Proposal Modified for a West Waterfront Cobblestone Hotel, Hearing Tuesday

This rendering depicts what a four-story, 62-unit Cobblestone Hotel could look like if built in Tax Increment District (TID) #4 on the West Waterfront. Submitted.

Sturgeon Bay’s Finance/Purchasing and Building Committee will take another look April 9 at a proposal from Cobblestone Hotels to construct a four-story, 62-room hotel in Tax Increment District (TID) #4 on the West Waterfront.

But instead of giving the land to the developer for $1, the proposed terms would require the hotel to purchase the land from the city for $90,000, and to slightly increase the hotel’s minimum assessed value.

The committee, after hearing from project opponents who were against the hotel locating there, voted 2-1 at its March 26 meeting to have city staff look over the financial figures for future negotiations. Those further negotiations between city staff and the company have now changed the parameters for a possible development agreement.

Instead of offering to sell the site along East Maple Street for $1 – the same price as for a 53-unit apartment project the city previously approved at that location, but was never built – the latest parameters bump the property price up to $90,000. The proposed terms would slightly increase the hotel’s minimum assessed value.

Though the financial incentives would remain at $1.32 million – $600,000 at the time of occupancy and the other $720,000 over 12 years in annual payments of $60,000 – Cobblestone Hotels would have to guarantee a minimum assessed value of $7.25 million, up from the $7 million previously proposed.

The recommendation from city staff calls for proceeding to draft a formal development agreement.

Given the current proposed minimum assessed value for the hotel, community development director Marty Olejniczak said the project would be expected to generate more in revenue than needed to pay back the $1.32 million in financial incentives.

Financial figures provided to the city from Anna Jakubek, vice president of development for Cobblestone Hotels, estimated the price to build the hotel at that site at $11,166,000, and with Community First Credit Union committing to a loan of $7,816,200, she said there would be a financing gap of around $3.3 million.

To offset that financing gap, she had requested financial incentives through TID #4.

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 in TID #6 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.

This isn’t the first time in recent years a hotel has been proposed in the West Waterfront area. In 2014 the city asked Bob Papke 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.