In 2000, the La Salle Sesquicentennial committee held a meeting at the Hotel Kaskaskia to kick-off planning the city’s 150th anniversary in 2002.
It was one of the last meetings at the six-story historic landmark, known for its big conferences and notable bashes, before it closed in 2001. That year, owners refunded a $600 deposit to the senior class of La Salle-Peru Township High School, which planned to hold its prom there.
The six-story hotel was designed by Marshall and Fox of Chicago. Built 1913-15 at Second and Marquette streets, it is the tallest structure in the city’s downtown district. Attached three-story apartments and a two-story garage were completed in 1917.
The hotel has been closed for 17 years. Since 2003, when Blouke Carus, chairman emeritus of Carus Corp., bought the building for $1 at auction with plans to restore it, progress has seen peaks and valleys.
2020?
The property is now owned by Kaskaskia Development LLC and is being developed by CL Real Estate Development LLC, a company of CL Enterprises.
CL Enterprises announced in the summer of 2016 a renewed effort to renovate the building, aiming for a $30 million project for a hotel, restaurant, small stores, ballroom, roof terraces, expo center, gym and spa. CL Enterprises LLC of Peru was repairing the brick exterior and roof of the hotel and looking for investors in China.
Completion was set for November 2018. In the summer of 2017, completion was changed to 2019. Now, the finish line has been moved to 2020, said Nathan Watson, general manager of real estate development for CL Enterprises, Peru.
“We are continuing raising capital and our sources of funding for the project,” he said. ‘There have been some adjustments in the schedule as we become more aware of external factors.”
The last substantive work on the hotel was in the summer 2017, when limited restoration tests were done on windows and plaster.
“The only work we’ve done there (since 2017) is really just tidying up and cosmetics so that the property looks nicer while we’re finishing up the project development plans and raising capital,” Watson said.
Looking for investors
In 2013, the renovation project was estimated $15 million. Blouke Carus told La Salle City Council he was looking at the federal Immigrant Investor Program, EB-5, to find foreign investors as no significant local investors had materialized.
The EB-5 program lets immigrants apply for U.S. visas to live here if they invest in a commercial enterprise with a plan to grow jobs and the economy.
In 2016, CL Enterprises renewed an interest EB-5, opening an office in Beijing to promote development of the Kaskaskia and to raise $11.5 million.
“U.S.-China relations right now have made that more difficult and also the program itself is backlogged on its acceptance of new Chinese visas,” Watson said. “They maxed out on a quota of 10,000 per year and they have about a 10- to 15-year backlog.”
CL Enterprises had hoped for changes in the program by the U.S. Citizenship and Immigration Services, Watson said.
“We may be going back to EB-5 investment dollars because it’s an attractive way for us to raise capital for the project,” he said.
CL Enterprises still has the office in Beijing.
“Instead we are moving directly to raising equity capital through a number of other sources, through direct private placement,” Watson said. “We are actively pursuing equity investors here in the U.S. but also abroad.”
Tax credits
In 1988 the Kaskaskia was placed on the National Register of Historic Places, lining it up for tax credits.
A new state bill signed earlier this year renewed a 2012 program and made it statewide, with $15 million in credits administered by the Historic Preservation Division of the Illinois Department of Natural Resources each year between January 2019 and December 2023.
This state historic tax credit promises to save the Kaskaskia project about $3 million, the upper cap for the program, Watson said.
The hotel also qualifies for a federal historic tax credit, which could give the hotel another $4.5 million, Watson said.
The federal historic tax credit underwent some recent changes with the new federal tax reform bill. However, historical tax credits for the Kaskaskia are grandfathered under the old rules, meaning it will get the credit in one payment rather than spread over five years, Watson said.
“When the project opens and is certified for its historic renovation according to the plans, then that investor gets 100 percent of that tax credit,” he said. “We’re able to get about 18.5 percent of our total project cost from federal historic tax credits. If we were paid over five years it would be worth maybe 16 percent.”
Committed to completion
Watson said he hears concerns about the scale of progress.
“We’re still very much committed working on this project consistently and persistently to raise the capital so we can open this project in 2020,” he said. “We share everyone’s anxiousness to get this finished as quickly as possible. We want people to know that we’re making those efforts as much as we possibly can. It is out highest priority project.”
Updates studies show the project is still viable, Watson said.
“We’ve also done a market study update,” he said. “It’s still strong even with the additional hotel rooms that have been added in Ottawa and Peru, or are going to be added in Peru and have been added or are under construction in Ottawa. Our occupancy and average daily rate are all strong. We also did an updated food and beverage study.”
The project might come in lower than $30 million, Watson said.
“We did some construction cost estimating updates this year,” he said. “There is still a lot of work to be done on the exterior, too. The whole property is looking at about $20 million of construction and then we have some soft costs, design costs, and additional property acquisition.”
These adjacent properties will be used for parking, Watson said.
“We expect to close in December on two more properties,” he said.