‘A Positive Step’: The latest on the unfinished downtown Skokie hotel

Skokie officials continue to work toward a more concrete future for a downtown Skokie project.

While no plans are locked in for construction to resume at the site of a massive unfinished hotel at 4930 Oakton St., Skokie trustees learned on Monday, Dec. 1 that lawyers for all interested parties are engaged in talks to solidify a path forward for the long-standing eyesore. 

Rodney Lewis, an attorney with Skokie’s outside legal counsel, shared the latest information about the skeleton of the Homewood Suites by Hilton, which has been in limbo since the Iowa-based construction company Russell Construction filed a complaint in July 2023 that claimed the project’s developer, E&M Strategic Development, had failed to pay a $10.7 million tab.

Russell Construction’s lawsuit was consolidated in February with another complaint from X–Caliber Capital, E&M’s lender, that sought foreclosure action against the developer. Rodney Tonelli, Skokie’s economic vitality manager, said X-Caliber is owed approximately $9.7 million.

A Cook County judge ruled that the Village of Skokie is not a defendant in the complaints and an arbitration panel ruled in October that Russell Construction has priority over any profit derived from an eventual sale or development of the hotel property. 

But the panel scheduled its next meeting to potentially resolve the various still outstanding claims between Russell Construction, E&M and X-Caliber Capital for September 2026. 

Lewis on Dec. 1 described that length of delay as unusual and “untenable.” 

Lawyers for Skokie met with X-Caliber Capital on Nov. 7 to discuss options to resolve the underlying litigation ahead of September 2026, and, Lewis said, Skokie has been contacted by representatives from Russell Construction to discuss solutions.

“I think the other parties involved realized that waiting an additional 10 months is not in anybody’s best interest at all,” said Barbara Mangler, Skokie’s corporation counsel. “So it’s a positive step that everybody’s seemingly willing to sit down and see if we can come to a resolution.”

Lewis and John Lockerby, Skokie’s village manager, have met with other developers in an attempt to drum up interest from an outside party to take over the unfinished site, Mangler said. 

X-Caliber Capital previously proposed releasing its mortgage on the property, securing the title of ownership from E&M and donating the property to the village, a memo from Mangler shows. 

But village staff rejected that plan as it would “just be trading places with X-Caiiber in having to deal with the underlying litigation,” the memo says. 

Trustee Lissa Levy asked whether the village would be liable if individuals were to trespass and get injured inside the now long-vacant building. 

Lewis said that liability would be on E&M; though, X-Caliber is still trying to obtain ownership of the property.

Lockerby also noted the village is partnering with X-Caliber in assessing the building on an annual basis to ensure its structural integrity. 

Lewis said the village has also been in discussions with representatives from E&M and has suggested the developer agree to a “consent foreclosure” to allow another party to “move things forward.”

“It’s about getting the right people together and incentivizing them to do their part instead of being obstinate and making us take this long to even get to the point we have an arbitration, and finding real solutions to move this forward,” Lewis said of the ongoing negotiations with the three parties.

A ‘significant financial gap‘

E&M first expressed interest in developing a hotel in downtown Skokie in 2016, village documents show.

The village paid for two market feasibility studies in the following years that apparently showed there “was in fact demand for a Downtown Skokie hotel.”

The ill-fated hotel was designed to include 142 rooms, a rooftop bar, 10,000 square feet of meeting space and 13,000 square feet of retail space. 

With 47,000 guests estimated to stay at the hotel every year, village staff projected patrons would spend $12.5 million in Skokie annually and benefit local restaurants by $2.1 million annually. 

In June 2018, E&M apparently demonstrated the project had a “significant financial gap which made the project difficult, if not impossible to finance,” village documents show.

Village staff then recommended the creation of a TIF district to help “bridge” the gap. 

The village ultimately expended approximately $10.5 million from an Oakton-Niles TIF fund to help pay for certain expenses at the site, under certain conditions, such as the hotel including 43,000 square feet of restaurant space and drawing 100,000 annual guests to downtown Skokie. 

The village also authorized a $4.5 million loan to help fund the hotel project’s financial shortfall, but that money was never disbursed because additional required funds were never obtained by the developer, according to a village webpage dedicated to the project. 

In the fall of 2020, E&M “was able to garner financial commitments and interest for the hotel” and the Skokie Village Board voted unanimously in December 2020 to approve a development agreement with E&M. 

Mark Meyer, E&M’s founder, apparently told The Skokie Review in 2022 that building the hotel would ultimately cost more than $60 million and it might be difficult to hit the initial goal of opening in the fall or winter of 2023. 

The demolition of the previous building at the hotel’s site, a Sanford-Brown College site that sat vacant since 2014, and other pre-construction work began in 2022, said Patrick Deignan, Skokie’s communications director.

The final building permit for the hotel was issued in December 2022; Russel Construction and its subcontractors, who are also parties in the unresolved litigation, worked at the site up until April 2023.

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