Delavan hotel work moving along

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Catherine W. Idzerda
April 15, 2015

DELAVAN--The remodel of the former Delavan House Hotel has turned out to be more complicated than expected.

So has the financing for the project—an important one for Delavan because the five-story, 60-room building is located in the heart of downtown.

On Tuesday, the city council approved an amendment to the developer's agreement with Sean Patel of Best Hospitality—the company that bought the hotel in 2013—and the Wisconsin Economic Development Corporation.

The amendment changes the terms of a $200,000 loan from the economic development corporation. The original agreement between Patel and the city allowed Patel to waive the interest payments—and then principal—of the loan if the business stayed open for a certain number of years. Along with keeping the hotel open, Patel also agreed to have a full-service restaurant and other retail businesses on the first floor.

But the economic development corporation told the city the loan had to be repaid. The amended agreement sets out those terms.

In an interview, City Administrator Denise Pieroni said other financial incentives might still be available to Patel through the downtown tax incremental financing district. A TIF district allows the city to pay for certain kinds of improvements. When the property value rises, the additional taxes are used to pay the city back for the improvements.

Patel and Best Hospitality bought the hotel in late 2013. At that time, Patel said he expected the hotel to be open in May 2014. Then it was moved to fall 2014. Now, Patel hopes to have one or two floors open in a few months.

Remodeling has turned out to be far more complicated than expected, Pieroni said.

"All the electrical needed to be redone. The sprinklers weren't up to code, and the elevator, which they thought would be OK, wasn't," Pieroni said.

When Best Hospitality bought the building, it had been vacant for nearly a decade, and the facade and the interior had to be redone. Best Hospitality will spend close to $1 million on the work.

In 2013, the city hired Vandewalle & Associate to create a strategic plan for downtown. The plan described the vacant hotel as the "largest building and highest-profile property in the downtown." Bringing the hotel back to an "economically productive use would be an enormous boost to the district," the report said.

When it is finished, the hotel will be part of the Baymont chain.

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