Alderman claims Johnson backed off housing migrants at Pebblebrook’s hotel

Alderman Brendan Reilly claimed Monday that Mayor Brandon Johnson backed off a plan to house migrants at publicly traded hotel landlord Pebblebrook’s Hotel Chicago in River North.

The mayor’s office told The Real Deal that there are no plans to house migrants in the 354-room hotel at 333 North Dearborn Street after the 42nd Ward’s Reilly went on the attack against Johnson. The alderman sharply criticized a deal he claims the mayor was exploring to house migrants with Maryland-based Pebblebrook Hotel Trust, a firm currently shopping its Chicago properties for sale.

As more foreign migrants flow into Chicago and other large cities, Reilly, whose ward includes much of River North and the Loop, blasted a plan he said Johnson was examining in a statement that also criticized another hotel — the 359-key Inn of Chicago owned by Remo Polselli — that made a similar deal with the city.

“I am glad the Johnson administration decided to listen to reason by shelving this horrendous idea,” Reilly told TRD in a statement. “They were strongly considering the site as late as this past Friday.”

Reilly initially said the Dearborn Street property could have housed up to 1,000 migrants and was concerned because the portion of State Street proximate to the Hotel Chicago has been on the Chicago Police Department’s “Drug & Gang Hotspot List” for years and is near what he called a “problematic” Red Line “L” stop, in addition to the temporary Bally’s casino.

“Alderman Reilly is vehemently opposed to converting this property into a migrant hotel and believes this decision will do irreparable harm to the River North community,” his office said in a statement, before the mayor’s office confirmed the plan was off the table for now.

As of earlier this month, 9,800 migrants were being housed in city shelters, and more than 3,000 others were at police stations and airports awaiting placement, according to local news reports. More than 17,000 migrants have arrived in Chicago since August 2022.

A spokesperson for Maryland-based Pebblebrook said Tuesday the company has had no discussions with any city officials about the deal to house migrants.

Nonetheless, the possibility ignited a brief flare as the landlord looks to sell the Hotel Chicago within the Marina City complex. It also started shopping the 752-room Westin hotel on the Magnificent Mile, and if the listings lead to deals, they would mark the company’s full exit from Chicago’s lodging market.

A JLL team was hired by Pebblebrook in May to market the Hotel Chicago for sale, but so far it hasn’t found a buyer.

Polselli, the landlord of the Inn of Chicago, pushed back against Reilly’s stance on housing migrants. Earlier this month, the alderman called on the city to cancel its contract at that property, which started housing migrants this year and has hosted over 1,500 new arrivals. Reilly and Alderman Brian Hopkins of the 2nd Ward have both requested the contract’s cancellation, with Reilly on Monday alleging there are “abhorrent conditions and criminal activity observed there on a daily basis.”

Polselli said the aldermen are contradicting themselves by targeting the Inn of Chicago, whose contract with the city allows only migrant families to be housed there, while both Hopkins and Reilly have said the trouble at migrant housing sites in the city is being caused by young single males.

“There are no single males at the property,” Polselli said. “Why is it a failure? Is it better to have the people lying in the police department or on the ground outside the police departments? These are human beings and we’re going into wintertime. Reilly is upset so he should find a solution if he thinks this thing doesn’t work.”

Polselli owns the former Standard Club hotel building at 320 South Plymouth Court in the Loop, as well, which also has a contract with the city to house migrants.

Reilly accused Johnson of “abusing the authority of his office” by entering into the contracts to house migrants at hotels without the approval of the full Chicago City Council.

Reilly’s statement went on to claim that requests for emergency responders to the Inn of Chicago have “skyrocketed.” Meanwhile, Polselli pointed out that the property was not operating as a hotel for the first couple years of the pandemic until May this year, when it started housing migrants, so the return of people to the property has perhaps contributed to more police calls recently. He bought it at a discount for $13.5 million in 2021, with plans to further invest in the asset to turn it around after it struggled under previous ownership.

Polselli is also working on resolving an unrelated lawsuit filed earlier this year over the Inn of Chicago property. Labor union Unite Here Local 1 wants its members laid off during the pandemic from their jobs at the property brought back to work now that the government has booked its rooms to house migrants. The landlord said a resolution is in the works between attorneys.

Editor’s note: This story was updated to add a statement from Pebblebrook.

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