Developer Justin Mandelbaum and Des Moines city officials are negotiating an amendment to a development agreement for his $200 million downtown project that would extend to 2020 the beginning of construction on a tower and commercial building.

Mandelbaum was to begin construction of the Fifth’s residential tower and commercial building by Oct. 31, according to a development agreement approved by the City Council in September 2018. 

Part of that agreement also included an August 2020 deadline for completion of a parking garage that is under construction at Fifth Avenue and Walnut Street.

But Mandelbaum added another element to the 11-story garage -- 435 windmills that move with the wind and 870 1-foot-square LED panels that would provide an array of light features. The proposed artwork would cover the 20,400-square-foot west facade of the parking garage. 

City officials have numerous questions about the artwork, which is being designed by artist Yorame Mevorach. 

Construction of the parking garage is underway and will be completed by the August 2020 deadline, Mandelbaum said. The installation of the artwork, however, may not be completed by that deadline, he said. 

“We want to plan for a contingency in the timing because this is something that’s not been done before,” Mandelbaum said. 

Mandelbaum said he and city officials are working through questions regarding the artwork. “The city has the same questions we have,” he said. Answering those questions is creating a delay in reaching an agreement in the wording of the proposed amendment, he said.

Originally, Mandelbaum had until 2028 to complete the entire project. That deadline changed when another developer submitted a competing proposal for the site and said he could complete the project at a quicker pace. That developer dropped his proposal; at the same time, Mandelbaum agreed to more aggressive construction timelines.

Mandelbaum and city officials have been negotiating the proposed amendment to the development agreement since July. 

City Manager Scott Sanders, in a letter to Mandelbaum dated Oct. 14, wrote that he currently could not support an amendment to the agreement suggested by Mandelbaum because “of a lack of information regarding the financial and design impacts” of the project the developer has proposed.

Because Mandelbaum has not yet signed the amended development agreement, it “has placed [Mandelbaum] in the position of inevitably failing to timely satisfy … obligations due on October 31, 2019,” Sanders wrote.

Sanders wrote that if Mandelbaum signs the amendment in time for the issue to be discussed by the City Council at its Dec. 16 meeting, Sanders will ask the council to extend the deadlines for commencing construction on the tower and commercial building. In addition, Sanders wrote that he would ask the council to extend the deadlines for completion.

If Mandelbaum doesn’t sign the proposed amendment before the December deadline, he could risk being forced to turn over to the city the property for the two projects.

Mandelbaum said he expects to start construction of the 40-story tower in spring 2020 and to complete it in late 2022. He expects to start construction of the commercial building in late fall of 2020 with completion by mid-2022. The development agreement requires proof of financing and a construction permit prior to starting construction.

Mandelbaum’s project at Fifth and Walnut includes a 40-story tower with 209 luxury apartments, a 21c Museum Hotel with restaurant and bar, and a five-story commercial building that will include a movie theater.

“It’s a complicated project, and plans are taking longer than expected to finalize,” he said. “What we’ve proven to the city is that we are diligently pursuing the project and that we’ve made the project better than when it was first proposed.

“We’ve also spent a lot of money on it.”

Mandelbaum said he’s confident an agreement will be reached with the city before the December deadline. 

The development agreement offers Mandelbaum more than $20 million in tax breaks and forgivable loans generated by the project. It also includes a complex loan for the parking garage under which Mandelbaum builds the garage with a private mortgage and the city lends him money to cover his losses over the 20 years the mortgage is in place. In year 21, Mandelbaum would start to repay the city with revenue from the garage. If the tower and commercial building are constructed, the city would forgive about $6.8 million of the loan.