New Hampton Inn hotel proposed for Sturgeon Bay

Jennifer Much

Contributor

September 9, 2024

STURGEON BAY – A development project in Sturgeon Bay is moving forward after the City Council approved a development agreement with Hobart-based developer Rodac Development and Construction at its meeting last month.

The project includes plans to build a Hampton Inn Hotel at the corner of Egg Harbor Road and North 12th Ave. in the City of Sturgeon Bay

City officials said they are optimistic of its potential fiscal impact to the area and region – residents, however, are divided on the project.

Project details

The planned 80-room property would be funded through Tax Increment Finance (TIF) district #6 dollars, with the city providing the entire $2 million within 30 days of an occupancy permit.

Rodac agreed to a minimum assessed value of $13.9 million for the project as of Jan. 1, 2026.

If the property’s value drops below the initial projection, the city will retain the ability to place a special charge on the property until it’s paid.

Taxes from the hotel will be used by the city to repay the borrowed funds.

“Getting the city to agree to financial assistance in the form of TIF was huge, but there are several hurdles to overcome before the construction happens,” Marty Olenjniczak, community development director for the City of Sturgeon Bay, said.

Olenjniczak said the city commissioned a consultant to conduct a hotel feasibility study with several potential sites proposed before one was chosen.

“The site at Egg Harbor Road and 12th Avenue was deemed to be the most advantageous,” he said.

Olenjniczak said the current property owner had also reached out to Rodac and Hampton Inn about the possibility of building a hotel in that area, however, to date, the developer still needs to acquire the site, secure financing and obtain approval for the hotel plans.

“All we have at this point is a concept and an agreement for tax incremental financing,” he said. “So there are many steps to take before construction can commence.”

Under the agreement, Rodac is required to “take all necessary steps to create and obtain ownership of the property” by the end of this year.

If Rodac fails to obtain ownership of the property by Dec. 31, 2024, the agreement would automatically terminate.

The city approves – so far 

Though the City of Sturgeon Bay already has a handful of hotels, Olenjniczak said the Hampton Inn may offer additional space for special events and meetings – plus help to generate extra economic activity from travelers.

“Currently, Sturgeon Bay does not have a flagged hotel of this level of quality,” he said. “The hotel will particularly benefit the adjacent, recently opened Gala events center due to the synergistic relationship between the hotel and events center.”

Olejniczak said the new property will also increase room nights in the city – which could ultimately lead to additional spending at restaurants, retailers and other businesses around Sturgeon Bay. 

“The hotel is expected to generate about $300,000 in annual property tax revenue and about $225,000 in annual room tax revenue,” he said. 

Sturgeon Bay Mayor David Ward said adding the new hotel is a positive move for the city.

“I think Sturgeon Bay needs another hotel,” he said. “There was a study done and it showed the need for one or two hotels – especially brands that folks use based on customer rewards plans.”

Ward said he believes providing additional rooms will help accommodate larger groups – especially those hosted by local manufacturers – and boost tourism to the city. 

“Sturgeon Bay has changed from a ‘drive-by destination’ to a ‘drive-to destination,’ and another hotel, especially a national brand, would help draw tourists,” he said.

Tourism aside, Ward said the city and residents can collectively benefit from the new property, too – noting that it will assist in building value in a TIF district that helps pay for several important infrastructure improvements.

Local residents are divided

Though initial projections – such as the cash flow proforma analysis prepared by R.W. Baird – show the generation of excess revenue and recovery of incentives in the project plan, Sturgeon Bay residents were quick to chime in about the plans.

“Regarding the possibility of a Hampton Inn at 12th and Egg Harbor Road, I would have to say that I’m leaning toward no,” Resident Renée Bauernfeind said.

Bauernfeind said she doesn’t believe the city can support another big box hotel since Egg Harbor Road has been struggling with empty lots and closed businesses for years.

“I very much doubt that this hotel will attract any more business,” she said.

Bauernfeind also cited the city’s exhaustive need for affordable, year-round housing for residents as a reason to be concerned – “who will staff it, and where will they live?”

“Our current hotels are nowhere near capacity in the off-season,” she said. “And until we can provide affordable housing for our workforce and middle-class families, either rented or owned, this is a dead-end street.”

Others, however, find the announcement promising.

“I for one like it,” Resident Jason Terhardt said. “It just helps the businesses in Sturgeon Bay, and maybe we can free up a few of the Airbnb places for some of the locals who need homes to live in.”