FOREST CITY | The city has entered into a purchase agreement for land on U.S. Highway 69 North for a development project to include a new hotel, where the Forest City Motel is now located.
City officials also hope to attract housing and commercial development to the seven-acre parcel lot, which is located within the Northeast Urban Renewal Area the city council established last week.
“This is an opportunity to redevelop a piece of property that has high potential for economic development and will benefit of our community,” said Mayor Barney Ruiter.
Other projects already in the works in the Highway 69 North area, such as a new Kwik Star convenience store to be built at the junction of Highways 9 and 69, also are located in the new Urban Renewal Area.
The city council approved the $335,000 purchase agreement agreement with private developer FC Properties II, LLC, for the parcel lot at 1115 Highway 69 North that includes the Forest City Motel.
The city’s obligation will be repaid with incremental property tax revenues derived from the new Urban Renewal Area.
FC Properties recently purchased the lot from an out-of-state owner.
The city will be the temporary owner of the property, which has fallen into disrepair over many years and presented no hope of improvement, city officials say.
The council has met in closed session since September to discuss the purchase agreement.
"The efforts paid off," said City Attorney Steven Bakke.
The sale of the property is expected to close sometime in June. No money has exchanged hands yet, Bakke said.
A hotel chain has expressed interest in building a 44-room hotel on the property, according to Bakke. He said the city needs more hotel rooms.
Bakke said FC Properties II is relocating those who are staying at the Forest City Motel as tenants rather than as guests.
Some tenants must move out by June 1, while others will be allowed to stay until the end of June, he said.
Area fire departments will do a controlled burn of the motel as a training exercise to make way for the new hotel, according to City Administrator Barb Smith.
Beth Bilyeu, director of Forest City Economic Development, said the city is losing out on a lot of potential hotel business.
"Our largest leakage is to Garner, Mason City and the (Diamond Jo) casino," she said.
City Councilman Karl Wooldridge said visiting teams from North and South Dakota playing against teams from Waldorf University are choosing to stay in Albert Lea, Minnesota.
He said teams can book a large block of rooms in one hotel instead of having the players split up between different hotels.
Forest City resident Stephen Sheehan, who was at the May 7 city council meeting, asked, "Do you have a sense for how firm the hotel deal is looking?"
"They (the hotel chain) are very interested," Smith said.
Once the city takes possession of the property, city officials will be able to start working with investors, she said.