

Ten opponents to the project signed up to speak, including Kelly Catarozoli, who was on the Common Council during the previous hotel controversy. She said there were “a multitude of reasons” for not supporting the project.

“This is a valuable piece of property, and you don’t sell it for $1, or give them free parking for something you don’t need,” she said, adding the hotel would be “fine if you’re on an off-ramp of a highway, not prime real estate in downtown Sturgeon Bay.”

“I’d rather see my taxes go up, personally, than have to look at that,” she said.

Christie Weber, who has been involved in the Door County Granary renovation project on the West Waterfront, said the outrage on social media about the proposal was “pretty outstanding.”

“The downtown has a historic feel, and it has a local feel,” she said. “Both of those are violated with a box, highway, standard-stock [hotel], and it’s more appropriate on Egg Harbor Road.”

The co-owner and operator of the Holiday Music Motel on the east side near the Michigan Street Bridge, melaniejane, said there was neither the workforce nor the occupancy to support another hotel in Sturgeon Bay.

“This makes no sense,” she said. “It is not something unique that is going to draw people to our community.”

She urged the committee to hold off developing the site and wait “for the right project to bring to this community.”

Paying off TID #4 Debt

The committee also heard from Mayor David Ward, who as an alderman before first being elected mayor in 2019 had supported the previous hotel proposal. 

Ward noted the city bought the former Door County Co-op property along the West Waterfront for $390,000 for redevelopment. He said a hotel in that area with a minimum assessed value of $7 million would help pay off the debt in TID #4 with the amount of property taxes it would generate.

In addition, with the room tax going up from 5% to 8%, and the city retaining 30% of the total room tax, Ward estimated Sturgeon Bay could receive around another $40,000 in annual room tax revenue with the Cobblestone Hotel, based on 50% occupancy.

“That’s a feature that can be used to pay off the debt of the TID as well,” he said.

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