Business briefs: Burnsville, investors work on deal for Heart of the City hotel

An investors' group planning to build a full-service hotel in Burnsville's Heart of the City has reached a tentative deal to buy the last piece of city-owned land in the redevelopment district.

Akota Hospitality LLC of Dickinson, N.D., has offered to buy the 1.75-acre site for $503,600. The Economic Development Authority is expected to consider the deal next month, according to Economic Development Coordinator Skip Nienhaus.

Akota is working on the hotel project with St. Paul-based LHR Hospitality Management, which declined to comment on the deal. The site plan submitted to the city shows the hotel as a Hilton Garden Inn.

City documents say the deal would require Akota to build a hotel with at least 90 rooms, a restaurant and meeting space. Plans would have to submitted by Jan. 31, 2014. The city hasn't gotten a specific development timetable but Nienhaus believes the buyers hope to begin work in the spring or summer of next year.

The site is part of a 6.24-acre parcel formerly occupied by AAA and acquired by the city in 2001 as part of the Heart of the City project. The Burnsville Performing Arts Center, Mediterranean Cruise Café and a parking deck are now on other portions of the site.

Akota's offer is more than Dakota County's assessed value of $457,600 but less than the city's appraisal of $865,000 and Akota's appraisal of $737,000.

Despite that disparity, city staffers are recommending the deal, noting that a sale would get the property back on tax rolls, with total taxes of about $125,000 a year. The new owner also would be subject to the annual Heart of the City special taxing district for streetscape and other amenities.

The Heart of the City site would be the second hotel-related property in Burnsville for Akota. In 2011, it bought the Burnsville Inn and Suites and demolished it. The city has gotten no proposals to redevelop that site east of Interstate 35W and north of Hwy. 13.

The Eagan City Council recently approved a Dakota County study of a busy stretch of Pilot Knob Road where changes could affect plans to redevelop the former Lockheed Martin corporate campus.

In accepting the study, the council made it clear it doesn't support the county's recommendation to close a driveway entrance off Pilot Knob that feeds to a Wells Fargo branch office. That has been strongly opposed by Wells Fargo.

The city and county have said they will continue to look at other ways to ease traffic congestion and improve safety on Pilot Knob between Yankee Doodle Road and Central Parkway.

The driveway issue may figure into plans by Minneapolis-based CSM Corp. to redevelop the 47-acre former Lockheed site, but it's not a primary concern, CSM Vice President Thomas Palmquist said.

CSM proposed a large-scale retail center for the site more than a year ago but later withdrew its application for the project. Palmquist said the developer is revising the plan to take into consideration the city's preference for a pedestrian-friendly, mixed-used development.

Under the original timetable, work on the project was supposed to begin this spring and be complete in the fall of 2014. Palmquist said CSM now hopes to begin construction in the spring of 2014.

Meanwhile, progress continues on Eagan's other major retail project in the Cedar Grove area. Baltimore-based Paragon Outlet Partners recently announced a June 4 groundbreaking for its outlet center that is expected to have more than 100 stores when it opens late next year.

Send your Dakota County business news to susan.feyder@startribune.com