ROCK FALLS – After a flurry of activity at City Hall the previous day, a redevelopment agreement was finalized Tuesday for an estimated $8 million riverfront project.
Local investor Pete Harkness filed paperwork in June to form Zesty Meatloaf, a limited liability company for the project that would cover a 5.6-acre area at the RB&W site on East Second Street.
The agreement divides the property into two development sections – hotel and retail parcels, with further subdivisions possible. The hotel, with 46 units tentatively planned, would be the first priority, with a completion deadline of March 31, 2020.
Harkness is working with My Place Hotels, based in Aberdeen, South Dakota. The chain, which opened its first site in 2012, has 43 hotels in operation, 75 planned in the near term, and longer-term commitments for about 40 more.
The development of the retail center on the other parcel would be the final step in the four-phase process outlined in the agreement. There is no deadline and Harkness isn’t even required to develop the retail portion, which is located in the slab area, to receive incentives for the project.
The first phase is the acquisition of the property, which carries a deadline of March 1, 2019. The second phase is the subdivision of the land, which must be completed by March 29, 2019.
Harkness declined to comment for this story, but city officials said he wanted to close on the land deal before the end of this year.
Before the agreement could be voted on by the City Council, the city’s Industrial Development Commission convened Monday to amend the land sale agreement. The finance committee met an hour later to give its backing to the new version.
Harkness had requested that the initial sale price of $700,000 be reduced to $500,000, which both panels unanimously approved. The city stands to get that money back as the deal nears its conclusion, but it frees up more cash to jump-start the work.
“The city reduced its redevelopment reimbursements by $200,000, but it gives him a break at the beginning and we recoup that money over the 10-year life of the agreement,” City Administrator Robbin Blackert said.
Harkness will have a $1 million cap on reimbursable expenses for the hotel parcel through the city’s riverfront tax increment financing district. The reimbursements don’t kick in until property taxes are paid. The amendment drops the cap on the slab parcel from $900,000 to $700,000.
During the life of the agreement, Harkness would receive 85 percent of the property taxes from the new hotel, while the city’s riverfront TIF would get the remaining 15 percent. The city is estimating that the hotel property alone would bring in $120,000 a year.
Another development incentive presented itself in May, when it was announced that the central part of Rock Falls, including the riverfront development area, would receive federal Opportunity Zone designation. Projects within those zones can get tax breaks for reinvesting unrealized profits in the protected areas.
The riverfront hotels could have a nearby banquet facility by June. Larry and Mary McCormick bought the Rock River Tool and Die building at 205 E. Third St. this summer for that purpose.
“We’re really excited about the prospect of having two hotels and a banquet facility on the riverfront,” Blackert said. “It’s been a lot of hard work, but it’s starting to pay off.”
If all goes as planned, construction on the new hotel should begin in the spring.