Jordan city leaders have been interested in courting hotel development deals for some time, and as of this week, the city faces the first serious offer in years.
On Monday, the Jordan City Council signed a memorandum of understanding with Allied Development Resources to explore the possibility of building a hotel on two city-owned lots in the Whispering Meadows development.
Allied Development Resources’ initial concept consists of a four-story, 81-room hotel that includes a brew pub, swimming pool, outdoor patio and business incubator space, although the proposal is subject to change based on further market studies.
“I think we’ve got a good mix of product there too with the working space and the incubator, in addition to a restaurant,” said Tom Hanson of Allied Development Resources.
A local hotel would satisfy Jordan’s dire need to improve the city’s hospitality industry. The only lodging option now available is the Nicolin Mansion Bed & Breakfast, while the nearest hotel is in Shakopee — eight miles away. Beyond that, visitors must travel to Belle Plaine or Prior Lake for lodging.
The lots, on the corner of El Dorado Drive across from The Station Bar & Grill, were purchased by the city from New Market State Bank last August for $300,000. Following the purchase, the city reached out to hotel developers regarding the property. Allied Development Resources responded with interest in exploring the feasibility of a GrandStay hotel on the property.
“We have some experience working with the GrandStay brand,” City Administrator Tom Nikunen said. “We feel that as a regional brand it’s a good fit for our community and the size hotel we’d generate.”
As the city and contractor enter into the memorandum of understanding, the city will suspend marketing the property to other developers for six months, while Allied Development Resources explores the feasibility of the project.
Under the agreement drafted by City Attorney Brian Wisdorf, the developers must submit an update on their feasibility study to the council by April 22. In June, the developer must submit a land use application for review, as well as cost estimates for the project. Allied Development Resources has until September to secure financing to complete the project.
The council also voted unanimously to approve a letter of support for future tax abatement and sale of the land at a reduced price. The possible tax abatement will be determined at a later date, after the developer completes the market study.
“We’re looking for some understanding that we would support this project with the idea of a certain amount of subsidy,” Nikunen said. “That’s not set in stone of how much that is. With past dealings with multiple different hotels, I’m pretty comfortable there will be some need on the city’s part. I don’t want to lead you down a trail and say it’s a surprise there is a need for abatement down the road.”
Later in the meeting, councilman Jeff Will expressed criticism of the council’s process for supporting tax abatement before the developer’s needs are fully researched.
“My concern is that we basically told them we’ll give you whatever you want,” Will said. “I don’t see the negotiation in this ... this process to me seems a little backwards. Maybe we should ask them what they want, bring it to the council and we can discuss to see how much we’re willing to go rather than telling them we’ll give you everything you want and then have to maybe renege on the deal later down and put us in an embarrassing spot.”
Councilman Robert Whipps said part of the reason for the council to signal their support of abatement is to establish trust with the developer.
“If we would’ve told them flat-out no tonight, then they’re not going to spend any more money on the project, so I think it’s kind of a two-way street were on,” Whipps said. “I think they’ve got some good goals they’ve got to hit on the way and we’re going to know how serious they are in a few months here.”
The last serious hotel offer from a developer was in 2015, when the city began working with builder Terry Eid of Terrance Eid Construction on a proposed hotel that would be built next to Clancy’s on Triangle Lane. Eid was later charged in 2016 with nine counts of theft for an apartment project in Hibbing, which halted the hotel project. He was found innocent of all charges last year.
In other city council news:
- The city council approved the resignation of city planner Addison Lewis, who is pursuing an employment opportunity with the city of Edina. Lewis’ last day is March 15. City Administrator Tom Nikunen suggested the position be filled within a couple months before the spring and summer building season begins.
- The city council lowered the annual permit fee for food trucks from $200 to $50.
- The city council voted to appoint Joe Thill as a commissioner on economic development authority for a six-year term. Thill is the only person to apply for the position, which was vacated at the start of the year after Dan Elke decided not to pursue another term. Former councilman Thom Boncher was critical of Thill’s appointment, due to the fact that he is the spouse of mayor and EDA commissioner Tanya Velishek, who later voted to appoint Thill to the commission.
“One wonders if the council is comfortable with the spouse of a council member on the economic development authority, which is the only commission in town that has the power to levy and spend taxpayer money,” Boncher said. “One wonders if that is not a conflict of interest. I would suggest that legal and ethical are not necessarily the same thing.”
When asked if the arrangement violates and laws, City Attorney Brian Wisdorf said Thill’s appointment is legal.