EMC Insurance Co. plans to expand its corporate presence in downtown Des Moines with an office building it plans to build on the cleared site of the former Younkers Department Store at 701 Walnut St.

The Des Moines City Council will consider a preliminary development agreement when it meets Monday in which EMC would construct a building with a minimum assessed value of $24 million and fund an escrow account that would help with the redevelopment of a stretch of Kaleidoscope at the Hub into a residential tower.

EMC and Blackbird Investments are in the process of closing a land swap in which the insurance company would obtain the Younkers site from Blackbird, which in turn would receive a stretch of the Kaleidoscope that is currently owned by EMC. 

Regarding the EMC building, Des Moines City Manager Scott Sanders said the city wants a building with a minimum of eight stories.

Carrie Kruse, with the city’s economic development department, said the land deal could close as early as next week. EMC has not set a timetable for construction of its office building, she said.

The company is said to have filled a major expansion of its corporate headquarters across the street from the Younkers site. That project was completed this year. In 1997, EMC completed an elaborate construction project at 700 Walnut St. Its corporate headquarters is at 717 Mulberry St. EMC also owns the Hub Tower at 655 Walnut St., directly east of the Younkers site.

Blackbird Investments acquired what remained of the Younkers building after it was destroyed by a fire in 2014. The firm also obtained the adjacent Wilkins Building at that time, which survived the fire. It has renovated the Wilkins Building, including a piece-by-piece reconstruction of the iconic Tea Room, into a mixed-use structure with 60 apartments above first-floor commercial space.

Blackbird had planned to build a high-rise at the Younkers site, but the location was problematic, if for no other reason than much of the view from the structure would be blocked by nearby tall buildings, including Hub Tower and the EMC building.

According to a city staff report to the City Council, EMC will finance an escrow account overseen by the city and used to defray Blackbird’s costs associated with the redesign work needed for its proposed tower at the new location at 555 Walnut, relocation expenses of existing tenants in the Kaleidoscope building, and/or costs associated with the demolition at 555 Walnut. The city also will negotiate for a minimum of $1 million of the escrowed funds to remain in the escrow account for re-establishing skywalk connections at the site.

The preliminary development agreement calls for EMC to include a declining percentage of project-generated tax increment finance revenues over a period of 15 years.

Kruse pointed out that the Kaleidoscope building at 555 Walnut has an assessed value of $100 (the land on which it sits is assessed at $650,000), and as a result the city is “extremely motivated” to participate in the redevelopment deals.

Blackbird had proposed a 33-story mixed-use building for the former Younkers site. The Kaleidoscope property will provide the firm a slightly larger development site on a prominent street corner that would offer more dramatic views of the city. 

The tower is one of two that have been proposed for Walnut Street. Mandelbaum Properties recently unveiled plans for a boutique hotel that will operate in the first 12 floors and a 40th-floor suite at a mixed-use tower project at Fifth and Walnut streets. Read more about those plans at BusinessRecord.com.