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They city and the owner of Hotel of T error are renewing negotiation talks.
SBJ file
They city and the owner of Hotel of T error are renewing negotiation talks.

City Beat: Council’s repeal of ordinance saves cost of referendum

A council member stresses savings by negotiating quickly on Hotel of Terror purchase

Posted online

Springfield City Council skirted a referendum election with a unanimous vote at its May 8 meeting to repeal a declaration of eminent domain.

With that Feb. 21 declaration, council had sought to acquire the property at 334 N. Main Ave., where the Hotel of Terror haunted attraction has operated for 45 years. The eminent domain declaration would have allowed the structure to be torn down to make way for the Renew Jordan Creek project and the replacement of the Main Street Bridge, as well as the construction and maintenance of other storm and water infrastructure.

The city and Hotel of Terror owner Sterling Mathis agreed to continue negotiations for the purchase of the building and relocation costs for its movable contents. Prior to voting for the repeal, Councilmember Brandon Jenson urged both sides to move quickly to avoid running up construction costs with a long delay.

The repeal made moot another resolution, which would have asked voters to decide in an Aug. 8 election whether to let the eminent domain ordinance stand and the building be condemned.

An election would have cost the city an estimated $250,000, according to City Attorney Rhonda Lewsader.

Mathis appeared in person at the meeting to make a case for council to repeal the petition.

“We’re here because the city is trying to take my property for way less than it’s going to cost to move or rebuild somewhere else,” he said.

Mathis said the city began its negotiation with a $200,000 offer four years ago, in line with an appraisal of the attraction as a vacant building – not a turnkey haunted house that has been in seasonal operation for 45 years. He noted 15,000 people visited the attraction in October 2022.

The city’s current offer is $550,000, according to Mathis.

He said a construction company has told him recreating the attraction elsewhere would cost $1.5 million-$2 million. Mathis owns another downtown building, the Dungeons of Doom, a haunted attraction built into a grain elevator at 701 W. Wall St. There is room in that structure for the Hotel of Terror’s contents, he said, but the property needs its roof replaced, metal silos removed, sprinklers installed and other work, priced at $500,000, before a now-closed area can be opened to visitors as a new Hotel of Terror.

Mathis said a moving company hired by the city found the majority of the features he has built into the attraction over the years cannot be moved. He added that a city-recommended builder believes he can do design work for $130,000-$150,000, but Mathis – who said he is not opposed to moving – needs more time to work it out.

“It’s up to you guys to give me the time,” he said.

Councilmember Matthew Simpson said that since there is a willingness on both sides to negotiate, it’s just a matter of determining fair market value and moving costs.

“I think that the best outcome in these situations is always a fair market value reached through negotiations,” he said. 

Jenson noted inflation is elevating the estimated cost of the project each month. City Manager Jason Gage said while inflation is coming down, it is not clear if the cost of construction projects will too, since there are a lot of federal dollars in the economy for construction.

Jenson stressed the need to move quickly to keep prices down.

“I would just respectfully request that if this ordinance is repealed that both the city and Mr. Mathis were to act as expediently as possible to minimize the cost overruns that are going to be experienced on this project as a result of this delay,” Jenson said.

Councilmember Craig Hosmer said he would rather have $250,000 spent toward getting the issue resolved than paying to have an election.

Rentals debated
Council approved Type 2 short-term rental permits for 2842 E. Lombard St. and 2040 N. Hoffman Ave. but rejected one for 1843 S. Kimbrough Ave. Type 2 rentals apply to properties where owners are absent from the premises during the rental period.

Permit requests with approval of 55% of surrounding property owners do not need to be voted on by council. No signatures were attained from neighbors in support of a permit for the Lombard Street property and no protest petitions were returned, but council approved the permit, with Hosmer delivering the lone “no” vote. The Hoffman Avenue permit was approved unanimously with signatures obtained from three of six adjacent property owners and no protest petitions.

The Kimbrough Avenue permit failed by a 6-3 vote, with councilmembers Callie Carroll, Heather Hardinger and Derek Lee supporting it. Three neighbor signatures were obtained for 50% approval. Two protest petitions were submitted, and one objecting property owner, Pat Gibson, attended the meeting to voice her objection, noting her tenant at the property was uncomfortable with strangers coming and going next door.

For short-term rental permit requests, the city sends petitions to owners of adjacent properties, and they may sign and return these to signify their objection. The letter to property owners indicates that if they do not return the petition, they are considered to be in approval of the permit.

Hosmer said that procedure unfairly puts the onus on neighbors and is very different than an election, where choosing not to vote is not taken as an indication of approval.

“I think we’ve got it backwards right now,” Hosmer said. “We might as well get rid of the short-term rental regulations and just let anybody do it in the city of Springfield.”

Councilmember Abe McGull disagreed, noting in a democratic society, people have an obligation to vote.

“Same thing for our neighborhoods,” he said. “If you don’t want this in your neighborhood, you should voice your opinion about it. But sitting back and not saying anything, I just don’t accept that.”

Director of Planning and Development Susan Istenes said there were 266 licensed short-term rentals and estimated over 400 were operating unlicensed in the city. Noting there are more people operating illegally than legally within the city, Hosmer said that’s not fair to people who work to meet the city’s requirements.

“It just seems like we’re encouraging people to violate what our laws are in the city of Springfield,” he said.

Gage said the Lombard Street property was the first one approved by council without any approving neighbor signatures. He added the city intends to subscribe to software that will help staff enforce short-term rental laws.

Other action items

  • Two residents of the University Heights neighborhood, John Stinson and Donna Hemann, expressed their objections to a proposed development by BK&M LLC at the corner of Sunshine Street and National Avenue. Hemann, who is president of the University Heights Neighborhood Association, said she anticipated Mayor Ken McClure would recuse himself from voting on rezoning the corner to make way for the development, as his sister owns property two houses away from it. McClure said he had obtained a legal opinion that he is not required to recuse himself.

Council is scheduled to consider BK&M’s rezoning application later this month, with a public hearing set for May 22 and a vote to follow on June 5. The Planning & Zoning Commission voted against recommending rezoning at its April 20 meeting.

  • Jeremy Dean, who unsuccessfully ran for a council seat in the April election, addressed council members to request that they issue a public statement in support of the LGBTQ+ community. He said he would work with leaders of local advocacy groups to submit one for council consideration.
  • Simpson was unanimously reelected and sworn in to a second term as mayor pro tem, the member who serves as mayor in the absence of that official.

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