Union wants Remo Polselli to rehire workers for migrant housing at Chicago hotel

A labor dispute is engulfing the landlord of distressed Chicago hotels who has a patchy past and a current deal with the city to lodge migrants at two prime locations.

Remo Polselli is once again at the intersection of a dramatic governmental intervention and public dollars tied to troubled real estate assets.

This time, though, it has nothing to do with millions in federal taxes that the Michigan-based investor has allegedly dodged. Polselli found himself in such circumstances during the 2000s, when he served prison time, getting released in 2004 after pleading guilty to three tax charges. Separately, Polselli’s alleged underpayment of taxes was the subject of a May ruling by the U.S. Supreme Court that struck down his contention that the IRS’ collection methods trampled on his rights.

A Chicago hotel union is the source of his next legal obstacle. Unite Here Local 1 claims its members laid off during the pandemic from their jobs at the Inn of Chicago, a property now in Polselli’s portfolio, should be brought back to work now that the government has booked its rooms to house migrants from south of the U.S. border who were transported to Chicago from southern states.

Unite Here Local 1 sued the Polselli venture that bought the 359-room, 22-story asset at 162 East Ohio Street for $13.5 million in 2021, a huge discount from the $57 million loan the property previously secured. Its former owner, San Francisco-based Chartres Lodging Group, defaulted on the debt, and the note was sold to New York-based Stabilis Capital Management in 2015. Stabilis had been trying to sell the property since seizing it in foreclosure in 2017, and Polselli emerged as its taker amid the pandemic when the lodging market was decimated.

Polselli last year also bought the Standard Club building at 320 South Plymouth Court in the Loop for $9 million, after the 96-year-old building’s occupant encountered declines in membership and financial trouble before the pandemic. He said the city approached him to use both properties to house migrants as southern state governments began sending droves of people to large northern cities.

Though he has renovation plans for both properties — he has said he intends to rename a   revived Standard Club the Chicago Social Club with two restaurants and 60 hotel suites — work on those projects is on hold until the migrant crisis is resolved. Both hotels had already been closed by their prior owners.

The Inn of Chicago had remained closed since earlier in the pandemic until May, when the city began housing migrants there. The labor union claims Polselli has not called former employees of the establishment back, and is ignoring a city law passed to ensure hospitality workers laid off during the pandemic would get priority on filling jobs as reopenings occur.

Polselli, however, said he came to an agreement with a master tenant to operate the property while it serves as a migrant shelter, and that it’s a fundamentally different business than hotel service workers are used to running.

“When Inn of Chicago does reopen, it is going back to the union jobs,” Polselli said in an interview.

The union and its attorney didn’t return a request for comment. Mayor Brandon Johnson’s press office didn’t respond to an inquiry into how much the city has paid Polselli’s ventures to house migrants in the properties, which were both empty and not generating any revenue previously. 

The Standard Club property isn’t subject to a labor dispute.

The city’s decision-making regarding how to house migrants recently sent to Chicago has proven to be sticky and controversial.

More than 10,500 asylum-seeking migrants have arrived in Chicago since the end of August, stretching the city’s shelter system as hundreds are still sleeping on police station floors, according to local news reports. The Chicago City Council last month approved $51 million in spending for migrant housing total, though it’s unclear how much of that is going to the Inn of Chicago and the Standard Club, and the funding was only expected to last through June.

The deals to house migrants are providing Polselli’s ventures some revenue when they would otherwise be in the midst of renovations and likely drawing little to nothing in the way of rents.  The camera-shy 67-year-old entrepreneur said he’s bullish in any case on the trajectory of Chicago’s hotel rebound despite what he says are higher labor costs here compared to other markets.

“The cost of operations is higher in Chicago than, for example, Florida,” Polselli said. “In LA, the hotel workers union just went on strike asking for $25 an hour plus benefits. The union does add a cost to it, but credit to the union: They provide really good, reliable people.”

He said he’s owned and operated 110 hotels over 32 years in real estate, and lately is jumping on problem-ridden assets, including a bid on the Hotel Felix in River North that was sold out of foreclosure last year — the winning offer was Monarch Alternative’s $29 million bid.

“They still got a good deal on it,” Polselli said of that sale. “Chicago is working its way out of its hole. Any hotel in Chicago will be a great investment if you can hang on for the next two or three years. Both of our properties — Standard Club and Inn of Chicago — are phenomenal buildings that we feel have a lot left.”

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