The city of Des Moines has agreed to defer payments and interest on the $2.1 million mortgage it holds on Hubbell Realty Co.’s downtown mall at 555 Walnut St.

On March 14, the City Council voted unanimously to approve an amendment to a city-developer agreement, which will retroactively reduce Hubbell’s interest rate on the loan to zero percent – back to April 15, 2010 – as the West Des Moines-based company works to fill voids left by former first-floor tenants CitiMortgage and Principal Financial Group Inc.

The move is expected to cost the municipality more than $360,000 in interest payments as a result of lowering the interest rate until May 2014, when payments are scheduled to resume and the interest rate on the outstanding balance will be return to 4 percent.

City records show that the Kaleidoscope is 67 percent occupied. Hubbell took the mall off the market in January.