Another developer has asked for more time to secure financing for a downtown Minneapolis project.
Mortenson Development requested a six-month extension for its mixed-use project on a sliver of land on Washington Avenue S. known as the Guthrie Liner Parcel. It would be the third extension the developer received for the project.
The request was approved by the city’s community development and regulatory services committee at a Tuesday meeting and will be referred to the City Council.
Mortenson plans to build a 10-story tower with space for a Hyatt Centric hotel, offices for the American Academy of Neurology and restaurant or retail space.
Plans initially were for a nine-story building that would cost about $49.4 million, but the size of the project has increased with the number of hotel rooms jumping to 235.
“We have been working through the development process during a rapidly changing investment period and have modified the hotel design to be slightly larger to meet the investment requirements of the ownership group,” Mortenson said in a statement.
Last February, the City Council authorized the sale of the Guthrie Liner Parcel to Mortenson and it was expected that the redevelopment contract would be executed within six months. But in July, Mortenson was given a 90-day extension to find more funding. In November, the developer was given another 30-day extension to find an additional equity partner.
“Over the past nine months commercial lenders have become more conservative in their underwriting of hotel projects, and construction costs have increased approximately 4 percent,” city staffers said in the request.
With the new extension, Mortenson is required to pay the city $24,600 for the first three months and $8,200 per additional month that it needs. The payments are nonrefundable, but they will be credited against the final purchase price at closing.
The purchase price for the property, located next to a parking garage near the Guthrie Theater, will remain around $3.8 million.
At the same meeting, the committee approved an extension to another high-profile downtown project, the redevelopment of the Nicollet Hotel Block by United Properties. It now has until the end of February, with the possibility of another couple months of more time, to find a financing partner for its hotel and residential tower.