An on-again, off-again project seen as one of the major early investments in Rochester’s push to remake itself as a global destination for health care is off again, this time due to a Saudi prince who apparently backed out of a pledge to invest in the project.
The $145 million Broadway at Center project from Rochester developer Gus Chafoulias promised to bring a 23-story residential and retail tower to downtown Rochester with a 269-room Hilton hotel.
First announced in March 2014, it would have been among the first significant private investments in Rochester’s Destination Medical Center plan, a 20-year project that blends billions of dollars of investment from the Mayo Clinic with private money and public tax dollars to retain the city’s role as a leading destination for health care, medicine and research.
An investment group lead by Prince Turki bin Abdullah bin Abdul Aziz Al-Saud, a member of the Saudi royal family, and Minnesota businessman Anas Abukhadra failed to meet a recent deadline, according to a statement from Titan Development and Investments, the Rochester firm supporting the project. A search is underway for a replacement investor, the statement added.
“I’m not overly surprised” at the delay, said Rochester City Council President Randy Staver. Pointing to the complexity of the project, he said he remains optimistic that the tower will get constructed at the intersection of the city’s busy commercial streets, S. Broadway and E. Center Street.
The City Council voted this week to move ahead with planning a city-owned $23 million parking ramp that would be adjacent to the Titan project. The city isn’t ready to build it just yet but wants to prepare for that day even with the uncertainty surrounding the Titan project, Staver said. The ramp would connect via skyway with the Titan project.
The delay wasn’t overly concerning to Lisa Clarke, the executive director of the Economic Development Agency of the Destination Medical Center Board. A former Mayo Clinic employee, Clarke has been charged with moving the DMC project from its planning stages into actual projects.
“I’m encouraged that Titan development is looking for additional investors,” she said. “On the flip side, I know also that projects like this, I guess they go through various stages like this, and some are going to hit and some are not.”
Other projects on track
Clarke’s office has delivered encouraging news in recent weeks to the DMC Board, sharing details on two other major projects, both of them residential and retail towers similar to the Titan project. The first, a $100 million, 13-story tower, would change the main entrance from Hwy. 52 into the city’s downtown. A partnership between Minneapolis-based Alatus LLC and Rochester developers the Pompeian family, the project would bring luxury-class apartments, 900 parking stalls and 13,000-square-feet of leasable commercial space to the corner of 2nd Street SW. and 14th Avenue SW.
The second, a $200 million mixed-use building from Abu Dhabi-based Bloom Holding along the Zumbro River in downtown, was hailed as a “home run” by DMC board member R.T. Rybak when it was introduced in May. The project features a 120-room, four- or five-star hotel, 100 condos, 40 leased apartments, a parking ramp, 100,000 square feet of office space, and street-level restaurants and retail.
The two projects are still in their concept phase, said Clarke, and are not as far along as the Titan development project, which was announced less than a year after the DMC project got underway. Clarke said her office has developed a more thorough process for partnering with private developers since those early days, and has been working closely with representatives from both Alatus and Bloom Holding to help them clear roadblocks in the planning stages.
In their announcement, Titan Development said the stakeholders in the project — including Chafoulias, the city of Rochester, Kraus-Anderson Construction Co., local unions and lenders including Dougherty Funding LLC, West Bank, local union pension funds through their adviser, Whitestar Advisors LLC and Premier Bank — met their obligations to close a $105 million loan for the project.
“We are deeply appreciative of all of our stakeholders who have stood by our side,” Chafoulias said in the statement. “Unfortunately, one of them didn’t follow through as promised. We are optimistic of our next steps, though, and hope to close on the transaction soon.”