Hofbräuhaus developers do not have completion date to announce

Developers of the Hofbräuhaus German restaurant and brewery being constructed off Illinois 15 say they do not have a completion date to announce. Work began on the restaurant in late 2015.
Developers of the Hofbräuhaus German restaurant and brewery being constructed off Illinois 15 say they do not have a completion date to announce. Work began on the restaurant in late 2015.

Developers of the partially built Hofbräuhaus in Belleville do not have an opening date to announce for the German restaurant and brewery under construction since late 2015, a company spokesman said.

Ron O’Connor, the spokesman for the Keller family of Effingham, previously has said the Hofbräuhaus would open late this summer, which would have been more than a year later than when the developers initially had hoped to open the restaurant and brewery.

The Keller family also has proposed a $28 million Hyatt Place hotel to be built next to the Hofbräuhaus on Illinois 15.

The financier for this hotel has retained a lawyer as ordered by a federal judge in Michigan as part of a lawsuit that describes the financier as a “rogue commercial lender.”

And in Jonesboro, Arkansas, where the Keller family has proposed a Hyatt Place hotel, a family member has sent city officials information about an investor in the project as requested by a Jonesboro commission whose leader has said delays in the project “raise some serious red flags.”

Chuck Keller and his sons proposed the Belleville project with the $12 million Hofbräuhaus, multiple hotels, a conference center and restaurants over two years ago but none of the announced businesses have opened at the site off Illinois 15 across from the National Shrine of Our Lady of the Snows. In Arkansas, the Keller family began construction on the Jonesboro hotel project last year but work stopped earlier this year amid complaints that contractors were not being paid.

A News-Democrat article last month highlighted the status of the Belleville project, the Michigan lawsuit filed against ICON Commercial Lending, which was tabbed by the Keller family to finance the Hyatt Place in Belleville, and the delays in the Arkansas hotel. Here are updates on those issues:

Belleville Hofbräuhaus and hotel

Belleville has spent more than $2 million to extend sewer lines to serve the Hofbräuhaus and Hyatt Place site.

And that’s been a constant concern for Ward 2 Alderman Mike Buettner, who has voted against the tax incentives offered to the Keller family.

“I think it’s ridiculous, myself,” Buettner said. “I cannot believe that the mayor and the other aldermen don’t step up and say something ... It’s the city’s problem because we’re going to have a sewer line going to nowhere.”

City officials have said the sewer line work is ready to be connected to any business.

Mayor Mark Eckert said he has asked city attorney Garrett Hoerner to monitor the development.

“He’s been relaying our concerns and trying to get answers as far as timelines, where they’re at and what’s happening,” Eckert said. “Several days a week he’s trying to have conversations with them and as soon as we know more we will share it.

“We’re trying to get some answers so we can get this project moving,” Eckert said. “We’re concerned and we’re very hopeful that they can get going in a timely fashion.”

Hoerner has had telephone conference calls about the issue, Eckert said, but has not yet been able to set up a face-to-face meeting with officials from the Washington, D.C. office of the Missionary Oblates of Mary Immaculate, which is the religious order that oversees the Shrine and owns the land where the Hofbräuhaus is being built. A meeting between the leaders of the Oblates and the city was scheduled in April but then canceled.

“Nobody could be more disappointed than the Oblates and myself that it’s taken this long, however we are going to do everything we can to see this project completed,” Eckert said. “There’s been some work but it has been minimal. We’re hoping to see some large amount of activity.”

A spokesman for the Oblates could not be reached for comment. Also, a spokesman for Hyatt could not be reached for comment.

Asked if the city will take legal action, Eckert said, “I’m going to stop short of saying that.”

The Belleville City Council has approved about $38 million in tax incentives based on city tax revenue generated by businesses that open at the site. The Kellers can get up $32.36 million in tax incentives, while the developer of a proposed soccer park was eligible for $5.5 million in incentives. However, the developer of the soccer park died last summer, and no announcements regarding a soccer park have been made since then.

The Kellers have said the owners of the Jack Flash convenience store chain would begin construction on a store this spring but work has not begun.

Michigan lawsuit

ICON Commercial Lending has retained an attorney, as ordered by a federal judge in Michigan in April.

Brian Akkashian of Bloomfield Hills, Michigan, has filed court papers stating that he is representing ICON Commercial Lending as well as ICON officials Randall J. Farr and Brent Watson. He filed the notice May 12, which was the deadline ICON Commercial Lending was given by the judge.

ICON Commercial Lending, Farr and Watson were sued Nov. 21 in Michigan by two real estate investors who alleged the company did not secure $12 million as promised and has not refunded them $310,000. ICON is accused of breach of contract, fraud and negligent misrepresentation. The case is pending.

Akkashian, Farr and Watson could not be reached for comment.

Before Akkashian was retained, Farr and Watson said in court documents that their company “is well known as a national lender with a solid reputation as a financier who can be counted on for honest answers and quick results.”

“ICON has not perpetuated any fraud or made false statement to plaintiff,” Farr and Watson said in court papers. They also said “unforeseeable force majeure events beyond ICON’s will or control, which were brought about about ICON’s European banking partner” prevented ICON from “performing its obligations.”

ICON continues to work to resolve this matter and the company expects that it will be able to pay the plaintiffs $310,000 in the “very near future,” Farr and Watson said in court papers.

In early November, Chuck Keller and his son, Chane Keller, announced that ICON Commercial Lending would provide up to $30 million for a six-story, 130-room Hyatt Place and 40,000-square-foot conference center to be built next to the Hofbräuhaus. Chane Keller said construction was expected to begin this spring but that work has not begun.

“We’re not discussing any aspect of the ICON Commercial Lending situation,” O’Connor said in an email. Chuck Keller released a similar statement last month.

In April 2016, ICON said it would refund the two Michigan real estate agents $310,000 but that did not happen, the lawsuit alleges.

“This is a breach of contract case against a rogue commercial lender and its two principals, who deceived two local real estate investors into a series of fraudulent agreements, and then perpetuated their fraud by making false statement after false statement about their desire to make good on their promises,” the agents allege in the suit.

Jonesboro hotel

Chris Keller, one of Chuck Keller’s sons, sent Jonesboro officials a letter saying he has a financial backer whose support will allow Keller to restart construction on the Hyatt Place hotel off Interstate 555 in Jonesboro.

Carl Kaeding of the Kaeding Management Group LLC in Minnesota will back the Hyatt Place project in Jonesboro, Chris Keller wrote.

“His support in this project will allow us to satisfy the existing obligations to the contractors and subcontractors who have already performed their work; as well as shore up the traditional financing required to complete this project,” Chris Keller wrote.

Neither Chris Keller nor Kaeding could be reached for comment.

O’Connor said he could not comment on whether Kaeding would invest in the stalled Hyatt Place project in Belleville.

Eckert said he had not heard of Kaeding.

Final plans for the Jonesboro hotel will be submitted to Jonesboro in about 60 days, Chris Keller wrote.

“Based upon conversations with our architect, general contractor and lender, we anticipate that it is reasonable to project we will be ‘coming out of the ground’ within 120 days,” Keller said in his letter.

Keller sent Jonesboro officials the letter May 19 after the city’s Advertising & Promotions Commission gave him a deadline of that day to document progress on the Hyatt Place or face losing financial support from the commission.

The commission has approved funds for marketing and tax incentives worth up to $500,000.

Jerry Morgan, chairman of the Advertising & Promotions Commission, said Keller has returned about $71,000 that had been advanced already and that about $4,000 was used for marketing the Hyatt Place.

“The letter can speak for itself,” Morgan said. “We’re not going to make any public comments about it until our next meeting, which will be May 31.”

On May 10, the general contractor for the Hyatt Place filed a mechanic’s lien for $1.5 million against the construction site claiming it had not been paid by Keller’s company, Northern Arkansas Hotel and Convention Center LLC, according to Craighead County, Arkansas, court records. This amount includes claims previously filed by contractors.

During the commission’s meeting April 5, Morgan said delays in Keller’s project and reports that contractors were not being paid concerned him.

“Needless to say, this has raised some serious red flags with me personally, along with the other commissioners,” Morgan said during the April 5 meeting when the board gave Keller the May 19 deadline.

At the time of the April 5 meeting, court records show two contractors had filed liens totaling about $900,000 against the Hyatt Place construction site. In mid-April, a third contractor filed a lawsuit against the general contractor saying it had not been paid $429,660 for steel for the project.

Eckert was asked if Belleville would give the Keller family a deadline to document when the work will be finished off Illinois 15 but he said it would be “premature” to say whether that would be done.

Buettner praised the Jonesboro officials.

“I’ve got to hand it to the people in Arkansas; at least they’re putting their feet to the fire, saying you need to produce something or we’re going to pull this money,” Buettner said.