Much work remains at downtown Urbana hotel
This story is based on hundreds of pages of documents obtained under the Freedom of Information Act from the city of Urbana. To view the documents and all the items for which the Urbana Landmark Hotel owner was reimbursed with public funds, you can look at a pdf of them all. Warning: It's a big file, 82-MB and more than 900 pages. You'll find it by clicking here.
URBANA — After three years and a city investment of $1.45 million, the Urbana Landmark Hotel has 75 of its 128 rooms open for business, as well as a banquet hall, a bar and a basement dance floor providing entertainment.
After a very gradual opening since it opened for limited business last year, its kitchen, restaurant, pool, conference room and a floor of rooms remain closed, as its owner says renovating an old building like the Urbana Landmark Hotel — formerly the Lincoln Hotel and Jumer's Castle Lodge — is no small task.
This past week, the downtown landmark sat with its signature timber stripped from one of the exterior walls after a new heating and air-conditioning system had been installed. It's a system that owner Xiao Jin Yuan touts as one of the most energy efficient, and unlike ventilation systems in any other hotel in America.
"I doubt any of the hotels in the United States are using this kind of air-conditioning," Yuan said.
It's one of the things he bought with $1.45 million the city offered three years ago to lure a buyer to purchase and restore what was then a shuttered hotel on which the bank had foreclosed.
Purchasing that air-conditioning system is just one of many expenses, with others ranging from six-figure costs for roof work; tens of thousands for the new canopy over the parking lot; about $17,000 for marble tile Yuan bought from China and used throughout the common areas of the hotel; to rubber gaskets worth barely more than $1 that were purchased as part of dozens of trips to Menards and Home Depot in Champaign, according to hundreds of pages of receipts The News-Gazette obtained with a Freedom of Information Act request.
According to Champaign County property records, Yuan bought the hotel in 2010 for $600,000 — the previous owner paid $2.7 million in 2001. But the hotel needed extensive repairs, and city officials believe they would not have found a buyer if they hadn't offered redevelopment incentives as a way to preserve the building.
The project has been bothered by delays since the beginning. Yuan received $650,000 from the city to have the hotel open by Nov. 1, 2011, and he was to receive another $200,000 annually for each of the next four years.
Roofing and electrical problems delayed the opening until November 2012. City officials even rewrote the deal so Yuan would receive more money — now up to more than $1 million — prior to the hotel's opening instead of during the subsequent years.
The hotel opened its first 45 rooms last year. In the year since, another 30 have opened. Yuan says there are another 53 waiting.
Yuan said he plans to open the hotel's kitchen and fourth floor of guest rooms "very soon." But the renovation is a very time-consuming process, he said.
"The money doesn't go very far," Yuan said.
'A working hotel'
Mayor Laurel Prussing said the project has been plagued with unexpected problems.
"I think he gets criticized for taking time to do it," Prussing said. "But anyone who's done a remodeling project knows that you're going to run into stuff you've never dreamed of."
The Landmark Hotel is an "important property" in downtown Urbana, said economic development manager Tom Carrino. It is attached to the Lincoln Square shopping center and a block from Main Street. Its success would mean more traffic to downtown stores and restaurants.
The jury is out on whether that has happened yet, Prussing said. The city does not have any definitive research or figures about what kind of effect the hotel has had on nearby businesses.
The Urbana Business Association declined to comment on what kind of effect the hotel has had.
"From our perspective, at some point, we want the entire hotel to be open and functioning at a very high level," Carrino said. "I think that's his goal as well."
Yuan said the hotel gets regular business and is always "very crowded" during big University of Illinois events. The beer cooler behind the bar, The Alumni Tap, was full for the homecoming events this weekend, and Yuan was preparing for a Halloween party in the banquet hall.
But the hotel is operating far from capacity without all of its rooms, kitchen and conference center open.
"He's not completely opened yet," Prussing said. "Any business that he has is adding to Lincoln Square, and it also pays hotel-motel tax."
Prussing said that, regardless of its economic ripple effect, you have to also consider the alternative.
"We want it to be a working hotel," Prussing said. "And if we hadn't done anything, we'd be stuck with a huge building that would be a danger and would have to be torn down to great public expense."
Before Yuan bought the hotel in 2010, it was beginning to fall apart. The bank had taken control of it and fought the city's attempts to designate the hotel as a local landmark for fear that it would prevent finding a buyer.
Yuan owns an oceanfront hotel in California, but that's a very different project from something like restoring what was then called the Lincoln Hotel in Urbana. The city's offer of $1.45 million was too attractive.
"I believe the city made a very wise decision," Yuan said.
The overall cost of the renovation is much higher, Yuan said. Without the subsidy from the city, he doubts anyone would have taken the project on.
"Because if they hadn't," Yuan asked, "what would have been the end result?"
Doing it differently
The city money used for the Landmark Hotel came from the downtown tax increment financing district, a special fund meant specifically for economic development, property and infrastructure improvements in the downtown Urbana area.
The fund draws tax money that would otherwise have gone to other taxing bodies — like the school and the park district — to reinvest in a geographic area. The idea is that, after a number of years, property values in that area will be higher than they would have been without that investment, and all the taxing bodies will benefit from more revenue in the long run.
"I think he's really brightened up the whole place, and it was a huge job," Prussing said.
Yuan pays for the improvements up front, and the city reimburses him for renovation costs.
Yuan has received about $1.13 million of the $1.45 million he is due to receive by the end of next year, according to Carrino. The first $1.05 million was technically a loan, but as long as the hotel stays open for two years, his debt will be forgiven.
He'll hit the two-year mark toward the end of 2014, and he plans to succeed where others have not.
Marine Bank foreclosed on the property in 2009, and its then-owner, Urbana Enterprise LLC, filed for bankruptcy.
Yuan, however, said he has taken on the project without any debt. The hotel's finances are "solid."
"There's no threat of banks coming over and taking over," Yuan said.
He's brought a new feature to the hotel — a basement dance floor that attracts young people, who ultimately buy drinks at the bar. Yuan said it has been so successful that he plans to start asking for a cover charge soon.
"If you do everything the same way as other owners, you are going to fail," Yuan said.