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Wheeling hotel asks village for financial assistance in form of 4% tax
By Sheila Ahern | Daily Herald Staff

The North Shore Westin Hotel on Milwaukee Avenue is an important part of Wheeling's profile.

 

Daniel White | Staff Photographer

Westin Hotel developer Michael Firsel raises his arms in victory at the hotel's grand opening in 2006.

 

Bob Chwedyk | Staff Photographer

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Published: 8/16/2009 12:00 AM

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In order to raise about $1 million a year, a Wheeling developer is asking the village to assess a 4 percent "conference center tax" that would apply to all hotel guests and most diners at the upscale Westin Chicago North Shore.

Mike Firsel, of Harp Mid-America Investment in Oak Brook, is asking Wheeling to levy the tax, and turn the money over to him.

With the money, which Firsel estimates would be about $1 million annually, Firsel's company would reacquire a controlling interest in the hotel, add about 100 spaces to the parking area and create open space at forest preserve land adjacent to the hotel.

Wheeling trustees have asked their financial experts to look into the idea and report back in September, but the response to the initial idea bordered on the skeptical.

"I'm not sure we want to create another tax layer that could cause us to lose business," said Village Manager Mark Rooney. "We have a lot of competition just across the street in Lake County."

The proposed tax would be worded to apply only to Wheeling hotels with more than 350 rooms and 35,000 square feet of meeting space. Currently only the Westin falls into this category.

The tax would apply to all hotel gross revenue, including room guests and diners.

Room rates for two people staying one night this weekend ranged from $119 to $204, according to the hotel's Web site. The hotel currently adds 11 percent in various taxes, bringing the cost of a $119 room to $132.09, according to the site.

If the conference center tax were approved, another $4.76 would be added, bringing the bill on a $119 room to $136.85.

Most travel Web sites, like travelocity.com and expedia.com, compare hotels based on flat room rates and don't figure in the taxes, which may explain why an additional tax would be preferable to just jacking up the flat room rate.

Rooney called the proposed new 15 percent tax "comparable to downtown Chicago."

Currently, the Westin development is owned by both Firsel's company and a New York company called Marathon Funds, which bought into the project in 2007.

"The other company is not interested in making these other improvements," Firsel told village trustees. "To make these improvements, we could need to reacquire controllability."

He said a private individual is ready to buy the bonds and that the transaction would not affect Wheeling's bond rating or involve Wheeling tax money in any way.

Trustee Dean Argiris is concerned that the increased prices at the Westin might harm the hotel overall, and said the tax proposal needs more investigation.

"Even though the village isn't on the hook for this, we don't want to tax ourselves out of the market," he said. "I want to see some numbers and know exactly where this money is going."

Trustee Ray Lang said it's important to note that the village's general fund wouldn't be affected.

"So you found an investor to buy these bonds and it won't cost this village 5 cents," Lang said. "You might want to repeat that.'

Wheeling officials have always taken a keen interest in the development at the southeast corner of Lake-Cook Road and Milwaukee Avenue, viewing it as a beacon to attract major conventions, shoppers and customers for the village's Restaurant Row.

From the beginning, the $100 million project got some major help by being in a tax increment financing district, which allowed the village to contribute about $20 million currently being repaid by property taxes being paid in the district.

When it opened, the hotel was expected to generate as much as $1.3 billion in direct revenue over the next 23 years and an additional $3.5 billion indirectly to the local economy, according to a feasibility study by developers.

The 17-story, 412-room Westin Chicago North Shore hotel opened its doors in October 2006. Along with the hotel, several dining options opened as well including Osteria di Tramonto, a contemporary eatery serving regional Italian cuisine, and Tramonto's Steak and Seafood, an upscale steakhouse.

Early this year, Osteria di Tramonto closed. Hotel officials are looking to lease the space to another restaurant operator, Firsel said.

"The steakhouse is doing extremely well," he said. "In light of the economy, we have still held rates steady and lowered them. This is still one of the top hotels in the market."