Tens of millions of dollars from Bloomington could support convention center host hotel; legal pressure mounts for Showers West 'public purpose'

To push along a potential deal with Dora Hospitality for development of a host hotel for the soon-to-be-expanded Bloomington convention center, the city's redevelopment commission (RDC) has approved $300,000 for preliminary architectural designs.

The designs for a hotel to be constructed at the former Bunger & Robertson site at Fourth Street and College Avenue (aka College Square) would be owned by the RDC.

The action by the five-member RDC came on Monday at its regular Monday meeting, with dissent from Randy Cassady. He was not adamantly opposed to the idea of approving preliminary designs, but wanted to register his desire for a "little bit more information."

In connection with the host hotel project, the $300,000 price tag for the preliminary architectural designs, combined with the $100,000 for site review brings to $400,000 the amount of incentives that Bloomington's RDC is putting on the table.

But that's loose change compared to the numbers that city of Bloomington corporation counsel Margie Rice described for an eventual deal, which she described as "in the neighborhood of tens of millions of dollars." That could come in the form of some kind of partnership with Dora, where the RDC retains ownership of the Bunger & Roberton land—for which it paid close to $7 million—and gets some kind of revenue stream from the hotel.

In other significant business for the RDC on Monday, the group voted to terminate the leases of the eight remaining tenants of Showers West—which is the western part of the former Showers Brothers furniture factory building that also houses city hall.

Showers West lease terminations

The city of Bloomington does not have any immediate specific plans for the space in Showers West that the eight tenants occupy. But based on remarks from Rice at Monday's meeting, the city is apparently facing increasing pressure from its outside bond counsel to ensure that the space is put to a "public purpose."

The bonds that were issued in late 2022 to pay for the cost of acquiring the Showers West building, as well as other public safety projects, come with a legal requirement that the building purchased with the money be put to a public purpose. That public purpose, as envisioned by then-mayor John Hamilton's administration, had been to house the city's fire department administrative offices and the city's main police station.

The fire department was moved into Showers West. But Kerry Thomson's administration, which took over at the start of 2024, opted not to pursue a move by the police department. That eliminated the immediate urgency for tenants to leave, which stemmed from the practical need to make way for a specific city use. But the view of the city's bond counsel, according to Rice, is that it does not count as a public purpose for the government to collect rent from tenants and use the proceeds of the rent for a public purpose. Rice put it like this: "And believe me, I've tried to sort of like—well, if we're getting the rent and we're using the rent as a public purpose, isn't that OK? And the answer by bond capital is: No, it needs to be used for a public purpose."

The tenants affected are: Bloomington Board of Realtors; Bloomington Health Foundation; Monroe County CASA; Crash Research and Analysis; Merrill Lynch; Probleu; Shrewsberry & Associates; and Warrant Technologies.

The lease terminations come with the requirement that damages to the tenants be assessed and paid. Rice said on Monday that she hopes the amounts can be based on negotiations, but if needed, in court.

RDC member John West asked for a breakdown of the lease end dates for the tenants. Rice replied that she could provide that information, but indicated she is skeptical that the end dates are relevant. Rice put it like this: "That's not going to be terribly relevant to me…in my negotiations, because…I just don't think that that's how you do the math." West countered by saying, "A little disagreement here—I think it is relevant, and it's kind of important to know that before we vote on this."

During public comment time, local real estate agent Dave Harstad also weighed in with the idea that the length of a lease is relevant to negotiations on damages. Harstad put it like this: "There should be some pretty clear black-letter law as to what damages should be. And I think that that would help de-escalate and make things more swift and amicable. Is an exercisable option compensable? There's got to be law on that."

Also attending the meeting was one of the tenants, Tia Arthur, who is executive director of Monroe County CASA (Court Appointed Special Advocates). Arthur asked that if the RDC were to approve the resolutions that the date by which tenants had to be out of the building be extended beyond Oct. 13 which was the proposed date.

The resolution approved by the RDC was amended to specify Dec. 13 as the move-out date. That led to dissent from RDC member Sue Sgambelluri, who was generally in favor of the resolution, but did not support the extension of time.

Potential deal with Dora Hospitality

The Monroe County capital improvement board (CIB) wants the host hotel for the convention center expansion to be an up-scale facility with at least 200 guest rooms and a range of amenities, like a restaurant, lounge, concierge or virtual concierge services, and an outdoor atmosphere like a rooftop courtyard. Included in the RFP was a meeting room of at least 10,000 square feet, along with a fitness center.

It was in early October 2024, when the CIB settled on Dora Hospitality as its favored hotelier, but the negotiations on the land acquisition at the former Bunger & Robertson site have not been swift.

The basic approach that the city of Bloomington pitched to the RDC on Monday was that by investing in the preliminary architectural design and potentially retaining land ownership at the former Bunger & Robertson site, Bloomington could become a partner in the hotel venture, and eventually secure ongoing revenue and maintain quality control over the hotel.

At Monday's RDC meeting, assistant city attorney Dana Kerr highlighted some key motivations for considering a public-private partnership for the hotel. First, the city could ensure the hotel remains a premier property by mandating regular upgrades like carpet and cabinetry replacements. Second, the partnership could create a non-TIF revenue stream after the current tax increment financing district expires, providing long-term financial benefits to the city.

Based on Rice's reports to the RDC of conversations with the city's outside counsel, Scott Chinn, the total package of incentives that would be required for a deal like the one that the city is contemplating with Dora, would amount to tens of millions of dollars.

As Rice put it, "I'd rather the city redevelopment commission be a partner and make money on this deal than to give tens of millions of dollars incentive, to get nothing out of it for return and investment."

According to the city's online financial records, Chinn's firm, Faegre Drinker Biddle & Reath, has so far been paid $5,361 for transactional advice on the hotel deal. The dates for the work stretch back to summer 2024. [Added 11:13 a.m. on June 3, 2025: According to HAND director Anna Killion-Hanson, "I just wanted to clarify that the City did not engage Chinn until just recently, in 2025, for the Convention Center Hotel."]

There were some grumbles from the RDC about the fact that up to now none of its members have been a part of the conversations between Dora and the city. One outcome of Monday's meeting, beyond the approval of the $300,000 in preliminary architectural design work, is attendance of two RDC members at upcoming negotiations. It will be John West and Randy Cassady who will attend those meetings.

The hotel planning is lagging significantly behind the convention center expansion project, which is set for a groundbreaking on Tuesday (June 3) at 3:30 p.m.—across College Avenue from the existing facility. The convention center expansion has a projected opening date of sometime in early 2027.