Des Plaines officials and a developer have inked a long-awaited deal to sell land on the northeast corner of Mannheim and Higgins roads, paving the way for a hotel, restaurant and gas station.

The city agreed last Tuesday to sell the 8-acre parcel to Pearlshire/Bask Development Group for $1.8 million and offer up to $7.5 million in tax incentives through the next two decades.

The proposed $28 million development, to be called The Orchards at O'Hare, will include a five-story, 130-room Holiday Inn Express & Suites hotel with a 6,500-square-foot restaurant, BP gas station with 16 pumps and a tunnel car wash, a convenience store with Subway and coffee/doughnut shop, and a 6,550-square-foot free-standing restaurant.

Development of the vacant site has faced setbacks since 2000, when the city created a tax increment financing district -- where property tax money above a certain point is set aside for redevelopment rather than for local governments -- on the property and land to the north. Several failed agreements, the economic downturn and negotiations with Pearlshire/Bask slowed development.

Under the new agreement, the city will rebate 50 percent of property, sales and hotel taxes for 23 years, or until returning $7.5 million, whichever occurs first.

One acre of city-owned property at the site remains unsold after the deal, though the developer holds an option to later buy the land and build a restaurant, City Manager Mike Bartholomew said.

The $1.8 million land sale and taxes generated from the site will pay for the $10 million debt the city incurred by buying the two parcels. Future tax money will be revenue for the city.

The development will be a boon for the city's tax base, after residents have waited since 2000 for the project, Bartholomew said. City officials estimate the property will generate $40 million in taxes during the 23-year agreement.

Work on the project could begin by March, he said.

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