The Des Moines City Council is scheduled to vote today on an urban renewal development agreement that would open the door to the construction of a 33-floor high-rise apartment building on the east half of the former Kaleidoscope Mall site.

The estimated cost of the project is $148 million, with completion expected in 2027. Once complete, its estimated assessed value will be more than $69.5 million.

The City Council will consider the agreement with 515 Walnut LLC during its meeting, scheduled for 5 p.m. at City Hall. According to city documents, city staff is recommending approval of the agreement.

The project would consist of 390 multifamily apartment units. It would be the largest residential project ever built in downtown Des Moines. It would include a mix of studio, one-bedroom and two-bedroom units.

It would also be the most significant change to the downtown skyline since the construction of 801 Grand in 1991, documents state.

The existing parcel is 0.86 acres. The tower project site is 0.35 acres, leaving the western half of the property available for future development.

Demolition of the Kaleidoscope site began in August 2023 to make room for the tower project.

The development agreement that the council will consider also includes a market-rate parking agreement for up to 390 spaces in the Fifth and Walnut Street parking ramp. The high-rise apartment building will also be connected to the skywalk, and the project would create more than 700 construction jobs, documents state.

The city’s Office of Economic Development has negotiated final terms of the agreement with the development company and its manager, Joseph Teeling. Terms of the agreement provide for a tax increment financing (TIF) package to help cover a construction funding gap, the reduction of rent and income-restricted units from 72 to 39, and the increase in the restricted rent caps from 50% of HOME Rent Limits to 65% of HOME Rent Limits. The income-restricted units would be available to households earning 80% or less of the area median income.

The mix of affordable units would be 18 studio apartments, 12 one-bedroom units, and nine two-bedroom apartments.

According to city documents, the reduction in affordable units and the increase in the rent cap restrictions is the result of $2 million in non-project-generated TIF incentives, which had been included in a preliminary agreement, being eliminated. In the documents, city officials said the $2 million can no longer be included because of city budget constraints.

According to city documents, the financial terms of the agreement include $5.3 million in incentives, including $3.8 million in TIF, $500,000 in an American Rescue Plan Act grant, and $1 million from the release of funds provided by EMC and held in escrow for the reconnection to the skywalk.

Documents also show that 515 Walnut LLC plans to file for a 10-year declining residential tax abatement on the project.

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