11 things to know about the $101 million convention hotel

Des Moines and Polk County released new details Friday about the proposed convention hotel attached to the Iowa Events Center. They provide the clearest picture yet of the years-in-the-making project.

Here's what you should know about the proposed hotel:

1. It is being scaled back.

The latest proposal calls for 330 rooms in a 10-story hotel at an estimated cost of $101 million. Plans announced more than a year ago called for a 450-room, 16-story hotel with a price tag of nearly $130 million.

Officials said the original proposal was too expensive and the smaller hotel will still have the high-end finishes and number of rooms needed to draw new events and conventions to the city.

"We didn't sacrifice quality," said Tim Leach, economic development director for The Greater Des Moines Partnership. "When you walk in to the lobby you won't know if there are 300 rooms above your head or 450 rooms."

2. It will be on the southwest side of the Iowa Events Center.

The hotel will stand near the intersection of Fifth Avenue and Park Street, southwest of Hy-Vee Hall, where the former Allied Insurance office building currently stands. The main entrance would be along Fifth Avenue. The broad sides of the building would face east and west.

3. Construction is expected to start this time next year.

Polk County bought the property last year and plans to demolish the office building this fall. Construction would begin around March 2016 and is expected to take 18 to 24 months, so if all goes to plan the hotel could open as soon as fall 2017.

4. Backers of the hotel plan are asking for more money from the state.

Backers of the hotel project originally asked for $36.4 million from a new state program called the Iowa Reinvestment Act. Under the new plan, the request will be increased to $39 million.

The state program allows cities to create reinvestment districts, where a portion of the sales tax and hotel/motel tax generated can be put toward economic development projects — like a convention hotel. The state doesn't actually cut a check upfront for reinvestment act projects. The funding comes from new taxes generated during the life of the project.

Assistant City Manager Matt Anderson said the city is increasing its request because it has better estimates on how much tax revenue will be generated in the district.

5. The hotel will be owned by a nonprofit.

Polk County plans to create a nonprofit Monday night called IEC Convention Hotel that will own the property. It will be governed by a seven-member board of business professionals — five appointed by the county and two appointed by the city. The hotel operator will report to the board.

Why a nonprofit? Anderson said convention hotel investors typically require a return on investment of close to 25 percent, so creating a nonprofit to develop and own the hotel will be cheaper.

6. The hotel brand hasn't been picked.

Hilton, Hyatt and Westin brands are all possibilities but no hotel operator has been selected for the project, city and county officials said.

7. The city and county are shopping around for contractors.

Mortenson, a massive Minneapolis-based construction firm, had been pegged as the contractor for the project, but city and county leaders said they think the company's construction estimates are too high.

Polk County administrator Mark Wandro said officials are in the process of getting construction estimates from another firm, which he declined to name.

Mortenson still could be selected for the project and there is no bad blood with the firm, Wandro said. It's just financial.

"Mortenson truly believes in their numbers, but it's a higher price than we think we can afford," he said.

8. Des Moines and Polk County are contributing a combined $20 million.

The city of Des Moines is offering a $14 million incentive for the project. The money will come from tax increment financing.

A TIF, as it's called, is the process in which cities take the additional property tax revenue created by new projects and use it to subsidize new developments. The $14 million incentive for the hotel is equivalent to 75 percent of the taxes the hotel would generate (above the amount the site currently generates) for 30 years.

Anderson said the the incentive is on par with subsidies for other downtown Des Moines hotels. The city agreed to provide $4.3 million in incentives for the $18.1 million proposed AC Hotel in the East Village and about $5.6 million in incentives for the recent $32 million riverfront hotels project.

Polk County is providing about $6 million for the purchase of the property and demolition of the office building on the site. The county paid $3.3 million for the property in April 2014. Funding will come from gaming revenue generated by Prairie Meadows Racetrack and Casino, Wandro said.

9. Consultants say it will help other downtown hotels.

The city hired Chicago-based Johnson Consulting to research the economic impact of the hotel. A report from Johnson says the hotel will bring an estimated 3 million additional visitors to the city and an economic impact of $1.2 billion during its first 20 years of operation.

City leaders say the convention hotel will create business for existing downtown hotels by bringing more events to town. Johnson's report said other downtown hotels will book an additional 3,200 room-nights per year as a result of the convention hotel.

10. Hotel operators disagree.

Managers of other downtown hotels, though, have voiced opposition. They have said downtown hotels don't have high enough occupancy rates to support the addition of a large convention hotel and they argue that the city shouldn't subsidize a project they believe will siphon customers from their businesses.

11. Business leaders are putting up cash.

A group of local business leaders is offering a $4 million loan for the project, Leach said.

BY THE NUMBERS

$101 million: Estimated cost

$39 million: Amount requested from the state

$14 million: Proposed contribution from the city of Des Moines

$6 million: Estimated contribution from Polk County

17,000 square feet: Ballroom size

1,000: Construction jobs

360: Permanent jobs (including those at the hotel and jobs elsewhere serving hotel guests)

330: Number of rooms

10: Number of floors

1: Full-service restaurant

1: Level of underground parking

IOWA REINVESTMENT ACT: How does it work?

The city of Des Moines is seeking $39.4 million from the state's new Iowa Reinvestment Act program.

If approved, the state won't actually cut a check for the project.

The program allows cities to create reinvestment districts where a portion of the sales tax, hotel/motel tax and excise tax revenue created by new developments can be redirected toward economic development projects.

The city plans to issue bonds for the hotel project and repay them with revenue from the reinvestment district. If revenue from the sales and hotel/motel tax falls short of projections, the city and county will have to pay the difference.

Des Moines' reinvestment district was one of three approved by the state last year. It includes the convention hotel site, Fifth Avenue and parts of Court Avenue. New projects in the district expected to generate revenue include the convention hotel, the Court Avenue Hy-Vee, the Hotel Randolph renovation and the redevelopment of a parking ramp at Fifth and Court avenues.