Hotel conversion planned for old Federal Reserve building in downtown KC
06/16/2014 2:04 PM
06/16/2014 9:17 PM
A Boston lender is providing $9.23 million to help a developer acquire the historic Federal Reserve Bank of Kansas City building at 925 Grand Blvd. and convert it into a hotel project.
UC Funds announced it’s providing the loan to help redevelop a 21-story tower in downtown Kansas City that opened in 1921, and includes a four-story annex and an eight-story garage. While the lender didn’t identify the structure or the new owner, the description matches the old Fed building that’s been vacant since 2008 when the Federal Reserve moved into its new office building near Penn Valley Park.
The statement from the lender said the prospective developer, identified by real estate sources as Developing Equities Group of Denver, wants to convert the main tower into a 301-room “key flag” hotel. A second phase would renovate the annex into a boutique hotel.
A total of 528 parking spaces would be provided with the existing garage and a surface lot.
“We saw the potential value in a new borrower’s vision and provided acquisition capital to close the deal,” Jeremy Ross, a UC Funds vice president, said in a statement. “We look forward to developing our relationship with our new borrower.”
Jeff Kirkendall, an official at Developing Equities, could not be reached for comment. Officials at UC Funds also could not be reached for comment beyond the press release.
The statement by UC Funds described the building as being on the National Register of Historic Places and in a prime location within walking distance of major downtown attractions, including the convention center and the Sprint Center.
The old Federal Reserve building had been slated to be redeveloped as a 306-room Embassy Suites hotel by its previous owner, Jason Townsend, three years ago. Townsend bought the building from the Federal Reserve in 2005 for $12 million, and the bank leased the property until its new quarters were completed.
Townsend originally conceived of it as a residential condo project, but after the recession hit, he changed his plan to a $70 million hotel project. He received approval from the Land Clearance for Redevelopment Authority for a 10-year property tax abatement with a 2014 deadline to begin construction.
In February 2013, Townsend lost control of the building when its lender, Great Western Bank of Sioux Falls, S.D., which had loaned $14.3 million, took back the property at courthouse auction.
At this point, the new owner has not filed any paperwork with the LCRA for his plan.
Should a project move forward to redevelop the old Federal Reserve, it could run up against a policy by the Kansas City Convention & Visitors Association that opposes using extraordinary tax incentives to develop any downtown hotel other than a long-sought major convention hotel project.
Jon Stephens, who recently stepped down as interim president of the CVA, said the organization has not been briefed on any hotel redevelopment plan for the old Fed.
“Seeing historic buildings coming back to life is great, but it’s against our board policy if they seek super tax increment financing,” Stephens said.