The city of Des Moines now has a tower struggle over the future of a shuttered parking ramp at Fifth Avenue and Walnut Street.
With a plan for a 32-story high-rise already on the table as part of a development planned by Mandelbaum Properties, Blackbird Investments met a 1 p.m. deadline today for submission of competing plans and set in motion a timeline that is expected to end April 3, when the City Council will have a public hearing and pick a winner.
"We think the city deserves to have an alternative to debate," said Justin Doyle, a Blackbird principal. The firm also is in the throes of developing a 33-story tower at the site of the former Younkers department store at 701 Walnut St.
As for the Fifth and Walnut site, selection of a development plan is pushed back two weeks. The City Council had been set to take a series of actions at its meeting Monday that would have led to adoption of the Mandelbaum plan.
On the surface, the debate is over two towers, a parking garage and use of some spare land at the 1.3-acre site. But the discussion also is bound to focus on policy regarding city incentives and the types of projects they support, not to mention the incomes of folks inhabiting downtown housing.
As with the Blackbird project at 701 Walnut, called the Blackbird, Mandelbaum's project, called The Fifth, also was expected to cater to higher-income renters. The new Blackbird proposal calls for residential ownership through the purchase of shares in a housing cooperative, with 20 percent of the units held for low- and moderate-income households.
One housing advocate called the Blackbird proposal "groundbreaking for Des Moines" in that it would provide market-rate and affordable housing. Doyle said that Blackbird would underwrite the affordable housing component under an arrangement with Polk County Housing Trust Fund.
The public will have plenty of chances to hear from both developers. A series of presentations is being scheduled before the city's Urban Design Review Board as well as the City Council leading up to the April 3 vote to pick a development plan.
City officials have been through this before. In recent years, the process of seeking competing proposals was triggered by Hubbell Realty Co. President and CEO Rick Tollakson, who objected to a city agreement with a Minneapolis developer for development of what were then city-owned parking lots at Fourth Street and Court Avenue.
Tollakson showed up at a City Council workshop meeting and argued that alternate plans should be sought for the build-out of city property. Hy-Vee Inc. and Knapp Properties Inc. teamed up to win that competition and delivered a downtown grocery store topped by apartments.
A few years later, Tollakson was back in action, at that time complaining about an agreement with a Jim Cownie-led development group for a project on the City Hall parking lot. City leaders agreed to seek competing proposals, but received none.
Assistant City Manager Matt Anderson said he was surprised to learn that Blackbird was working on a competing project.
"Competition is a good thing," he said. "Either way, we're going to end up with the best project we possibly we can."
And for his part, Justin Mandelbaum said he was caught a little off guard when he learned of the competing plan.
"We've spent so much time on this, we've developed the plans so far in working with the city, I think the City Council will recognize that," he said.
So, what are the plans?
We'll start with Mandelbaum's, since it has been on the table since June 2015.
Under its current iteration, the plan is for a 32-story tower with 200 apartments topping a 50-unit boutique hotel fronting Walnut, a 564-stall parking garage in the middle and a two-story movie theater fronting Court. The city would provide an estimated $30 million backstop of any shortfall from parking revenues over 20 years at 1 percent interest, with repayment beginning in the 21st year. The city would return $4 million to Mandelbaum for its purchase of the site and would refund nearly $7 million of the parking loan. Some estimates are that the city would not clear its investment in the project for 45 years.
In addition, a 100 percent, 20-year property tax rebate with an estimated value of $3.4 million is part of the incentive package for the ramp. The incentive package for the high-rise includes a 10-year sliding scale property tax abatement and a 100 percent, 20-year TIF rebate, with a cap on payments established in the 11th year and the excess applied to the parking ramp loan. In addition, the city will return $4 million from the sale of the property. The value of the TIF is estimated at $2.8 million. The theater would receive a 100 percent, 20-year TIF rebate, also capped in the 11th year with the excess used to help repay the parking ramp loan. Theater users would be able to park for free for three hours. The estimated value of the TIF is $4.3 million.
Doyle has not concealed the fact that he believes the incentive package is excessive, particularly the backstop loan for the parking garage.
"When public financing is involved, there needs to be an expectation of what the public is getting," he said.
Though the financial incentives for the Blackbird proposal have not been worked out, Doyle said the project will not use tax abatements and any backstop of the parking ramp will be paid off in 20 years. The project will use tax increment financing.
Here's the plan for what is estimated as a $145 million project.
Blackbird proposes a 35-story tower fronting Walnut. The company would use its own funds to finish the Walnut streetscape project. A podium that would allow construction of the tower and would be an extension of a 700-stall parking ramp would be the first structures out of the ground. Building the podium allows a permanent skywalk connection to Mulberry. The parking ramp follows a design that would allow the upper floors to be converted to commercial uses, such as office spaces, at a later time. The ramp also would house Blackbird's Tesla rental operation, charging stations for electric vehicles, and would feature a dynamic wind wall. The construction timeline on the ramp is two years.
A 150-room hotel would occupy the site along Court Avenue and would provide elevator access to the skywalk at Fifth and Court. The first floor would feature an indoor/outdoor music venue. Blackbird plans to sell the hotel project. In addition, Mulberry Street would be extended through the site for guest dropoff at the hotel.
The company plans a range of traffic signal improvements at Mulberry and on Court.
Blackbird is proposing a six-year timeline to complete all phases of the project. In the end, it would be left owning the parking ramp. Plans are to sell the hotel, and the tower would be owned by the co-op.
Introduction of co-op apartment ownership would be relatively new to the city. At the moment, it is being used for a senior housing community in Beaverdale.
Tenants would purchase shares in the co-op, guaranteeing them ownership of a living unit that would be purchased over 40 years under a U.S. Department of Housing and Urban Development program. Construction of the tower could not begin until enough shares are sold to finance construction. Doyle estimated that a basic buy in would be around $5,000. Occupants could have a hand in designing their units.
Eric Burmeister, executive director of the Polk County Housing Trust Fund, said Blackbird will fund the affordable housing component of the tower.
Doyle is "like a disciple for mixed-income affordable housing," Burmeister said. He hopes the project triggers a broader debate among developers and the city about making affordable units a part of residential projects.
"One of things that is very important to the Polk County Housing Trust Fund beyond the affordable units is having the city beginning to require affordable units within market rate developments from folks who want to build here. That's a huge step in a very important direction the city needs to take," Burmeister said.