Nelson Construction & Development will receive an estimated $3.1 million in tax increment finance revenues over 15 years from a hotel project that was triggered by Drake University’s desire to foster economic development near its campus. 

The Des Moines City Council voted Monday to approve the agreement, the first under the newly created Drake Urban Renewal Plan that was adopted by the council on Jan. 14.

Nelson is building a Home2Suites hotel and retail building on a former Drake parking lot on the south side of University Avenue between 26th and 27th streets. The $27 million project calls for a lobby and amenities on the first floor and 124 hotel rooms on floors two through five. 

The building will have 11,000 square feet in retail/restaurant space on the ground floor facing University Avenue. Construction is scheduled for spring. The city will receive an estimated $5.9 million in hotel/motel tax revenues over 15 years and $35,500 from land sales proceeds for the project, according to a report from the city’s economic development department.

Nelson has acquired additional property in the area where it plans a multifamily project. Projected net property tax revenues from the project are $2.1 million over 10 years, $6.3 million over 20 years and $13 million over 30 years.