By: William Morris
January 25, 2018
The Owatonna City Council has approved a preliminary letter of understanding to build a new hotel and related development downtown.
The letter was brought to the city by Deacon’s Quest LLC, a business entity owned by former Federated Insurance executive Steve Judd, and HK Hospitality Management, a hotel development and management firm with offices in Minnesota and Florida. Community Development Director Troy Klecker said the city has been working with Judd for several years to make the development on the 200 block of Cedar Avenue North feasible.
Judd and HK are proposing “to develop a branded hotel, historically renovate two buildings and develop a third facility on private property and three public properties owned by the city,” according to the letter, and Klecker said other features under consideration include restaurants, retail and some form of event or civic space.
The developers to date have not released further details about the project’s scope and specifics, but the letter specifies three properties currently owned by the city, which the city agrees not to sell to any other party for at least six months. Two are currently city-owned parking lots east of the former Jerry’s Supper Club, while the third is the site of the former State Theater on North Cedar.
Under the terms of the letter, the city agrees to sell those properties at a date and price to be determined so long as other terms are met, including that the city will support developers in seeking Property Assessed Clean Energy equity and other state and federal funding, and provide tax increment financing as additional support for the project.
The letter will remain in effect for six months, although it can be extended so long as the developers provide regular status updates to the city.
“Approving the letter of understanding would allow the developers to do their due diligence to see what aspects of the development would be feasible,” Klecker said.
The council voted to approve the letter unanimously and without discussion. After the meeting, Jim Kelley of HK Hospitality said he was “ecstatic” to see the project moving forward.
“We are currently finalizing our discussions with a co-developer and construction people, and our plan is probably more than 50 percent completed, so we’re very excited to present it next month,” he said.
At the same meeting, the council set a hearing date for another tax increment district downtown, this one to assist Torey’s Restaurant in renovating and relocating to the former Ace Hardware store across the street from the proposed hotel development.
“We’re also very thrilled to hear about the restaurant coming downtown, Torey’s. That just adds to what we want to do,” Kelley said.
A third downtown development matter before the council on Tuesday was a proposed ordinance change regarding building heights. Within the downtown business district, city ordinance would now permit buildings up to six stories or 75 feet, rather than three stories and 35 feet under current code. Klecker did not reference any specific development plans in explaining the proposal.
“It’s really to be more proactive on downtown redevelopment,” he said.
The council approved the first reading of the change without discussion, and will consider it again at its next meeting.
As the meeting wrapped up, Owatonna Area Chamber of Commerce and Tourism CEO Brad Meier took the podium to voice appreciation for the council’s actions downtown.
“These are important steps forward in the work and momentum for our downtown, so thanks for being aware of that and having that as a key goal for the city,” he said. “I want to thank Steve Judd publicly for his dedication to this project, and his passion for it. I urge you to continue with that as well, Steve.”
Council President Greg Schultz noted that downtown redevelopment is one of the city’s key strategic goals.
“We’re on board with you there,” he said.
William Morris got his start in the newspaper trade as a recurring editorial intern in Wisconsin and has been writing about business, government and crime at the Owatonna People’s Press since 2015. He now splits his time working with the newspaper and as Associate Editor for Forge.