Bloom says it was 'blindsided' by Mayo hotel project
An executive from Bloom International Realty said the firm has no plans to abandon its proposed riverfront project in downtown Rochester.
In a letter addressed to city administration on Thursday, Bloom Senior Vice President Sameh Muhtadi said it “has invested heavily in the project and remain[s] serious about seeing it to fruition.”
However, Muhtadi said Bloom was “blindsided” by Mayo Clinic's announcement that it intends to develop an upscale hotel directly above the Gonda Bulding in partnership with Pontiac Land Group.
“The location of that hotel and its connection with the Mayo Clinic create a considerable competitive disadvantage for our project,” said Muhtadi. “Whether demand over the next few decades would support two upscale hotels in such close proximity has not yet been determined.”
Mayo, for its part, has said its goal is to “grow the pie, not change some slices of the pie.” Those comments were made by Jeff Bolton, Mayo’s chief administrative officer, after announcing the Gonda hotel project.
But Muhtadi said Bloom is reluctant to put any further resources into the project until it has “greater clarity.” While he admitted the company cannot stand in the way of the city offering the site to other developers, he did suggest Bloom would be prepared to compete with those developers.
Bloom notified the city in December that it was re-evaluating the hotel and condominium portion of the project. Until the announcement from Mayo, which came in September, Muhtadi said Bloom was ready to move forward with the two-phase, $230 million project along the Zumbro River.
“Because of the magnitude of the investment involved, it is incumbent upon Bloom to exercise caution and perform adequate due diligence before taking its final investment decision,” said Muhtadi. “As previously communicated to the City, we are working with specialist consultants to address feasibility concerns flowing from this setback.”
According to Muhtadi, Bloom has reached out to Singapore-based Pontiac Land Group about potentially partnering on the development of a single hotel on the riverfront site. He said Bloom expects to deliver a revised proposal to the city in “due course.” He requested that senior management be able to attend a council meeting later this month to discuss matters.
This week, city officials all but wrote off the Bloom project after the developer failed to meet a deadline for submitting a revised proposal to the city. In a news release Friday, City Administrator Steve Rymer reiterated the city’s desire to take another look at the riverfront site.
“Rochester is a much different place than it was four years ago,” said Rymer, who was not in the position when Bloom negotiations first began. “There’s been significant growth and vitality in the market, specifically in the downtown DMC district. This includes more than a half a billion dollars invested in housing, hospitality, and commercial developments. Plus, there are new projects in the pipeline, including the expansion of Mayo Clinic’s Gonda building to accommodate additional clinical space and a new hospitality option. We are excited about the momentum.”
Bloom first pitched the riverfront project about four years ago and until recently had exclusive negotiating rights on the city-owned property. The city council and the DMC Corporation Board had authorized up to $20 million in tax incentives for the site. However, at this point, there are no formal agreements in place between Bloom and the city.
With or without the development, 2019 is poised to be a big year for development in the DMC district. There are 9 grand openings scheduled this year representing about $300 million in non-Mayo private projects.
Meantime, the clinic continues toward its commitment to investing $3.5 billion in Rochester over the lifespan of DMC. During this week’s DMCC board meeting, Mayo CEO Dr. Gianrico Farrugia said Mayo plans to invest $1 billion in Rochester projects and infrastructure by 2021.
Story updated 2.9.19
Follow Sean on Twitter.