UPDATE: Hotel deal at hand for Heart of the City

Hilton Garden Inn said to be the brand

The city of Burnsville is poised to sign a deal with a hotel developer, completing one of the last pieces of unfinished business in the Heart of the City redevelopment district.

The City Council, acting as the Economic Development Commission, is scheduled to vote June 4 on the sale of city-owned land north of the Performing Arts Center to hotel firm Akota Hospitality LLC of Dickinson, N.D., according to Skip Nienhaus, Burnsville’s economic development coordinator.

An Akota representative, Joel Cary, didn’t return a reporter’s phone call.

The $503,600 sale has been reviewed by the city’s Economic Development Commission, which recommended approval on May 8.

Akota appears to be interested in building a Hilton Garden Inn, Nienhaus said. The city’s proposed contract with Akota requires a hotel of at least 90 rooms, including a restaurant, meeting space and about 55 parking spaces. Construction must begin within 90 days of approval of a planned unit development that must be submitted no later than Jan. 31, 2014.

A hotel has always been part of Burnsville’s plan for the Heart of the City, Nienhaus said. The redevelopment effort grew from initial city efforts in the 1990s to improve the Nicollet Avenue and Burnsville Parkway streetscapes.

The hotel has gone waiting while other plans for the Heart of the City – the arts center, an urban park, mixed residential and commercial uses – materialized.

“It certainly took a while, but yes, it did happen,” Nienhaus said.

The 1.75-acre hotel parcel is the last remaining piece of 6.24 acres the city bought in 2001 from AAA Minnesota/Iowa. The contract with Akota calls for the company to pay $503,600 – more than Dakota County’s $457,600 valuation but well below an August 2012 city-commissioned appraisal of $865,000.

“The price that we’re selling it for is virtually equal to the price we bought it for when we bought it from Triple A,” Nienhaus said.

The property has had a “For Sale” sign for about four years. The city issued a request for proposals from would-be buyers in 2011 but got no responses.

The city issued the RFP at that time because some eligible costs it could help subsidize for developers in the Heart of the City tax-increment financing district were expiring at the end of the year, Nienhaus said.

“We thought we’d better go out and take one more shot,” he said, adding that officials didn’t expect much response in the post-recession economy.

Other suitors for the property have come and gone, including fast-food restaurants and gas stations – none of which met the 25-foot minimum building height required in the Heart of the City, Nienhaus said.

The city is providing no tax-increment financing or other subsidy for the hotel, he said.

Akota Hospitality has been represented in negotiations with the city by  Cary, of St. Paul-based LHR Hospitality Management, one of two firms competing earlier this year for the Performing Arts Center’s management contract.

The council chose to stick with arts center manager VenuWorks rather than switch to LHR, which specializes in hotel management.

LHR manages a number of hotels owned by Akota, which has specialized in turning around distressed hotels but has also built hotels in North Dakota since the oil boom, Nienhaus said.

City officials didn’t disclose it was LHR working the hotel deal, even as LHR was before the city seeking the arts center management contract.

There are potential synergies between the hotel and the arts center.

“I would assume that they’d still pursue those synergies,” such as business meetings at the arts center combined with stays at the hotel, Nienhaus said.

The PAC hosts about a dozen dance competitions a year, adding more potential business for the hotel, he said.

Nienhaus said he expects construction on the hotel to begin next spring or summer.