Another developer has expressed interest in building a hotel and event center in Clear Lake east of Interstate 35.
The Clear Lake City Council unanimously approved a preliminary economic development incentive agreement with VKB Management LLC and JSM Investment LLC, whose principal office is located in Johnston.
“Like we’ve done before, this outlines our good faith intentions to work with the developer while they continue to do their due diligence on the site,” said Clear Lake City Administrator Scott Flory.
The agreement, which Flory outlined at Monday’s council meeting, states VKB Management LLC and JSM Investment LLC are interested in building a hotel and event center in the Courtway Park Subdivision, where Andrews Prestressed Concrete once stood.
The Courtway Park Subdivision, which is owned by TDFUEL LLC, or Lorri and Todd Hall of Sheffield, comprises 11 lots, two roadways and curb and gutter on nearly 64 acres east of Interstate 35 and north of Highway 122.
The hotel — if its franchise application is approved — will be a Marriott International featuring about 85 rooms and an approximately 450-person 6,000-square-foot attached event/conference/meeting center, according to the agreement.
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Flory said the city expects to find out the status of the franchise application in early April.
The initial estimated capital investment for the proposed project is about $12 million, he said.
“We don’t see $12 million projects every day that’s for sure,” he said. “We’ll see what becomes of that process, but I’m optimistic about it as is the developer. It would be a very positive thing for Clear Lake.”
Councilman Bennett Smith agreed.
“Frankly, when it comes to hotel brands, Marriott’s a fantastic brand and I think it would be a tremendous asset here in Clear Lake,” he said.
The agreement enables Clear Lake and VKB Management LLC and JSM Investment LLC to take the necessary steps to formally consider a development agreement.
VKB Management’s purchase option with TDFUEL is contingent on a development agreement with the city of Clear Lake.
Flory said VKB Management has credibility, experience and bankability.
“(The developer’s) reputation is well-known and very positive,” he said.
The agreement states the city of Clear Lake will reimburse the developer not to exceed $50,000 of the $75,000 total franchise application fee after its approved and after the approval of the project site plan and building permit issuance. The reimbursement would be paid from the city’s general fund, tax increment fund or other funds.
The preliminary agreement will be terminated after 60 days if for any reason a development agreement hasn’t been approved by the city of Clear Lake and the developer.
A future development agreement would include additional economic development incentives, subject to the City Council’s approval, like property tax rebates, infrastructure incentives for water and sanitary sewer services, assistance with civil engineering consulting services and a financial contribution completion of the project.
The council’s vote Monday comes five months after it unanimously — and enthusiastically — approved a development agreement with WillowStream LLC for a multi-million hotel, conference center and restaurant development.
The development agreement was the result of weeks — if not months — of work between Clear Lake and WillowStream LLC, a developer interested in building a $16 million hotel, conference center and restaurant in the Courtway Park Subdivision.
The development minimally included the construction of a 75-room GrandStay Hotel & Suites, an 8,500-square-foot conference/meeting/event center, and a 5,000-square-foot Jethro’s BBQ, a popular Des Moines-based restaurant, in the southwest corner of the Courtway Park Subdivision, the agreement stated.
According to the development agreement with WillowStream LLC, construction was to begin no later than Nov. 28, 2019, and be substantially completed by Nov. 1, 2020; however, work didn’t begin on the site as agreed upon.
“That developer had a purchase option for this particular lot. That option lapsed, expired for reasons I cannot comment on because I do not know,” Flory said. “It’s an attractive location and another developer took immediate interest and secured a purchase option on that location.”
The development agreement was signed by David Harchanko, president of Apollo Development LLC based in Monticello, Minnesota, on behalf of WillowStream LLC.
When asked whether WillowStream remains interested in developing in Clear Lake on Thursday, Harchanko said it remains very interested and remains confident that “the GrandStay Hotel is the best solution,” without commenting on the expired purchase option.
“That does not necessarily mean that there will not be another hotel built in Courtway Park or in some other area of the community. It doesn’t necessarily mean that this one will be built. It’s an interesting scenario,” Flory said. “You may have none. You may have two. You may have one. We just have to see how things play out.”
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Reach Reporter Ashley Stewart at 641-421-0533. Follow her on Twitter at GGastewart.