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Med City Beat is an independent news source covering government, business and culture in Rochester, Minnesota.

Est. 2014

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Council OKs development plan for Second Street hotel

Council OKs development plan for Second Street hotel

The Rochester City Council on Monday approved the final development plan for a proposed 250-room hotel to be located directly across the street from St. Marys Hospital.

The developer, California-based EKN Development Group, plans to demolish the existing auto garage at the site, 1102 Second Street Southwest, and replace it with a five-story structure with two levels of underground parking. The building would be branded as two hotels: Staybridge Suites and EVEN Hotels. There would also be space for retail on the street level.

Before signing off on the project, Council Member Michael Wojcik, whose ward includes the hotel, said he appreciated the developer’s willingness to work with the city and neighborhood on the final design.

“There was a lot of give and take on this project,” said Wojcik.

The big question moving forward is whether the developer will be able to come up with the financing needed to break ground. EKN’s two other Rochester projects — a new extended hotel on Civic Center Drive and the redevelopment of the former Holiday Inn on Broadway — received a combined $7 million in tax increment financing (TIF) incentives.

But with a Destination Medical Center analysis showing the supply of hotel rooms beginning to catch up with market demand, the city is likely to become more judicious about the type of projects that receive assistance.

Related: Policy may slow Rochester's TIF spending

“The financing is a concern, and we all up here know the community’s appetite for TIF has been worn pretty thin at this point,” said Wojcik.

EKN had initially asked for $6 million in public assistance for the Second Street project. Given the likelihood of that figure being rejected, however, the developer has since gone back to re-evaluate its funding options.

Asked about a potential TIF request on Monday, EKN CEO Ebbie Nakhjavani indicated it was too early to give a clear answer.

“There’s currently a financial gap that we’ve been working on,” he said. “We’re looking at many different ways to resolve that.”

Any request for public assistance would require approval from both the city council and the DMC Corporation Board.

Sean Baker is a Rochester journalist and the founder of Med City Beat.

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