Block 9 names new hotel partner for downtown Fargo high-rise
FARGO – A proposed downtown high-rise has a new hotel group on board, a key step that’s replaced a former partner and moved the project closer to construction.
Developer Kilbourne Group announced Tuesday, Jan. 23, that Aparium Hotel Group will take over as the hospitality management partner for a hotel and restaurant planned for Block 9, construction of which is expected to start sometime this spring or summer and be completed in 2020.
The Chicago-based company will oversee a hotel as well as a food and beverage concept, according to a news release. The hotel and restaurant slated for Block 9 haven’t yet been named.
President Mike Allmendinger said Kilbourne Group has been in talks with Aparium for several months since learning about the company’s “unique” way of managing its dozen hotels, including the Hewing Hotel in Minneapolis. Both groups also share a mutual desire for lodging and guest services in Block 9 to have a local flair and add to the “existing momentum” of downtown, he said.
“They were very curious about Fargo, and they came to Fargo and spent a couple days with us,” he said. “They loved Fargo, and that was a significant part of our path to a successful partnership.”
Aparium’s vice president of acquisitions and development said the company that’s slated to have 18 hotels to its name by 2020 is “atypical” in the hospitality industry.
Michael Kitchen said Aparium creates “legacy assets,” not just temporary business holdings.
“We want them to get better with time, so we still want to be operating that hotel in 20, 30 years,” he said. “We want to be better in 20 or 30 years.”
That includes the restaurant that Aparium will operate here. Kitchen said he wants to see that become “an emblem” of downtown Fargo and the kind of place where locals – many of whom wouldn’t stay in a hotel room in town – want to dine, drink and encourage visitors to stay there.
The hotel will have 110 rooms and take up five floors of Block 9, while the restaurant will be on the ground floor. But Kitchen said even Aparium isn’t sure how it will all look when construction is finished.
That’s because the company intentionally makes each of its properties unique and localized, he said, which is why his team isn’t looking at current Aparium hotel projects in Chicago or Kansas City for inspiration.
“If I had the exact answer of how the rooms would feel, what it will look like and the look and feel, then we wouldn’t be doing our job,” he said.
The 18-story Block 9 on the corner of Broadway and Second Avenue North has been discussed for years. Once complete, it will be the city’s tallest building.
Allmendinger said it’s slated to include office space, retail, residential condos, an attached parking garage and a hotel, in addition to a new public plaza in front of U.S. Bank, and the development will take the place of a surface parking lot.
Once construction starts, Allmendinger said the total project should wrap up in 2020 after about 2½ years of work.
He said the project has been approved for a $15 million loan from the city, which will be used to build a parking garage and public plaza and will be repaid with interest. There’s also a 20-year property tax exemption on the high-rise, with the exception of the condo units. The exemption is estimated to save about $625,000 per year based on an assessed value of $40 million.
In May 2016, when Block 9 was approved for city tax incentives, the project’s partners originally included Fargo-based RDO, which still plans to move its headquarters into the high-rise, as well as Fargo-based hotel operator TMI Hospitality.
But TMI’s name was dropped from the list of partners last year following the company’s acquisition by an affiliate of Aimbridge Hospitality, a Texas company that manages hotels across North America and the Caribbean.
Last August, the Fargo City Commission approved a fifth extension for the $117 million project. An agreement with the city from 2016 gave developers until the end of August 2017 to meet certain requirements, including completing the sale of bonds to build the high-rise.
Block 9 was originally scheduled to break ground in the fall of 2016.
Allmendinger said delays happened because of the complexity of putting together a financing package for a project like this.
“It has multiple partners and operating agreements that are needed to be completed before we can break ground,” he said, “and one of those key components is the hotel partnership.”
He said the group originally wanted a separate partner to operate a Block 9 restaurant, something TMI couldn’t do even when it was involved. Allmendinger said TMI is better suited as an operator of “limited service hotels,” but lacked experience overseeing restaurants.
That’s why he said Aparium is a good fit because it can handle both the boutique hotel and restaurant.
“They have a process that will look at Fargo and create an experience that is unique only to Fargo,” he said. “That’s what we’re most excited about.”
Still, Allmendinger said more work needs to happen before a construction start date can be set, and there is no firm schedule yet.