Two ambitious proposals for a key spot in the Downtown East mixed-use development were reviewed in recent weeks by city officials, who ultimately backed a $101 million hotel-apartment hybrid for the spot.
Minneapolis-based developer Ryan Cos. was chosen above a competing bid by Golden Valley-based Mortenson Development, which proposed a $63 million, 300-room hotel for the site.
A mix of city officials, from planners to finance experts, made the recommendation, but the City Council will have the final say on the proposals at its March 28 meeting.
Ryan is the developer of the overall $400 million Downtown East project, which includes twin office towers for Wells Fargo & Co., 200 apartments, retail shops and restaurants, a 1,610-space parking ramp and a two-block public park near the new Vikings stadium.
The bids solicited ideas for the space above the parking ramp, as well as a spit of land along S. 4th Street.
Ryan’s proposal calls for a 150-room Radisson Red hotel and an additional 200 apartments. The firm will pay the city $5.7 million for the land and the so-called “air rights” above the ramp, which will be used by office employees and fans using the stadium.
“We are really excited that staff recommended our proposal and hope the City Council will approve it on March 28,” said Rick Collins, Ryan’s vice president of development.
Mortenson, whose construction division is building the $1 billion Vikings stadium, pitched a $63 million dual-branded AC by Marriott and SpringHill Suites by Marriott.
The goal of the project is to maximize the property’s development potential, contribute to the area’s vibrancy, feature active uses on the ground level of the ramp, and leverage nearby transit infrastructure, which would include the Downtown East light-rail stop.
In making its recommendation, city staff noted that Ryan’s upfront purchase price exceeded Mortenson’s proposal by $4.65 million. However, the total amount of city taxes generated by both proposals was “very similar,” according to the review, which was released Friday.
The Ryan pitch “results in greater taxable market value from the completed project and, consequently, greater property tax revenue than the Mortenson proposal,” the report states.
Officials from Mortenson were not available for comment.
City finance officials say Ryan’s hotel and apartment tower, which would span about 27 stories, will generate $876,000 in upfront park dedication and building fees, and annual city taxes of about $1.2 million by 2029.
Ryan is partnering for the hotel with Chicago-based Magellan Development Group, which is currently finishing the LPM Apartments project in Loring Park, as well as Carlson Rezidor Hotel Group.
The Radisson Red concept is a new one crafted by Minnetonka-based Carlson, and the Downtown East hotel could be the first of its kind built. Aimed toward millennial travelers, the Red will compete with the likes of Hotel Indigo, a brand of the Intercontinental Hotels Group, and Citizen M., which has properties in Amsterdam, Glasgow and London.
For the sliver of land, Ryan is proposing a “large restaurant-sized space” wrapping around the corner of 4th St. and Chicago Av. S., as well as a pocket garden between the hotel-apartment entry and the parking ramp. Up to 200 parking stalls would be built for the apartment tower and the roof would be covered as a green roof.
Council Member Jacob Frey, whose district includes Downtown East, said he’s “really excited about what Downtown East will be,” but says there needs to be “a maximum number of eyes on the park.” In that regard, he said, apartments added to the overall project and the hotel met that goal.
In addition, Frey said he would support the proposal with the most amount of dollars to help maintain and operate the park.
Construction on the ramp development, should Ryan’s proposal be approved, would begin in May 2015 with completion slated for August 2017.