Plans for a $100 million convention center hotel were unveiled this morning to the Des Moines City Council, which will be asked to approve the preliminary terms of an economic development package for the project.

A large component of the financing is from a federal program that provides permanent visas and green cards for wealthy foreign nationals who invest in U.S. development projects.

Green card is the return on investment for convention center hotel investors  Major private partners in the convention hotel have placed their money in the project under a federal program that provides permanent visas or green cards for foreign nationals who invest in commercial enterprises. This is the first time the program has been used in Iowa.Read more

The 330-room, 10-story convention hotel at Fifth Avenue and Park Street is part of the 23.5-acre Iowa Convention and Entertainment Reinvestment District that has received preliminary approval from the Iowa Economic Development Authority to receive a portion of sales tax revenues and hotel/motel tax revenues over 20 years. An application for final approval must be submitted to IEDA by March 1.

IEDA has so far approved the capture of $36.4 million of the tax revenues generated in the district. The city of Des Moines will ask to increase that to $39.4 million. The district also includes the Hy-Vee Inc. and Knapp Properties Inc. development at 420 Court Ave and renovations of the Hotel Randolph complex of properties as well as the parking garage at Fifth Avenue and Keosauqua Way.

Assistant City Manager Matt Anderson said the city believes that the Hy-Vee grocery store that is planned for Court Avenue will generate more sales tax than initially predicted and, as a result, the city is asking for a $3 million increase in revenues that can be captured with the district.

There is no guarantee that IEDA will approve the extra funds, Anderson told the Des Moines City Council this morning.

Officials also plan to impose an additional 3 percent facility fee on rooms.

In addition, the agreement for the reinvestment district can be amended to include additional retail projects. The district runs roughly from the hotel site, south along Fifth Avenue to Court.

The city development package includes $14 million in tax increment financing over a 30-year period and a $5 million loan guarantee that would come from TIF bonds

The Polk County Board of Supervisors has approved spending $6 million in revenues from Prairie Meadows Racetrack and Casino for the purchase and demolition of the property at Fifth and Park, which was formerly the home of Allied Insurance Co. The building currently has an assessed valuation of $400 and land it sits on is valued at $1.9 million. The $6 million comes from a reserve fund that was created for the construction of Wells Fargo Arena. 

In addition, county supervisors have approved using an additional $20 million in gaming revenues as a loan guarantee in case income generated by the convention hotel is not sufficient to make mortgage payments. If needed, the $20 million would be generated by refinancing the Iowa Events Center debt. The county presently uses about $14.5 million a year in gaming revenues to retire the debt. The $32 million renovation of Veterans Memorial Auditorium was paid for by refinancing the events center debt.

Des Moines Redevelopment Co., which originally owned the convention hotel site, also will provide $4 million to purchase a portion of the hotel debt. The nonprofit organization of local businesses and business leaders sold the Allied site to Polk County last year for $3.3 million. The price included an interest in a nearby parking lot.

Officials also anticipate receiving $1 million in state brownfield tax credits for the hotel project,.

The hotel will operate under the nonprofit Iowa Events Center Hotel Corp., which will have a board made up of five representatives appointed by the Polk County Board of Supervisors and two members appointed by the city of Des Moines.

That board will be made up of experts in real estate, hotel management, banking and finance and the law, Anderson said.

The hotel will have an economic impact of $35 million in its first year of operation and $1.2 billion over 20 years, Anderson told the City Council.

Demolition of the site could begin after the American Enterprise Group lease expires at the end of September, with construction expected to begin a year from now.

Officials claim the city loses millions of dollars in revenue from events that skip Des Moines because it does not have a convention center hotel to compliment the Iowa Events Center.

The hotel is expected to attract an additional 3 million visitors, generate 1,000 construction jobs and 360 permanent jobs. An estimated $25 million in hotel/motel tax revenues could be returned to the district over 20 years.