By Kevin Collison
The long-awaited redevelopment of the historic Federal Reserve Bank building into a 321-room Embassy Suites hotel is back on track and is expected to start interior remediation soon, according to its Colorado-based developer.
“It’s been a long, difficult process that’s now come to a head and we’re ready to go,” said Jeff Kirkendall of Delta Quad Holdings.
Interior demolition work should begin in about two months after asbestos, mold and other contaminants are removed, and if all goes according to plan, the $120 million hotel should be ready to begin accepting guests by June 2020.
“It’s an iconic building and I want to make it spectacular,” Kirkendall said.
The building opened at 925 Grand Blvd. in 1921 as the headquarters of one of the 12 regional Federal Reserve Banks established by Congress in 1913. It’s been vacant since the Kansas City Fed moved into its new offices at Penn Valley Park in 2008.
Five years ago, Delta Quad began pursuing the redevelopment of the 21-story historic building as a hotel after a previous plan to convert it to condominium residences fell through.
The developer was granted tax incentives, including tax-increment financing, for the project about two years ago. It also qualifies for $40 million in state and federal historic tax credits.
The redevelopment plan includes locating a $50 million data center in the basement, but that component of the project encountered problems when a construction lender opted not to finance it, Kirkendall said.
The developer had to scramble to separate the financing for the hotel from the data center. Kirkendall said his team now has lined up a construction lender for the hotel side and are negotiating a contract.
The data center is still part of the redevelopment plan and is being pursued on a separate track. The building legally has been divided condominium-style to accommodate potential lenders.
“It’s been a very time-consuming process,” he said.
In the meantime, McCownGordon, the contractor, and Jason Reece of Focus Architecture, have been refining the design of the hotel. Doug Stone of Lewis Rice is the attorney for the developer.
The planned Embassy Suites will include 12,000 square feet of ballroom and meeting space, a third-party restaurant, a complimentary dining and cocktail area for hotel guests on the mezzanine level and a rooftop venue.
The old Federal Reserve building also has a 450-space garage that’s in good shape, the developer said. The top floor of the garage is expected to be used to accommodate data center equipment, but it will still leave 400 spaces available for parking.
Kirkendall said more than $20 million in private equity has been invested so far.
And while downtown has seen and is seeing an infusion of hundreds of new hotel rooms, including the 800-room Loews Convention Center Hotel now under construction, Kirkendall remains bullish the demand will be strong when his project opens in two years.
“If you look at new hotels that have opened, the occupancy and daily room rates have increased substantially in downtown Kansas City,” he said.
He said the Embassy Suite flag has consistently been one of the best performing operated by Hilton, averaging 80 percent occupancy rates.
“The Kansas City market needed nice, new rooms and it’s getting a lot now,” he said.
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