MANKATO — A five-story $7 million apartment building in the Mankato Place mall would bring 56 luxury-living units to the city center as soon next year under a proposal from developer Gordon Awsumb.
“This is Class A apartments with enclosed parking, top-quality finishes and private balconies facing Jackson Park,” Awsumb said.
Also, possibly, a swimming pool and health club for residents.
The 60,000-square-foot building would rise above the former Red Rocks nightclub, stretching nearly to the Brett’s Building and eliminating the Jackson Street entrance to Mankato Place.
The ground level would be converted into 46 parking stalls using a “Parkmatic” mechanical system that lifts and lowers vehicles to allow them to be stacked in the confined space.
Four levels of apartments would cover the second through fifth floors with balconies facing east and south toward Second and Cherry streets.
Awsumb, who will present the plan to the city Economic Development Authority on Monday, said there’s unmet demand for high-end apartments downtown.
“People like living in the city but there aren’t any top-quality apartments immediately (downtown) right now,” he said.
Awsumb, the longtime owner of Mankato Place before selling it earlier this year, said he is serving as the new owners’ asset manager for the mall and as their development agent for the apartment project. He and his partners a year ago were pursuing a $14.2 million 117-room five-story Marriott hotel project above the Cherry Street Ramp just to the southwest of the proposed apartment building site.
The hotel development is not being abandoned but is on hold because of the ongoing pandemic, according to Awsumb, who notes that the partnership retains exclusive rights with Marriott and owns the “air rights” for construction above the city-owned parking ramp.
“We’d love to pursue it again as soon as the world opens up and the hotel industry recovers,” he said. “… It will eventually.”
For now, Awsumb will be pitching the apartment building to the Economic Development Authority, which is made up of the City Council, aiming to gauge interest in future tax-increment financing for the project. If city leaders appear open to TIF subsidies, a formal proposal will follow.
Awsumb is certain to talk about the project’s eventual benefit to Mankato’s tax base once the TIF subsidies expire after 15 years.
TIF involves setting aside a portion of the additional property taxes generated by a new development for a certain number of years, dedicating those dollars toward some of the costs of the development. The subsidies are permitted under state law for projects that meet certain conditions such as renovating an aging building or constructing a project on a vacant former industrial site.
“Of course redevelopment is more expensive than building on a cornfield, but it’s better for the community,” Awsumb said.
The $7 million investment in the apartment building will result in a property with an assessed market value of more than $4.5 million, according to a preliminary estimate by the county assessor’s office. That would bring a local property tax bill of nearly $74,000 a year — about $57,000 more than that portion of Mankato Place is now paying to the city, county and school district.
Over 15 years, the additional taxes add up to more than $800,000, and the City Council could allow that amount to be used to help cover the costs of the apartment building’s construction.
“It’s completely in accordance with what everybody else has got for good projects,” Awsumb said, referring to other TIF subsidies approved by the city. “It’s certainly good long term for the tax base.”
Mankato’s strategic plan includes the goal of boosting the number of residential properties downtown as it attempts to make the area a place to live as well as a place to work, eat and drink, and attend music, sports and other entertainment events.
“It’s an interesting reuse and redevelopment project,” Community Development Director Paul Vogel said of Awsumb’s proposal. “It fills something we’ve been looking at for some time, which is increasing housing options in the city center.”
Vogel is encouraged that private investors are looking to build in downtown Mankato even in the midst of a pandemic-driven downturn in the economy. A $48 million redevelopment of the downtown Hy-Vee site — including a new supermarket and a 66-unit six-story affordable-housing apartment complex connected by skyway to the civic center — is also in the planning stages with construction possibly beginning as soon as 2022.
“It’s a bright spot,” Vogel said. “… Development still seems to have some momentum to it.”
Awsumb’s current plan would have the apartment complex completed by December 2021, although he admitted the timetable is very tentative: “Tell me when the world’s going to open up again, I’ll tell you if that’s realistic.”
But Awsumb said he is very confident in the demand for high-end apartments in downtown Mankato. He has developed downtown apartment and condo buildings in larger cities in recent decades, including St. Paul, Minneapolis and Des Moines.
Mankato might not offer the same level of urban excitement as those places, but he said it’s attractive because it provides restaurants and bars, movie theaters, civic center events, bike trails and other entertainment options in a low-crime environment.
“Mankato is just such a stable area economically,” Awsumb said. “It’s a well-run city. It’s a safe city. It has a lot of things going for it, so it attracts investment.”
As for the SpringHill Suites by Marriott, he said there’s no chance that project will be constructed in the coming year.
“The hotel’s further down the road. There’s a whole lot that has to happen in this world before any new hotel is built.”