Mortenson is here to stay
Expect the Minneapolis-based company to take up residence after landing downtown convention center hotel deal
Friday, May 23, 2014 6:00 AM
It’s a short walk and a quick look up in downtown Des Moines to spot projects developed by Minneapolis-based M.A. Mortenson Co.
The 60-year-old firm will lead the development and construction team on a proposed convention center hotel that will change the downtown skyline. Mortenson has been doing just that in Des Moines and across the state since the 1990s.
“We already had a business plan for Iowa in place” when the company opened an office three years ago in Iowa City, said Randy Clarahan, a Sigourney native and Iowa State University graduate who is based in Iowa City as Mortenson’s construction executive.
Clarahan spent the past several months traveling between Iowa City and Des Moines and Minneapolis as Mortenson sought approval from a consortium of public and private entities that believe a convention center hotel is the key to drawing big events to Des Moines and spilling their economic benefits across the metropolitan area.
Mortenson was chosen as the developer of what supporters hope will be a 450-room, four-star hotel. The project is far from a done deal, with local officials waiting for a determination from the Iowa Economic Development Authority on whether a 25-acre area that extends south from the planned hotel location at 700 Fourth St. to Court Avenue will be approved as a redevelopment area that could qualify for up to $100 million in sales tax rebates. The project is one of three from 10 submitted to the state that have survived so far in a complicated and lengthy vetting process. The city of Des Moines is seeking about $35 million for several projects in its reinvestment district.
Clarahan said that gaining state approval is key to securing financing for the project, which has an estimated cost of $128 million.
There is little doubt that Mortenson was chosen in part for its expertise in securing financing for hospitality projects. The company has its own hospitality division that develops, designs and builds hotels. According to a report submitted to the Iowa Economic Development Authority, the developer of the convention center hotel will have a $15 million equity stake in the project.
So far, Mortenson has completed 85 hotel projects in the United States and Canada with a combined total value in excess of $1.3 billion.
It is keeping busy these days with $500 million of hospitality projects, including a JW Marriott at the Mall of America in Bloomington, Minn., its second hotel project at the nation’s largest shopping center. The first was an ultra-upscale Radisson Blu, which was built during the waning days of the recession and involved a $138 million non-recourse funding package that included private equity, tax increment financing, federal Recovery Zone bonds, pension fund investments, and a taxable and tax-exempt syndication.
“They pulled the project off when no one on the planet earth was getting financing … everybody had their hands in their pockets,” Clarahan said.
Worth mentioning is that Mortenson also is the developer behind a $325 million expansion of the Mall of America, including the JW Marriott, an office tower, expanded retail space and more formal dining area, a tourist welcome center and a large event space.
Mortenson, the country’s 25th largest contractor in 2013 with revenues of $2.3 billion, according to Engineering News-Record, is staying busy in the Twin Cities. It is the developer leading construction of a 1.6 million-square-foot, $975 million stadium for the Minnesota Vikings. It also has built stadiums for the area’s professional baseball, basketball and hockey teams, as well as for the University of Minnesota football team.
The company was founded on April Fools’ Day in 1954 by M.A. Mortenson Sr. His wife, Jennie, served as telephone operator, stenographer, payroll clerk, bookkeeper and “chief morale builder,” according to the company’s website.
By the 1990s, Mortenson was leaving its mark on Greater Des Moines.
It was the developer of Principal Financial Group Inc.’s 801 Grand, still the city’s tallest building at 44 stories.
A mere two blocks south, Mortenson built Wells Fargo & Co.’s North star Building at 801 Walnut St. With R&R Realty Group acting as the developer, also built the Wells Fargo Card Services building in West Des Moines.
City of Waukee Economic Development Director Dan Dutcher was Principal’s project manager on 801 Grand. He recalled that the company got the job because it was the low bidder, plain and simple.
A few years later, Dutcher was working for R&R Realty and was the project manager on the Wells Fargo Card Services building.
On that project, Wells Fargo was moving out of leased space and had a strict deadline for completing its new offices.
“It had to be done by a drop-dead date, and they got it done,” Dutcher said.
In addition to signature projects in Greater Des Moines, Mortenson also renovated Mercy Medical Center – Des Moines’ surgery center.
And it has been busy in Ames, Coraville and Iowa City over the past decade. If you’re a fan of wind farms, it is the contractor on MidAmerican Energy Co.’s Top of Iowa wind farm.
Mortenson has worked with several architectural firms in Des Moines. RDG Planning & Design is part of the convention center team.
It is unlikely the company will walk away from Des Moines after a convention center hotel is completed, a process that will take about 24 months.
“The convention center creates an opportunity for us to be here permanently,” Clarahan said. “It’s just a matter of time before we’re here.”
The Depot at 4th, 100 4th Street, Des Moines, Iowa 50309 | (515) 288-3336 | © 2014 Business Record. All Rights Reserved. | Legal disclaimer