The start of construction of a proposed 112-room Element Hotel by Marriott at 304 E. Walnut St. in Des Moines has been delayed. Rendering special to the Business Record

 

A developer who plans to construct a six-story hotel in Des Moines’ Historic East Village will be allowed to delay completion of the project until Dec. 31, 2023, the City Council decided this week.

Swaps Cash LLC, managed by Lincoln and Lisa McIlravey of Solon, has proposed building a 112-room Element Hotel by Marriott at 304 E. Walnut St. Construction was to begin a year ago, according to a development agreement approved by the council in August 2019.

Completion of the project, originally valued at $21.5 million, was slated for early 2021.

However, cost overruns and the economic effects of the outbreak of the novel coronavirus on the hospitality business have delayed the project, according to information provided to the council at its meeting this week.

The McIlraveys are "optimistic that future economic conditions with the local hospitality industry will be conducive for the project to move forward," according to the council document.

The project is expected to receive financial assistance from a 10-year, 80% tax increment financing economic development grant of up to $2 million, according to the development agreement with Swaps Cash LLC.

In a related matter, the council also approved an amendment to a development agreement that delays until July 1, 2021, the reopening of the Hotel Fort Des Moines at 1000 Walnut St.

The hotel, originally constructed in 1917, is undergoing a $50 million renovation. A development agreement approved in 2016 between the city and Coralville-based Janssen Lodging LLC, the hotel’s owner, called for the project to receive up to $4.1 million in tax increment over 20 years.

The Hotel Fort Des Moines, which will retain its name but be part of Hilton Hotel's Curio Collection, received $16.2 million in state historic preservation tax credits awarded in mid-2019.

The renovation project had been expected to be completed by this fall.

"As the building restoration nears completion, it would not be beneficial to either the developer nor the city for the developer to immediately open the hotel due to the impact of the COVID-19 virus on the hotel industry," according to a document provided to the council this week.

Also this week, the council approved:

• Preliminary terms of an urban renewal development agreement with 217 E Second LC, which is managed by developer Jake Christensen, who is proposing a $6.3 million renovation of the building at 217 E. Second St. Christensen bought the property in 2018 for $1.85 million, Polk County real estate records show.

Terms of the proposed development agreement between the city and Christensen call for the project to receive financial assistance in the form of project-generated tax increment of about $1.2 million.

• Designating the Financial Center at 606-666 Walnut St. and 207 Seventh St. a local landmark. LawMark LP, which owns the structure that includes a 25-story tower, plans a nearly $60 million renovation of the property. The designation makes the property eligible for State Historic Tax Credits that can be used to help defray renovation costs.

• Final terms for a development agreement with Aust Real Estate LLC, managed by Matt and Mindy Aust of West Des Moines. Aust Real Estate plans a $6.1 million restoration of property at 1201 Keosauqua Way in Des Moines. For years, the brick structure was home to Reliable Rug and Carpet Cleaning Co.

The development agreement approved by the council provides the project with up to $990,119 of project-generated tax increment over 20 years. The property in early 2020 was valued at $180,700. When the renovations are completed, the property’s value is expected to climb to $1.4 million, according to city documents.

The developers, who bought the property in April, plan a historically compatible renovation of the 18,912-square-foot building, which is vacant. The renovated structure will include speculative commercial and retail space and one second-story living unit.

Construction is expected to begin by spring 2021 and be completed by early 2022, according to city documents.
Aust Real Estate LLC has purchased a long-abandoned building at 1201 Keosauqua Way. The structure will undergo a $4.8 million renovation. Architectural rendering special to the Business Record