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Hotel plan withdrawn following council’s motion for archeological survey


The would-be developer of a downtown hotel has backed off plans to construct a 140-room inn south of Court Avenue, citing what it considers to be unreasonable expectations for an archeological survey of the proposed site.

HRC Hotels LLC had been considering a purchase of 101, 121 and 114 S.W. Second St., proposing to redevelop the parcels with an approximately 80,000-square-foot Hampton Inn, before a Des Moines City Council motion in July made the survey a condition of the vacation of an alleyway needed to begin construction.

“Council directed staff to work with the developer regarding the archeological and historical architecture issues on the site,” said Matt Anderson, Des Moines economic development director. Following the July 27 council meeting, the applicant’s attorney told him “the project was no longer moving forward,” he said.

Jeffrey Good, president of HRC Hotels, said his company has spent nearly $150,000 on preliminary engineering work, a franchise fee and a third-party feasibility study of the downtown hotel market in anticipation of the development progressing.

“As you get further and further into the process and feel more comfortable with it, you tend to spend more money,” Good said. The Plan and Zoning Commission on July 16 recommended that the City Council approve the alleyway vacation, bolstering the developer’s confidence.

The Michigan-based company now stands to forfeit the $75,000 franchise fee if it is unable to secure an alternate downtown location for the hotel within eight months. But Good is concerned that he could face a similar issue at another site.

There are “a couple of people in the economic development department who have a certain vision of how they feel the downtown area should be developed,” Good said. He thinks the city is using the right-of-way approval process to force HRC Hotels to do the study, even though the developer isn’t pursuing any federal funds or tax abatements to offset the $15 million project cost.

“Is this the leverage they are going to use on each site?” Good asked. “Do you spend additional money to go through the process again and maybe end up with the same results? They have the right-of-way wild card to use whenever they want.”

Good said depending on what an archeological dig would reveal, the project could be delayed for years. “We would have liked to know that earlier in the process,” he said. “We didn’t feel like we were in a position to take that additional risk.”

“In no way was the City Council saying (HRC Hotels) couldn’t develop there due to archeological restraints,” Anderson said. The council’s intent, he said, was only to investigate the historical and archeological implications of conveying the alleyway.

“If a developer wants our alley, we need to think of the implications of conveying that alley,” Anderson said. The specified conditions were not stringent enough to “derail a project.”

“If we are going to invest $15 million,” Good said, “we are going to follow the rules. But we need to figure out a way where the city can balance what (its) endowment in the project is going to be.

“We were told that we were going to lose the vote,” based on the council’s recommendations, he said.

Good said HRC’s intent was, and still is, to construct four or five hotels in Iowa, which includes its recently completed 82-room Hampton Inn and Suites in Marshalltown.

Anderson said the City Council and staff were looking forward to working with HRC on the development.

“It is unfortunate that they are not going forward,” he said.

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