Developers couldn't reach deal on Phillips properties

Plans for a mixed-use downtown building and parking ramp are being retooled after developers couldn’t reach a deal with landowners along Phillips Avenue.

Sioux Falls Community Development Director Darrin Smith said Thursday the original design and location for a four-story building called “The Banks,” which had a hotel, apartments, retail and office space and a public parking ramp at the corner of 10th Street and Phillips Avenue, were changed when project backers were unsuccessful in acquiring the properties that house Skelly’s Pub and Copper Lounge.

Following a June press conference where the development group’s proposal was publicly selected for the public-private partnership, Skelly’s Pub owner Houston Haugo told the Argus Leader no deal had been reached.

Copper Lounge owner Tim Kant said this week that a written agreement was reached with the developers but the deal fell through when they couldn’t settle on a closing date. U.S. Hotels & Resort Management, the hotel arm of The Banks, wanted to finalize the deal in December, he said.

“They said ‘If you’re not going to wait, then we’re backing out of the document,” Kant said.

Calls to U.S. Hotel & Resort Management and Haugo’s attorney were not returned.

Smith said the team of developers and the city agreed to alter The Banks designs when it became obvious the land acquisition wasn’t going to happen in time to address a need for more downtown public parking. With available downtown public parking facilities at 90 percent capacity, Smith said a priority of the city is to get a new ramp built as soon as possible.

“It takes 12 to 18 months to get all this done so we need to break ground in the spring,” he said. “Once it became clear that that might not work out … we met with The Banks people and said ‘Let’s move on.’”

Moving on they are and new plans have The Banks going up solely on an existing city-owned parking lot at 110 S. Mall Avenue, where the public parking element of the project had already been slated to go.

“There’s always been a plan A and a plan 1A,” said Micheal Bender with Bender Midwest Development. “This was as much about timing and getting the footprint set so we could start doing the design as it was anything else. If we would have had the luxury of time, we would have got all that done.”

Also factoring into the site change was higher-than-expected costs associated with necessary utility work if The Banks were built along Phillips Avenue. A sanitary sewer line running below Mall Avenue would need to be relocated to connect The Banks with the city-owned lot. That would have cost about $1 million, Smith said.

By building on the city’s parking lot only, the Mall Avenue utility can stay. It also means a storm sewer line below the city-owned parking lot will need to come out at a lesser cost.

“We’re still determining what that cost would be,” Smith said. “There’s a big difference between storm sewer … versus sanitary sewer.”

Maintaining the planned 18,000-square-foot building on a smaller parcel of property will add two levels to The Banks — it’ll be a six-storied structure — in order to maintain key design elements. A green rooftop, 500 new downtown parking spots on top of the existing 100 or so spaces on the lot now and the 80-room hotel boutique are still in the mix.

Bender said the new design will simplify the process while bolstering what The Banks will offer. For example, the added levels open the door for an additional 10 apartment units above the 45 originally included.

“Quite frankly it’s simpler – we don’t have to deal with other properties and closing streets,” he said.

The June estimate of $40 million in construction expenses might still be feasible, but Smith said the additional building levels could push the bill as high as $50 million.

“Because the project will be one to two levels higher, the cost of the project will go up,” Smith said. “The private development shared with us they think it could go up $5 to $10 million.”