Is it a miracle on Walnut Street?An on-again, off-again, 8-year-old proposal for a 33-story apartment tower on the northwest corner of Walnut Street and Fifth Avenue in downtown Des Moines is showing signs of life.
A crew of workers was on the site Friday, assembling large metal structures. The head of development firm the St. Joseph Group, Joe Teeling, did not respond to a request for comment, but a plan submitted along with the company's permit application shows that rebar cages are being built, typically used for reinforcing concrete.
Part of Walnut Street between Fifth and Sixth avenues has been closed, as well as the surrounding sidewalk, per a request from Beal Derkenne Construction, the company slated to work on the tower.
And the City Council on Monday is slated to approve the final terms of an urban renewal development agreement between the city and St. Joseph Group, as well as a conceptual plan for the site.
It's more than a little overdue. Des Moines Assistant City Manager Matt Anderson told the Register in early 2023 that he expected a final agreement to be reached by April of that year. The delay has been attributed to inflated borrowing costs.
According to a communication to City Council members, completion of the tower is now expected in 2027. Demolition of the eastern section of the Kaleidoscope mall to make way for the project severed skywalk connections, and the St. Joseph Group is still on the hook to reconnect them before June 11, 2026, regardless of the status of the tower project.
If all goes according to plan, 515 Walnut will be the largest residential project ever constructed in the city's downtown core -- a project St. Joseph Group boasts on a sign at one of the blocked skywalk connections will be the "highest housing building between Denver and Chicago."
What's in the agreement for the 515 Walnut skyscraper?
Per the development agreement, Des Moines has proposed giving the St. Joseph Group $3.8 million in tax increment financing over 14 years in exchange for the construction of 390 apartment units. The entire project is expected to cost $148 million.
In addition, St. Joseph Group would file for a 10-year declining residential tax abatement on the project. When the tower is completed, the city would provide the company an additional $500,000 in American Rescue Plan Act funding.
However, an amendment to the agreement reduces the number of affordable units that 515 Walnut is required to have in order to receive its incentives. After originally committing to providing 72 units at rents affordable to households that earn 50% or less of the area median income, St. Joseph Group now is required to set aside just 39 units.
Also, it can raise the rent cap to be affordable to residents earning 65% of the area median income -- or $51,415 for a single person.
A communication to council members from city staff explained that the reduction in affordable units and increase in rent cap restrictions are being allowed due to the elimination of $2 million that was previously included in the incentives but removed due to budget constraints.
There is no deadline mentioned in the final agreement for beginning construction or the completion of the tower.
How long has the project been in the works?
The 515 Walnut project dates back to 2016, when Des Moines developer Blackbird Investments received city approval for it. But the company became embroiled in lawsuits for failure to pay loans on other developments and work stalled. With no construction on the skyscraper, the city terminated the development agreement on June 1, 2020.
Teeling, at one time president of Blackbird, emerged in fall 2022 with a proposal to revive the project, using the same plans. It would occupy a 0.35-acre portion of the eastern section of the 0.86-acre Kaleidoscope site.
The building there was demolished in July 2023 though there was no development agreement yet in place for the tower.
Aside from housing, 515 Walnut also is projected to have coffee shop, bike storage and a dog park on the first floor. The second floor would have shared workspaces, conference rooms, fitness rooms and a yoga studio. The top floor would include gaming and dining lounges with a deck and pool.
In the final terms is an agreement for the tower to lease up to 390 parking spaces in the Fifth and Walnut parking ramp.