by CHRIS ROGERS
A hotel could succeed at downtown Winona’s 60 Main Street site, according to a new report. A feasibility study commissioned by the city of Winona recommended that a moderately priced, 59-room hotel could be financially viable. The city’s Port Authority Commission may solicit developers in early 2020 to build such a hotel — or a hotel-apartment-commercial complex — at 60 Main Street, a city-owned parking lot just south of Levee Park.
This positive report comes after the last company selected to develop 60 Main Street dropped its plans for a hotel, then dropped out of the project entirely. As part of the city’s Opportunity Winona initiative pushing big developments downtown, city leaders sought a developer to turn 60 Main Street into an apartment, commercial space, hotel, and parking ramp complex. In 2017, the city’s Port Authority Commission selected Minneapolis-based company Sherman Associates’ proposal for such a building. However, in late 2018, Sherman Associates cut its plans for a hotel as part of the development, citing the recent construction of new, competing hotels in Winona. Then over the winter of 2018-2019, city officials reported that Sherman Associates stopped communicating with them entirely. In early 2019, the Port Authority canceled its deal with Sherman, and Port officials began reevaluating what kind of development would make sense at 60 Main Street.
As they went back to the drawing board, the Port Authority Commission decided to conduct its own hotel feasibility study to determine whether asking developers to build a hotel at 60 Main Street was a reasonable proposition.
“So the question we had in the past was, could we do a hotel downtown? And this is saying that we could, or that it makes sense,” Port Authority Commission Chair Mike Cichanowski summarized at a meeting last Thursday.
The new study — conducted by New York-based commercial real estate company Newmark Knight Frank — concludes, “Our analysis indicates that the development of the proposed 59-room limited-service hotel affiliated with [the hotel brand] Cobblestone, or a similar brand, is financially viable.”
The study recommended a relatively small, 59-room establishment with limited amenities: breakfast, a small bar, and a fitness room, but no full restaurant or pool. Newmark Knight Frank proposed a Cobblestone Hotels-branded facility because of that chain’s lower franchise fees. Alternatively, a Best Western would work, the report states. The study estimates constructing such a hotel at 60 Main Street could cost $5.9-$7.4 million, and it recommends nightly rates of around $125 to $133.
There are both opportunities and weaknesses at this site, Newmark Knight Frank advised. The location benefits from its access to downtown and its views of the Mississippi River, but it is far from any major highway bringing visitors in and out of Winona. Winona has lots of businesses and universities that generate demand for hotel rooms, but a new hotel would also face competition, according to the study. The 60 Main Street site is small, putting limitations on what could be built there and providing minimal space for parking, the report notes.
“They did say parking would be a challenge on the site, but that would have to be part of it. If it’s a hotel, parking would have to be part of it,” Winona Economic Development Director Lucy McMartin said.
Last winter, city officials acknowledged there was some consideration of trying to buy neighboring properties and increase the amount of developable land at 60 Main Street. Port Authority Commission member and City Council member Al Thurley raised that issue at last week’s meeting, asking whether the report considered the project’s footprint to be a full block or just the half-block that is currently available.
Newmark Knight Frank’s report is based on the half-block of property the city currently owns. It adds, “Our study assumes that adequate parking will be available either onsite or via an easement or agreement with a nearby business or parking lot.”
McMartin stressed that this study is specific to the 60 Main Street site and the hotel variety Newmark Knight Frank recommended. The report should not be used as an assessment of the overall hotel market in Winona or as a guide for the feasibility of other hotels in other locations, she cautioned.
The Port Authority Commission laid tentative plans last week to develop a request for proposals (RFP) in early 2020 to solicit possible developers for the site. An RFP is a competitive process where the city would advertise what kind of development it wants and any company could submit a proposal for building a development. It’s the same process the city used in 2017 before selecting Sherman Associates. City manger Steve Sarvi suggested drafting two possible RFPs the Port Authority Commission could choose between: one with just a hotel and one combining a hotel with apartments and other uses.
Sarvi also raised the option of not issuing an RFP for the project, but selecting a developer city officials know through a noncompetitive process. “We could also consider working with someone who is currently interested in the area rather than going out for an RFP,” Sarvi noted. The Port Authority Commission used a noncompetitive process to sell the city-owned “Hardee’s block” to Bob Kierlin’s Main Square Development, for instance.
Winona Port Authority Commission member and Fastenal Vice President Dana Johnson recommended that the Port Authority wait for the city to finish its forthcoming downtown strategic plan before it drafts an RFP for 60 Main Street. Cichanowski concurred, adding of developing 60 Main Street, “We’ve got time.”
The downtown strategic plan is meant to set a new, big-picture vision for the future of downtown. It would replace the city’s 2007 comprehensive plan’s downtown revitalization plan. The consulting firm ISG and city staff have been working on the new strategic plan throughout this year. It was originally scheduled to be released this summer, but it has taken months longer than expected. McMartin said city staff are currently revising drafts of the plan that have not been publicly released. She stated that a draft of the plan may be publicly released in January before being reviewed and approved by the Port Authority Commission, Planning Commission, and City Council.