United Properties is asking the city of Minneapolis for more time to raise money to redevelop the Nicollet Hotel Block downtown after a potential partner stepped back from its hotel and residential tower project.
The company, the real estate arm of the Pohlad family, has been trying for a year to line up financial support for its possible 40-story tower on the block at the north end of Nicollet Mall near the downtown library.
After a contest in 2015, city officials chose United to purchase and develop the city-owned lot, now used for surface parking and named for a landmark hotel that stood on it for decades.
Initially, United was supposed to have secured its financing for the city by July. But it sought more time last summer and was given a 90-day extension to line up partners.
Now, the developer is seeking until the end of February, in a request made public Friday in an action item published for the Jan. 3 meeting of the city’s community development and regulatory services committee. City staffers will suggest at the meeting that United could get another 60 days beyond February.
“We remain confident that, given time, we will secure the necessary financial partners to develop this signature project for downtown Minneapolis,” United spokeswoman Sheila Thelemann said in an e-mail.
With each month of delay, United Properties is required to pay the city $25,000 but those payments could be credited against its eventual purchase of the block, which is bounded by Nicollet and Hennepin avenues, S. 3rd Street and Washington Avenue.
United initially proposed a 36-story building. Earlier this year, it said the tower size would drop to 33 stories and asked for leeway to bring it down to 30.
Earlier this month, United Properties President Bill Katter said the company now envisions a 40-story tower with about 280 hotel rooms, 160 apartments and 36 condominiums estimating the cost to be about $350 million. The firm has been talking with Four Seasons Hotels Ltd., the Canadian-based owner and operator of the Four Seasons hotel chain, to operate one of its luxury hotels at the site.
Goldman Sachs, which was in discussions with United as an additional equity partner, recently backed out of the project.
“The challenge we are facing is that the equity markets are tightening, making large, private development deals like this one tougher to develop,” Thelemann said.
The Nicollet Hotel Block is one of the last wide-open blocks in downtown Minneapolis. It has been a parking lot and bus stop since the early 1990s. Under its deal with the city, United will pay $10.4 million for the block.
The proposed extensions will likely push back the timeline for the rest of the project. Originally, the Minneapolis City Council required United to close on the property no later than January 2018, but that schedule may not hold.