Effingham Daily News, Effingham, IL

September 17, 2013

Kellers request funding for new hotel, convention center renovation

Effingham City Council

Tony Huffman
Effingham Daily News

EFFINGHAM — Members of the Keller family addressed Effingham City Council Tuesday night concerning their interest in receiving city funds to build a new hotel and expand the Keller Convention Center — but not without opposition.

While points were made about the positive economic impact this may have on the city, Co-owner of Fairfield Inn and Suites and head of BB and K Development Corporation Richard Beatty took exception with the idea of the city “giving them a free hotel."

Chuck Keller Jr. outlined a plan to build a new hotel that would offer an additional 100 rooms. They already offer 112 rooms near the Keller Convention Center. The cost of the new hotel and an expansion to the existing convention center would be approximately $18 million, said Keller Jr.

The board also heard from Patty Greene, director of the Keller Convention Center, who said more rooms are needed for bigger groups that wish to come into town.

With approximately 200,000 people a year coming into town for conferences, weddings, banquets and other events, Greene informed the board such visitors spend their money at various businesses around town. She added when visitors come into town, they are directed to tourist attractions like Tuscan Hills Winery, the downtown area and The Cross at the Crossroads.

“I hope people see how important our convention center is to the community,” said Greene.

She further stated that many conventioners report they might not return to Effingham because of a lack of rooms on the convention center property. Greene hopes that the new hotel, which will offer higher-end accommodations, will offer a place to stay close to the convention center.

“When the Kellers put something together, it is amazing,” said Greene.

She asked commissioners what they would like to see as the future of Effingham.

Beatty doesn't believe it creates a fair playing field within the business community to assist only one business and not all the others. While he did admit the city reimbursed BB and K $1 million in Tax Increment Finance funds to tear down an old motel to make room for the recently built Hampton Inn & Suites, he pointed out that wasn't for the construction of the new hotel.

Beatty also said there are cases where developers take money from a city, then sell the property or walk away from the project. Additionally, he contends that a business has to provide “a past history of credit worthiness” to receive funds. Keller Enterprises have lost two hotels in the past and filed bankruptcy, said Beatty.

Issues relating to the economic viability of an additional hotel were offered by Ted Mandigo, managing director of the Midwest division of Horwath HTL, which provides market analysis for hotels throughout the Midwest.

Mandigo contended that half of the hotel rooms are vacant on an average night in Effingham, with the exception of about 12 events a year. He went on to say spending public money for a private business is not preferable, adding he doesn't believe the market can sustain a bigger convention center.

“I think these numbers (on the convention center and hotel usage) are highly exaggerated,” said Mandigo.

Mandigo believes the additional hotel and expansion of the convention center will not bring enough people into the city to justify the cost. He cited a lack of tourism and a commercial passenger airport as issues with Effingham competing with larger markets.

While the Kellers did not specify the amount they would like to receive, Greene did say they would like a portion of the 5 percent they pay in a hotel/motel tax given back to them for the construction and renovation project.

The council did not comment on the Kellers' request, and Mayor Merv Gillenwater declined to comment on what the city's financial obligation might be, only saying the issue will come before the council again before any vote is made.

The Kellers did not respond to Beatty's claims at the meeting.

In other news, the council approved an ordinance prohibiting motorized vehicles on parts of the TREC Trail located within the city. A complaint was made to city hall concerning ATV and dirt bikes riding on the trail, said Gillenwater. Previously, there was no ordinance on the books to prohibit such activity.

According to Effingham Police Chief Mike Schutzbach, his officers will be monitoring the trail and writing tickets to those who violate the ordinance, which will result in a $100 penalty for each offense.

The areas within the city are located around the start of the trail by the Effingham Performance Center and a southern portion where the trail comes out on Calico Road.