MASON CITY | The clock is ticking for Philip Chodur, who is developing a downtown hotel for the River City Renaissance Project.
That’s what Mason City Administrator Aaron Burnett said Thursday afternoon – four days before the Iowa Economic Development Authority’s deadline for the city and G8 Development, Chodur's San Diego-based company, to show progress on Mason City’s nearly $39 million River City Renaissance Project to retain state funding.
“We’ve provided a notice of default to G8 because the financing has not been provided,” he said.
In August, the Iowa Economic Development Authority, or IEDA, approved two contingencies for the city’s project: an extension for G8 Development to show full proof of financing for its hotel, an important aspect of the overall project, or Mason City’s written notice of Chodur’s default by Monday.
On Sept. 7, the city provided written and electronic notice of default to G8 Development for its development agreement, giving Chodur 45 days to show full proof of financing for the hotel. He has until Oct. 22.
Burnett said documentation of the of default was submitted to the IEDA to satisfy one of its two contingencies.
“The IEDA Board members continue to support the project regardless of the developer, but wanted to see progress, and that progress is notice of default and pushing for a resolution if financing will be provided within that 45-day cure,” he said.
If G8 defaults on the agreement with Mason City, then the city may pursue alternative options, Burnett said, but until then, it’s in contract.
“We continue to standby moving through the contract with G8, but because we’ve provided notice, we have to think, ‘Where do we go from here?’ and have conversations with our partners and make sure we still have their support,” he said.
You have free articles remaining.
Last month, IEDA Program Manager Alaina Santizo said she didn’t believe a default would kill the city’s project, per the board’s action, but emphasized that would ultimately be up to the board. The IEDA Board’s next meeting is Sept. 27 in Des Moines.
When contacted after the Aug. 17 IEDA meeting, a few board members wouldn’t say whether Sept. 17 – the deadline for either the default decision or hotel-financing requirement – was a drop-dead date.
However, delaying the start of the project for any reason, like seeking a new developer, could shorten the window for the city to collect the tax rebates the IEDA has awarded.
The board has awarded Mason City about $9.1 million in rebates if it meets project contingencies.
“While this is a hurdle, a stumbling, the fact is the project is still a good project ... and a good opportunity for downtown,” Burnett said.
G8 Development was selected to build a hotel in the Southbridge Mall parking lot, which would connect via skywalk to The Music Man Square, which would be remodeled into a conference center.
The hotel is a key component in the city's project that also includes a performing arts pavilion and an ice arena and multipurpose center. One of the state requirements is $10 million in private investment. The hotel is valued at $15 million.
Chodur originally pitched a downtown hotel in 2013. When he failed to meet several construction deadlines to build next to City Hall, the city found him in default and the deal fell through. At the time, city officials said Chodur could not get financing.
That delay led the city to work with another developer, Gatehouse Capital. Local opponents forced a referendum on the overall project in November 2017, but voters overwhelming approved the plan. About the same time, Chodur filed a lawsuit against Mason City and the Chamber of Commerce Foundation, claiming a breach in contract.
But the plan's changes in the contract negotiations between Gatehouse and Mason City forced the city to open the project for bid. G8 submitted a bid the Mason City Council found more favorable and accepted.
As a condition of the new agreement, G8 dropped its lawsuit against the city and the chamber.