A massive downtown redevelopment of the 100 block of Main Street in Mankato would dramatically redesign the City Center Hotel and the Landmark Center building on the other end of the block, resulting in 200 or more remodeled or new hotel rooms.
Jon Kietzer is proposing the project that would convert the three-story office and apartment space in the Landmark Center to a 60-room boutique hotel called the Landmark Hotel. It would have a public outdoor garden dining area on the south side of the property. Kietzer said they are also planning a restaurant on the ground floor on the corner of Main and Second streets.
The adjacent City Center hotel would be dramatically renovated, resulting in 144 rooms, slightly fewer than the 150 rooms in the hotel now.
Kietzer said the roof would be removed from the existing swimming pool area to make way for an open-air courtyard, with hotel rooms on both sides of the courtyard. The pool would be relocated.
The plans show the addition of a new skywalk along Main Street that connects the current City Center Hotel to the Landmark Center. City Center Hotel already is connected to the civic center by a skywalk.
Kietzer, owner of Century 21 Landmark Realty, has long owned the Landmark Building.
“We’re pretty excited about the project,” Kietzer said Friday.
He is partnering on the City Center Hotel project with Slowey Management of Yankton, South Dakota, which manages 10 hotels. Kietzer said they have a pending purchase agreement on the City Center Hotel, which is owned by AHMZ out of the Twin Cities.
“Our plan is to get the Holiday Inn name back on it,” Kietzer said of the City Center Hotel, which was long a Holiday Inn.
“There’s considerable delayed maintenance that needs to be done there to get it up to the standards of Holiday Inn.”
He said the Landmark Hotel would be independently operated from the Holiday Inn, and he is still in discussions about whether Slowey also would manage the Landmark.
He said the City Center Hotel has a large kitchen and meeting rooms that will be retained. “We can use that for weddings and other events.”
Kietzer said they will be asking the city for “the standard TIF” subsidy to help finance the project. Tax-increment financing allows the developers to keep the property taxes that would be paid on the increased value portion of the project for a certain number of years to help finance it. “We won’t be asking for anything out of the ordinary, no tax abatement or anything.”
He said they already have some investors lined up for the project and others are interested. Kietzer said investors have interest because the properties are within an Opportunity Zone.
Opportunity Zones were set up in certain parts of larger cities under part of the federal tax overhaul of a few years ago. Investors who have sold other properties or investments and invest that money in Opportunity Zones can delay paying capital gains taxes on that money until 2026.
“And what really interests them, if they hold the (investment in) the hotel for 10 years, they’d never have capital gains on that investment,” Kietzer said.
He said investors also have expressed interest because the City Center Hotel has a skyway to the civic center.
Kietzer originally was planning only to turn his Landmark building into a boutique hotel but said finding enough additional parking on the site was problematic. He said tying the project into the City Center Hotel renovation solved that problem. City Center has underground parking and is attached to the civic center ramp, so there will be ample parking to handle both projects.
Mankato City Manager Pat Hentges said the proposal has a ways to go before the city gets into detailed reviews for plans and financing, but said having a plan in place is encouraging.
“It’s optimistic that they have a plan, and it’s certainly a big project.” Hentges said any projects in an Opportunity Zone would be attractive for investors.
This is the second major hotel proposal that’s been presented recently.
Developer Gordon Awsumb is proposing a new Marriott-brand hotel that he would build above the Cherry Street parking ramp in downtown Mankato.
Awsumb is seeking a total of $2.5 million in tax abatement from Mankato and Blue Earth County.
When the project was first brought to the City Council in December, Awsumb suggested the only direct subsidy needed was the abatement of $1.3 million in property taxes paid to the city. But he said the cost of building above the ramp is higher than first anticipated.
He owns the land under the ramp and the “air rights” above it. The city and county are reviewing his requests.