Developer changes for proposed hotel project

Agreement expires for GrandStay Hotel project; Marriott now interested 

by Marianne Gasaway

A potential change in the developer of a new hotel and convention center in the city’s Courtway Park subdivision along Interstate 35 and Highway 122 was revealed at Monday night’s City Council meeting.

City Administrator Scott Flory presented the Council with a preliminary economic development agreement with  VKB Management LLC and JSM Investment LLC, of Des Moines.  The developer hopes to build an 85-room Marriott hotel and 6,000 square foot attached conference and events center which would accommodate about 450 people.  

WillowStream LLC had eyed the same location for construction of a GrandStay Hotel & Suites, detached convention center and Jethro’s BBQ.  However, that developer let its purchase option for Lot 4 in the subdivision expire.   David Harchanko, president of Apollo Development LLC based in Monticello, Minn., signed the development agreement on behalf of WillowStream LLC.  That agreement stated construction was to begin no later than Nov. 28, 2019, and be substantially completed by Nov. 1, 2020. 

“That option lapsed— expired for reasons that I cannot comment on.  I do not know.  It’s expired and didn’t get renewed,” said Flory.  “It’s an attractive location and another developer took immediate interest and secured a purchase option on that location.”

Flory explained the preliminary agreement approved with VKB Management LLC and JSM Investment LLC allows the city to work  toward a potential final economic development agreement.  

“This developer, I have had conversations with for quite a while, and I know their work,” Flory told the Council.  “They’ve done quite a bit of work. They have a similar Marriott product that they built in Des Moines.  I think it’s important— credibility, experience, bankability is clearly there.  They have met with some of our local bankers and they have established contacts with other banks and their reputation is well known.  I think all the things are there.  We just need to continue with the process and see if they get approval for the Marriott flag.”

The preliminary economic development agreement calls for the City to make grants out of its general fund, tax-increment fund, or other funds to offset the cost of a Franchise Application Fee to Marriott International, not to exceed $50,000 of the $75,000 total application fee paid by the developer upon approval of the franchise application.

Flory said Marriott officials will meet later this month and review the application. The approval process would include a site visit by a Marriott representative, who would then issue a recommendation to company leadership.  A decision about the project is expected by early April.

Estimated capital investment for the Marriott project is $12 million.

Although WillowStream LLC let its purchase option expire, Flory said the developer may still be interested in locating in Clear Lake.

“Interest remains strong.  This doesn’t mean there won’t be another hotel.  We could have none, two or one,” said Flory.  It’s very positive when two quality developers are interested in your community.”

The 64-acre Courtway Park development is currently owned by Lorri and Todd Hall, of Sheffield.