MANKATO — A new 117-room Marriott hotel would be the latest in a string of recent multi-million investments in downtown Mankato under a proposal coming before the Mankato Economic Development Authority Monday.
Developer Gordon Awsumb’s Marriott SpringHill Suites hotel project would place guest rooms on the upper three floors of a five-story building constructed into the existing two-level parking ramp along Cherry Street and the Front Street plaza. Some of the current parking ramp would be remodeled and incorporated into the hotel — including a ground-floor swimming pool, bar/restaurant and hotel lobby. A skyway connecting the hotel to Mankato Place is also requested.
A memo to the Economic Development Authority doesn’t specify the construction timetable or the total cost of the hotel development, which would be the latest in a spate of downtown construction this decade — joining new office buildings constructed across Cherry Street, the recently completed seven-story Eide Bailly Center at Second and Main streets and the five-story Bridge Plaza building under construction at Second and Mulberry streets.
“When you’re talking about a hotel, you’re well into the $5 million range and it’s probably a lot more than that,” said City Manager Pat Hentges, who added that one or two other possible downtown hotel projects are being discussed.
Jon Kietzer, the owner of the Landmark Building at the corner of Second and Main streets, is exploring a boutique hotel as part of a renovation and expansion of the century-old building. Hentges has also heard rumors that a hotel is one potential use for redevelopment of the historic downtown post office building.
“I would predict within the next two to three years, we’ll have at least one (new) hotel,” Hentges said. “... There must be a market or otherwise people wouldn’t be interested. I think it says a lot about the success of the civic center — the investment made by the city and the state.”
Awsumb, who was the longtime owner of Mankato Place before selling it earlier this year, has held the development rights to the air space above the parking ramp since it was constructed in 2005. City Manager Pat Hentges told the City Council in January that Awsumb was getting closer to finalizing a hotel project that he’s been working on for several years.
Awsumb wouldn’t provide details to The Free Press in an April interview but said he was representing a group of investors — Downtown Mankato Properties, LLC — on a project for the site: “I’ve been working in Mankato since 1976, off and on, on that property. I’ll continue working on it the next four or five years.”
Documents filed with the city show the progress the developers have made in recent weeks and the work yet to be done.
On Nov. 1, a letter was sent to Wayzata-based Downtown Mankato Properties by Lee Janezic, vice president of Marriott Lodging Development, confirming that the group had been approved for a Marriott hotel franchise contingent on specific construction plans and other documentation.
A memo from Cory Abels of Bremer Bank to Awsumb and partners Matt Mithun and Mike Kahler indicated interest in financing the project: “Based on review of the market study, projected cash flow and strength of guarantors, we would like to move forward in finalizing our financial proposal for construction and the permanent financing of this project.”
But Abels cautioned that the bank would first need to see a development agreement between Downtown Mankato Properties and the city, architectural plans, construction bids and a contract with a hotel management company.
Hentges, too, said there is more work to do.
“We are at a point where we can brief the council on the nature of the plan and what are the next steps,” he said. “So we are only that far.”
Although Awsumb has the air rights above the ramp, he will need to purchase the parking facility from the city to move forward, Hentges said. The 2005 agreement allows Awsumb to buy the ramp for $1 starting in 2052, and city staff is recommending an appraisal to determine an appropriate value for purchasing it 33 years sooner.
The hotel would also consume part of the landscaped area on the Front Street plaza.
“The bigger issue is the loss of parking in the short run,” Hentges said.
The hotel would reduce parking spaces in the ramp from 156 to 121, and 24 to 84 stalls would be used by hotel guests, depending on occupancy on a given day — bringing the net loss of public parking to as many as 119 stalls.
One possibility to address that loss is to use the additional property taxes generated by the hotel to increase the number of parking stalls elsewhere in the area bounded by Riverfront Drive and Second, Hickory and Cherry streets. But those taxes might total only $800,000 over 20 years, which wouldn’t be enough to completely replace the lost parking, according to Hentges. More funding would be available if Blue Earth County agreed to also dedicate its new property taxes from the project toward boosting the availability of parking elsewhere in the area.
Those additional taxes, captured by a tax abatement, might also be the suggested source of financing for construction of pedestrian improvements requested by Awsumb — the skyway between the hotel/ramp and Mankato Place and a ground-level covered walkway leading from the opposite side of Mankato Place to the vicinity of the Graiff Building near Hickory Street. Those improvements would be intended to provide protection from the weather for people walking from the hotel to the civic center.
Compared to the city assistance approved in 2007 as part of a development agreement for construction of the Hilton Garden Inn, the Marriott request is substantially smaller — evidence of the significant increase in interest by private investors in downtown Mankato.
“The vast majority of the financing to get this project done rests on the private sector,” Hentges said.
The location of the hotel — it would face the Front Street plaza — is also an indication that the downtown entertainment district has evolved beyond the “Barmuda Triangle” once dominated by a sometimes-rowdy college-aged crowd.
“I think what makes this attractive is the nature of Front Street has changed a lot,” he said.
Floor plans for the hotel — which show a total of 121 guest rooms — portray a U-shaped building fronting the plaza. The first floor would contain the hotel lobby, bar and pool while retaining 41 parking stalls. The second floor would be almost entirely parking — 78 stalls — with a small area at the front dedicated to a hotel fitness room, guest laundry and a patio overlooking the plaza. The third floor would have 39 hotel guest rooms in two wings with the open portion of the “U” being a courtyard with grass and other landscaping planted on the roof of the parking garage. The fourth and fifth floors each contain 41 guest rooms.
The developers have been asked to hold a neighborhood meeting with other property owners in the area before formally seeking a review from the Planning Commission and City Council, something that isn’t expected to occur before February.