Senior Housing: South Bend hotel project takes its next step
By JEFF PARROTT for South Bend Tribune
SOUTH BEND – A developer Friday cleared his first hurdle in obtaining about $32 million in bond revenue to fund a renovation of the Chase Tower, downtown’s tallest building.
Victor Osinski, of Northbrook, Ill., a northern Chicago suburb, won unanimous approval from the city’s Economic Development Commission to use $7.5 million in city bonds to help fund a $43 million project. Osinski plans to convert the building’s Ramada Inn to a more upscale Hotel Indigo, turn part of the Ramada space into assisted living for seniors, and modernize the 38-year-old, 25-story structure’s exterior.
Osinski told The Tribune the building will look far different, with new colors, shapes and textures on the facade, but he declined to elaborate.
Osinski also presented the plans to the city’s redevelopment commission. He is asking that body to help him make the loan payments with property tax revenue generated by improvements to the building.
Osinski said the project will boost the property’s market value from $32.7 million to $62.6 million, according to an appraisal by the Chicago-based firm of Cushman and Wakefield.
The redevelopment commission took no action on the request and wants more time to consider it, as was expected.
Osinski has said the deal won’t happen without the incentive.
Granting the incentive would mean the city’s downtown tax increment financing district would receive no new property tax revenue from the project until the bonds are paid off in 20 years.
City economic development director Don Inks has estimated that the revenue could account for 20 to 50 percent of the developer’s loan payments.
Inks said forgoing the property tax revenue isn’t ideal, but the bonds pose no risk for the city, and the downtown needs the economic ripple effect resulting from the influx of up to 250 seniors moving in.
The assisted living center also would create about 100 new jobs.
Bob Matthia, a city economic development planner, asked Osinski whether the senior housing would affect nearby senior living developments, such as the Robertsons Apartments, which have significant vacancy rates.
Osinski dismissed that notion, saying he plans to market the facility to seniors living outside of South Bend. He thinks they will move in from around the state and region because the concept, modeled after the Planetree continuing care approach, is so unique.
Aside from the Planetree model’s appeal, studies show that a growing number of retirees prefer to live in urban areas, where they feel like they are in the center of activity and have easy access to cultural amenities, rather than in assisted living facilities built in suburban and rural areas, said Terry Gouette, a certified public accountant who is handling the project’s finances.
Gouette said a market study determined there’s an unmet demand, created partly by the presence of the University of Notre Dame, for upscale hotel rooms in South Bend. The Hotel Indigo, a high-end boutique brand that would rate as “5-star,” would include valet parking, extensive in-room services, luxurious furnishing and a limousine for guests.
“Hotel occupancy will increase drastically,” Osinski said. “We expect it to reach up to 90 percent.”
The site’s Ramada, of which Osinski is minority owner, often is only half-full, he said.
Officials from Hotel Indigo’s franchisor, International Hotels Group, have visited the building and are excited about Osinski’s plans to incorporate a Studebaker automobile theme in the hotel, Osinski told city officials.
He said he is one of 17 shareholders of Dillingham Hill RE LLC, which bought the building in 2004. Osinski would use the bond proceeds to buy out the other partners.
He will next approach the county to request use of $13.5 million in bonds, and ask the Indiana Finance Authority for use of $10.7 million in bonds.
The bonds, authorized by the federal stimulus bill, must be issued by Dec. 31. Osinski hopes the common council will consider the request at its next meeting Oct. 25.