Adam's Mark Hotel Plan Shredded in Half

Now able to build 800 rooms rather than 1,594, a proposed Adam's Mark project is dead, says Richard Miller, executive vice president of real estate for HBE Corp. "We are stopped. We cannot build a hotel that's satisfactory to our company," Miller told 42nd Ward Alderman Burton Natarus, who led the effort to change plans for an area bounded on the north by Grand Avenue. "No one would invest $46 million to build an 800-room hotel."

Attorney Theodore Novak of real estate specialists Piper Marbury Rudnick & Wolfe cries foul, explaining HBE Corp. bought a site east of a Sheraton Hotel based on encouraging discussions from city officials, including the former planning and development commissioner and representatives from the office of Richard M. Daley, a booster of increased hotel and convention business. "This is not the framework for how the city and development community should work," Novak told the plan commission Friday, suggesting its 5-1 vote in favor of changes in the planned development sends a chilling message to the lending community as well. "This developer is doing everything it was asked to do and more."

HBE paid the lofty $46 million price for the site, and spent more than $1 million in expenses, on the premise it could build a 1,594-room hotel with 175,000 sf of meeting space. By comparison, the land for the Sheraton at 301 E. North Water St. cost $23 million in 1997. "Forty-six million is probably more than it was worth in the market, but we were willing to pay a premium," Miller says. "We're shocked by what was an arbitrary change."

Natarus argues a hotel could still be built at the site, perhaps a boutique property catering to the luxury market, but Miller wasn't biting. Natarus adds the changes would allow HBE to add a residential component to its 40-story development, which also failed to satisfy Miller.

Meanwhile, Novak thought HBE has satisfied local residents' groups such as Streeterville Organization of Active Residents, but their tune changed as attendance at Navy Pier soared to 9.1 million visitors last year, with clogged streets sometimes stopping emergency vehicles in their tracks.

"We never expected Navy Pier to be as successful as it is," Natarus says. "We're asking them to build a smaller building. We're asking them not to build a convention hotel, because frankly, there's too much traffic there."

While Novak points to the verbal commitments from city officials, Natarus argues HBE has not yet obtained a building permit.

Deputy planning and development commissioner Jack Swenson says 2,225 rooms could have been built in the site's subarea before the changes in the planned development were made. That would be on top of the 1,200 rooms Sheraton added to the market.

The proposed Adam's Mark would have created 2,000 construction jobs and 1,100 permanent positions at the hotel, producing a $25-million payroll, Novak says. The building would have generated an average of $12.7 million a year in property, hotel and other taxes, he adds. Instead, HBE paid a $394,000 tax bill last year on its undeveloped property, he notes.