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Shrine work moves ahead, faces hurdles

IBJ Mar15 Page 22 Image 0001    BELLEVILLE — Before the first visitor hoists the first mug of beer, a number of hurdles have to be met for a development group to begin building a complex that envisions a Hofbrauhaus restaurant, hotel/convention center and four other dining establishments.
    But key progress has already been made among the major players, including the Missionary Oblates of Mary Immaculate, which runs the National Shrine of the Lady of the Snows and on whose property the 33-acre complex would be built along Illinois Route 15, across the highway from the heart of the shrine.
    The Oblates are working with the Kellers, a family of developers based in Effingham, as well as the city of Belleville, which annexed the Shrine property on Jan. 1, making it possible to move forward on an ambitious financing plan.
    Among other things the city would have to extend its enterprise zone to the site. It would have to create a business district sales tax — 1 percent of which would be collected on purchases made at the site’s businesses and returned to the developer. And, a tax increment financing district would have to be approved to allow generated property tax revenue to be funneled in part back to the developers.
    There would also be a rebate involving the city’s 5 percent-per-room hotel/motel tax.

    Under an agreement approved in a split vote of the City Council on Feb. 17, the city would rebate up to $15.69 million of the developers’ costs from the tax revenue generated.
    Some $6 million of the money would come by way of the TIF district, from money generated by projects on the site, said Forrest Langenfeld, a former banker who is working with the developers on a financing plan.
    “There will not be a single dollar coming from any other property in the city of Belleville,” he stressed.
    Money generated by the TIF district would go toward the developers’ infrastructure work.
    As now envisioned, the developers would get 60 percent of the 5 percent hotel/room tax, up to 20 years, or $7 million, whichever comes first, Keller said. The money would help subsidize the convention center, he said.
    The share of business district sales tax, meanwhile, would go toward luring individual restaurants to the site, he said.
    The city would only start rebating funds once the developments have begun generating taxes, Mayor Mark Eckert said. Right now, zero taxes are generated on the land.
    The only expense the city has committed to is $2.2 million in sewer engineering and construction at the site which it expects to recover from tap-on fees and the like. The city would have eventually extended those sewers anyway, Eckert said, as part of the development of the Route 15 corridor.
    Langenfeld said ground could be broken on the facility “within two weeks” of all the necessary approvals, including anything requiring the state’s OK.
    “It’s a very laborious process to get all those things done,” he said. “I would say ground could be broken in late June or early July if everything goes according to plans in Springfield.”
    Some observers have privately suggested it might take many more months to nail down the pieces, but Eckert said he feels comfortable with the timetable, noting that he’s enlisted local legislators to help keep things moving at the state level. The enterprise zone expansion, for instance, has been approved by the Department of Agriculture but still needs backing of the Department of Commerce and Economic Opportunity.
    Eckert said he and his staff have been working with the Kellers to develop the acreage across from the Shrine for the last two years.
    “It’s not like we’re into just the first day of it,” he said, pointing out that the city acted to hire a TIF district consultant and a business district consultant back in December.
    The city will hold special meetings to act on components when necessary, Eckert said.
    Langenfeld said the first phase of the project, including the Hofbrauhaus and hotel/convention center, would cost $50 million, with other phases and their budgets still to be determined.
    Discussions are under way with other restaurants but no contracts have been signed, Langenfeld said. Those are unlikely to evolve until other work actually starts, he said.
    “As you see these things develop, it will be done in a way that it’s not your traditional development, with the same old chains that you see all around the St. Louis metropolitan area. It will be a nice, upscale hotel, and it will help the Shrine replace the rooms (that are dated and can no longer be used for large events).”
    The Kellers have been negotiating with hotel chains, but have reached no definitive agreement, spokesman Chane Keller said. He said it is only a matter of time.
    No matter who signs on, a single management company, involving the Kellers, would oversee the hotels and the 30,000-square-foot convention center, Keller said.
    The convention center will allow the city an opportunity for hosting regional meetings, some of which the Shrine already participates in.
    “This will give Belleville a facility that’s second to none on the Illinois side,” Langenfeld said.
    The other restaurants also would not be repeats of what people can readily find in the market, he said.
    “The Hofbrauhaus and the first hotel/convention center are pretty much in place and ready to roll, as soon as the city of Belleville can go through their legal processes on the special service districts and the TIF component,” Langenfeld said.
    The legal arrangement with Hofbrauhaus is pretty straightforward, Keller said.
    “We have a contract. We own the franchise for the Hofbrauhaus in St. Louis,” he said. “We will own the building and everything. We have a license for the name and some proprietary stuff with Hofbrauhaus, recipes and stuff like that.”
    Keller said the restaurant and an adjacent beer garden could accommodate up to 1,000 people. The facilities are known for their large banquet-hall styling, Bavarian atmosphere and German music.
    The Hofbrauhaus is a destination restaurant that busloads of people travel to reach, he said.
    The connection between the Kellers and Hofbrauhaus came by way of Chane Keller, who reached out while on a trip to Germany.
    “Their American president has been on site twice. They’re very excited,” Langenfeld said.
    Hofbrauhaus would be the centerpiece of the development, perhaps the most visible part of the 33-acre complex, judging by the site plan. It would be set back from the highway, on a hillside. Beyond it would be one or two hotels and the convention center.
    Hofbrauhaus stems from the 400-year-old restaurant based in Munich, Germany. There are already six Hofbrauhaus locations in the United States. Of those, the one in Rosemont, Ill., outside Chicago would most resemble what’s planned in Belleville, Keller said.
    “Stefan (Gastager), who runs Las Vegas (Hofbrauhaus), is actually one of our partners in helping set this up,” Keller said. “He helped set up Chicago, too.” Construction would have to adhere to very specific Hofbrauhaus standards, he said, right down to the “slick roof” tiles.
    A gas station/fast food/convenience store in which the Keller family has long been involved is also part of the overall development, just off Route 15 and a little to the east of the main part of the project.
    Langenfeld said: “That (station) will be very beneficial to the city and to the development. That will generate excellent dollars for the project. They are very profitable, very well run, very clean, nice, upscale (sites). That almost sounds like an oxymoron with a gas station/convenience store/fast food thing, but it will be a nice neighbor to this development.”
    Keller said the gas station and store would be developed by Wortman-Keller Development, a partnership that runs, among others the Jack Flash complex in Effingham. The fast food outlet would be something like a McDonald’s or Wendy’s, but nothing is signed, he said. The gas station would likely be a BP or a Shell, he said.
    The station component would likely be constructed first because it would only take about three months to build, Keller said.
    The Oblates have 177 total acres on the north side of the highway. If this project comes to pass, future phases could one day include things like office buildings and a winery, Langenfeld said.
    He said the Oblates, with their contribution of the acreage “are an integral partner in the process with the Keller family. They are equity partners.”
    The Oblates are entering into a 50-year lease of the property to the developers with the option for two, 25-year lease extensions. In return, they would get a percentage of any subleases to future businesses, Langenfeld  said. New money will assist the charitable work of the Oblates, rather than have to be applied to maintenance of the sprawling Shrine complex, he added.
    “This is not a simple little development. It’s a well-defined project that takes in the aesthetics of the Shrine,” he said.

Family of developers

    The Kellers are no strangers to the development business, having done projects in six states.
    “It started in Effingham in 1929 when my grandparents opened up a convenience store — a bad time to do it,” Chane Keller said, referring to the start of the Great Depression. “That developed into a business where they distributed Shell fuel. On top of that they also owned over 100 convenience stores. Meantime, in 1963 they broke ground on the first Ramada Inn east of the Mississippi River. That was our venture into hospitality and restaurants. We built more motels, starting in 1980, and we kept expanding. Now we have hotels in Illinois, Florida, Minnesota, Iowa and Wisconsin.”
    Keller said the family has formed an umbrella entity called Oak Tree Hospitality to pursue partnership projects across the Midwest. The  partnership working on the Belleville project is going under the name of Missionary Ventures, he said. He is chief financial officer of Oak Tree Hospitality.
    Two other key participants are Lawrence Group, an architectural firm out of St. Louis that is drawing up the site plans, and Kaskaskia Engineering Group LCCC of Glen Carbon, which has been retained to do traffic studies that could determine if turn lanes or other changes are made at the Route 15 intersection.

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