Employers Mutual Casualty Co. has offered $700,000 to buy the Kaleidoscope at the Hub, a key piece to the transition of Walnut Street from a bus mall to a retail and entertainment district that will position Des Moines as a 24-hour city.

The Des Moines City Council agreed last month to release a nearly $2.2 million first mortgage on the property that it loaned from a federal development grant in 1984, when Hubbell Realty Co. and others developed the Kaleidoscope and the adjacent Hub Tower in one of the initial efforts resurrect downtown.

According to a city document, Hubbell has accepted a $700,000 cash offer from the insurance giant to purchase the Kaleidoscope, that last remaining piece of a two-block development that Hubbell spearheaded.

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Employers Mutual, more commonly known as EMC Insurance, bought another piece of that development, the 20-story Hub Tower at 699 Walnut St., out of receivership in 2010 for $7 million, about half of its assessed value at the time.

Hub Tower was placed in receivership in November 2009 after U.S. Bank foreclosed on a $16 million loan that had been assumed by an investment group led by Greater Des Moines commercial real estate broker Kurt Mumm.

Soon after Mumm acquired the property, vacancies spiked as its larger occupants, including Aviva USA, began building their own corporate headquarters.

Hub Tower and the Kaleidoscope were built as a mix of office and retail space. The skyscraper was part of the downtown renaissance of the 1980s; its developers sported prominent business names - Equitable Life Insurance Company of Iowa, Iowa Power and Light Co. and Hubbell.

EMC has moved some operations to Hub Tower and has triggered extensive rennovations that have attracted new tenants, including Regus PLC, which rents office suites, and PricewaterhouseCoopers LLP.

The Kaleidoscope had struggled as a retail center in recent years, with Hubbell experimenting with a variety of marketing strategies to add tenants.

According to a city document, the property is 50 percent occupied.

EMC plans to invest up to $4 million in repairs, upgrades and renovations to the 161,900-square-foot property, according to the city document.

"It helps redevelopment efforts when you have one large owner controlling such a huge swath," said Matt Anderson, the assistant Des Moines city manager who is in charge of the city's economic development efforts. "We're very excited."

Hubbell will pay half of the gross sales price to the city to release the mortgage, according to city records. Hubbell will be responsible for payment of all tax escrows, real estate commissions, attorney fees and closing costs.

Meanwhile, the City Council will be asked in December for final approval of a development agreement for the renovation of the Younkers Building.