City of Springfield Reaches Tentative Agreement With Hammons

First posted on 10-17-2007

The City of Springfield has reached tentative agreement with John Q. Hammons to develop a new full-service hotel adjacent to the Springfield Exposition Center.

BKD, LLP, representatives have informed the City that the Springfield-based national accounting firm is in negotiations with Opus Northwest, LLC, a Minneapolis-based real-estate development company, to build its new corporate headquarters.

The City Council on Monday, Oct. 22, 2007, is expected to review a term-sheet agreement between the City and John Q. Hammons. The term sheet provides that John Q. Hammons will build a 150- to 200-room Embassy Suites Hotel on the 1.7-acre redevelopment site east of the Springfield Exposition Center as well as purchase the Jordan Valley Car Park. Construction of the hotel must begin by Sept. 30, 2008.

John Q. Hammons’ offer of $7 million for the land and Car Park is $600,000 more than the next highest proposal. The offer also assures the City of the retention of BKD. None of the other proposals would have kept the BKD office downtown.

The terms for the BKD office building are being negotiated independently by BKD with Opus Northwest.

Hammons and Opus Northwest were two of the four developers that originally responded to the City’s request for proposals to develop the land next to the Expo Center.

One of the other developers to respond to the RFP was HCW Evergreen, LLC, which notified the City on Sept. 14, that it was withdrawing from the selection process. The fourth developer to submit a response, BC Development, did not respond to repeated requests for additional information regarding its proposal.

After a series of meetings to hear presentations and review development goals, the Springfield TIF Commission in July sent the proposals to the City Council with a recommendation for the City to negotiate for both a hotel to increase the number of downtown hotel rooms for meetings and conventions, and an office building to retain BKD, a national accounting firm and large downtown employer.

City Council then instructed City staff to negotiate with the four firms that made presentations to the TIF Commission.

During the process of negotiating with developers, BKD informed the City that it has reached a tentative agreement to locate its office building next to the University Plaza Hotel. Its developer, Opus Northwest, had expressed concern during the TIF Commission meetings about whether the former arena site could accommodate both the hotel and office building projects.

BKD will locate its office building at the southwest corner of St. Louis Street and John Q. Hammons Parkway, with Opus to purchase land now used for University Plaza parking from developer John Q. Hammons. BKD currently leases its office space in the adjacent Hammons Tower.

Opus is expected to begin construction by early 2008 with a targeted completion date in the second quarter of 2009.

The City’s redevelopment site will be used solely for construction of the Embassy Suites Hotel in order to accommodate the 150 to 200 suite-style rooms and amenities including a full-service restaurant and lounge, business center, swimming pool and fitness center.

The $7 million sale of the land and the Car Park are scheduled to close by Sept. 30, 2008. Construction is expected to begin no later than Sept. 30, 2008, with an estimated completion date of Sept. 30, 2010.

“This agreement meets all of the goals set by Council and the TIF Commission to do both projects without any financial obligation to the City and taxpayers,” Mayor Tom Carlson said. “It keeps a major employer in our downtown area and fulfills the goal of the Springfield Convention & Visitors Bureau to add more hotel rooms for meeting and convention recruitment.”

Mayor Carlson said the City appreciates the work of the TIF Commission and thanked the developers for their interest in the project and their patience with the process to reach the term-sheet agreement.

“Opus Northwest has an outstanding track record of completing projects with remarkable efficiency and quality,” he said. “Mr. Hammons has a well-known and longstanding record of achievement in our community and pioneered the earliest downtown revitalization in the 1980s to bring us to where we are today.

“HCW Evergreen also is an excellent developer with an impressive track record,” Mayor Carlson added. “We appreciate HCW’s original interest in this project, but we respect its decision to withdraw from the process.”

The term-sheet agreement going to City Council for review includes the following provisions:

Hammons will pay the City $7 million for the redevelopment site, including the adjacent 90-foot strip of land subject to the Expo Center operating agreement, and the Jordan Valley Car Park. The Car Park will continue to be available for public parking after business hours for activities such as Springfield Cardinals’ games, along with being used for hotel guests, commercial tenants of the new office building, and visitors to the Expo Center.
The Hotel will be connected to the Expo Center, allowing for the seamless operation of the Expo Center and the Hotel.
Hammons is required to begin construction of the new hotel by Sept. 30, 2008.
Hammons will agree to make improvements to the Expo Center, including adding approximately 15,000 square feet of flexible meeting room space, enhanced acoustics and improvements to the food-service facilities.
In exchange for improvements to the Expo Center, the City agrees to extend Hammons’ management contract for the Expo Center an additional 20 years with four, five-year renewal options. Currently, Hammons’ management agreement extends to 2038. Hammons receives no fee from the City for managing the Expo Center.
The City will provide property tax abatement on the redevelopment sites for the hotel and office building and on the Car Park. In addition, the developer will have the right to sales-tax exemption on materials used in building the hotel.
All of the City’s incentives for the Hotel and Car Park are conditioned on Hammons starting construction on the hotel by Sept. 30, 2008. If Hammons does not begin construction by that date all incentives will be terminated and the City has the right to re-purchase the land for $1.
The City’s incentives for the Hotel and Car Park also can be revoked by the City if Hammons does not operate the hotel with the promised amenities.
If City Council approves the term-sheet resolution at its Oct. 22 meeting, the City would work with John Q. Hammons to prepare the formal redevelopment agreement. That agreement would be expected to go to City Council later this fall. That agreement will allow Opus and BKD to move forward.