After years of planning, St. Paul’s Xcel Energy Center is finally getting a new neighbor. Developers will break ground late this week on a $69 million apartment building and hotel complex that will include two restaurants and other amenities.

The project will convert a 2.4-acre surface parking lot at W. 7th Street and Kellogg Boulevard into a five-story Courtyard by Marriott and a six-story apartment building by the end of next year. The 120-room hotel will be on the north side of the lot, closer to W. 5th Street, while the apartment complex will anchor the south end of the property.

A public plaza will separate the two structures, which will each house a restaurant/bar. The Williston Holding Co. has agreed to develop both restaurant concepts, officials said.

“Everyone is really excited about [the project],” said Tony Hallada, managing principal of CliftonLarsonAllen Wealth Advisors (CLA). Hallada said that CLA secured $30 million in equity funds plus $39 million in debt financing to make the long-coveted project a reality.

About 25 to 30 investors from the Twin Cities are participating in the deal and will receive tax benefits because the project sits in what is designated as an “opportunity zone.”

Investors were attracted to the chance to help punch up downtown St. Paul and to bring more vibrancy to urban living as Minneapolis has done in recent years, Hallada said.

“Our view is that downtown St. Paul is about 15 years behind Minneapolis in terms of its development,” Hallada said. “Today, in Minneapolis about 52,000 people live in the downtown area and it’s on fire. It’s booming. Downtown St. Paul is just starting to grow and it is where the young people want to grow. It’s going to be vibrant.”

Kaeding Management of Bloomington is the developer of the project and originally agreed to pay $5 million for the property back in the spring.

The money was paid last month, so construction is set to begin.

Doran Cos. in Bloomington is the general contractor.