Cobblestone Hotels Looking to Build on West Waterfront

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 city’s Finance/Purchasing and Building Committee will consider the proposal at its next meeting on Tuesday, March 26.

Previously, the hotel chain 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.

Community development director Marty Olejniczak said 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.

Instead, Olejniczak said the company is now proposing to build the hotel on the West Waterfront along East Maple Street in Tax Increment District (TID) #4, where the city previously approved a 53-unit apartment building. That project fell through, Olejniczak said, due to higher-than-expected construction costs and interest rates.

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

Anna Jakubek, vice president of development for Cobblestone Hotels, informed Olejniczak in an email dated Feb. 26 that 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 is a financing gap of around $3.3 million.

To fill that gap, she requested $1.6 million in incentives through TID #4, with half paid upfront upon the hotel being completed and the remaining $800,000 paid out over 12 years.

Jakubek also requested that the hotel chain be able to purchase the site from the city for $1, with the company agreeing to a guaranteed minimum assessed value for the hotel of $6.21 million, the same minimum assessed value that was in the agreement for the Egg Harbor Road and 12th Avenue site.

“We are very excited about this location [on the West Waterfront], and Cobblestone Hotels remains committed to bringing a new hotel to Sturgeon Bay,” she said.

Jakubek said the construction team would be able to address the methane collection system that would be needed at that location.

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.  

Finance Committee to Consider Agreement Parameters

Following negotiations between Cobblestone Hotels and city staff, Olejniczak said parameters for a possible development agreement have been put together for the city’s Finance/Purchasing and Building Committee to consider at its next meeting on Tuesday, March 26.

He said that includes 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.

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.

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