D.M. council members praise $669 million overhaul of downtown, Merle Hay Mall

Krause Group wants to build a stadium downtown for a new professional soccer franchise. (Image courtesy of Pro Iowa)

Des Moines City Council members on Monday said developers’ plans for a combined $669 million in projects at a Superfund site in downtown Des Moines and at resurgent Merle Hay Mall would enliven both areas and draw people from around the state.

The developments would include Krause Group’s proposed stadium for a new professional soccer team in downtown Des Moines and a hockey arena for the Des Moines Buccaneers at Merle Hall Mall. Backers are seeking state aid from a $100 million pot of hotel-motel taxes. West Des Moines and Johnston also want to tap that fund for their own projects.

Des Moines Mayor Frank Cownie said the potential $540 million in added development downtown continues a boom that began in the 1980s, bringing a mixture of housing, corporate campuses, and new retail. 

“We went from 1,700 people living downtown to 17,000,” Cownie said. “We look at the downtown as thousands of more opportunities in places to live and to make downtown more exciting, more inviting. I think it is a very exciting opportunity.”

Merle Hay Mall plans to remodel the vacant Younkers store for a hockey arena that would house Des Moines Buccaneers games. (Screenshot of Des Moines City Council meeting)

Krause Group CEO Kyle Krause told council members he welcomes the chance to turn the blighted DICO Superfund site, eyed for the stadium, and a fast-growing commercial and residential area next to it, into a new business and entertainment district. He said he would be especially glad to rid the cityscape of the dilapidated, polluted  buildings and rubble of the DICO site.

The city has signed a court agreement with the U.S. Environmental Protection Agency that calls for the city to take ownership of the site and EPA to help with cleanup. 

“I’ve been in Des Moines for 33 years and it’s been a 33-year problem, plus,” Krause said of the former industrial plant, which left the groundwater polluted with solvents. “We are more than excited to be part of the solution and to bring professional soccer to downtown and central Iowa,” he added.

The council learned more details of Krause Group’s $540 million in downtown developments, and Merle Hay Mall’s $128.6 million plan for a hockey arena, housing for senior citizens, a new Kohl’s store, added retail space and an upgrade to the mall. 

The Des Moines City Council planned to vote Monday night on endorsing the concepts and backing applications for part of a $100 million state fund. The program, administered by the Iowa Economic Development Authority, uses added hotel-motel tax receipts from certain developments. The program is aimed at urban redevelopment. 

Frank Cownie is mayor of Des Moines. (Photo courtesy of city of Des Moines)

Both projects grabbed the council’s attention for their potential to rejuvenate two high-profile areas of the city. The Krause Group project is a 12- to 15-year buildout that would begin with the 6,300-seat soccer stadium and related projects. The USL Championship team Krause wants to bring to Des Moines would be one level below the Major League Soccer teams, and the city’s first at that level.

Krause Group’s wide-ranging plan also includes a brewery to open in March 2022 at the Crescent Chevrolet building to the north of the stadium site, hotels both south of Martin Luther King Parkway and near Iowa Methodist Medical Center, and a plaza for festivals next to the soccer stadium.

Krause, the parent company of Kum & Go, is working with Sherman Associates on master planning for the district south of Martin Luther King Parkway, which would include a grocery store and a 150-room hotel. The hotel and grocery are expected to open in late 2023. The stadium would open in 2024. 

Councilman Josh Mandelbaum said just cleaning up the DICO site would be a long-awaited achievement. Bringing professional soccer and the related developments makes it an attraction. “It’s something that I think will draw folks from across the state,” Mandelbaum said. 

Recent developments in western downtown and the Gray’s Lake area will tie to the new projects. “We’re going to see such a drastic transformation from these investments in what is a relatively short time period,” Mandelbaum said. “I’m incredibly excited about it.”

Connie Boesen is a member of the Des Moines City Council. (Photo courtesy of city of Des Moines)

Councilwoman Connie Boesen agreed. “I think both of these projects … are almost statewide projects for what they are going to bring. They are truly exciting developments for the metro area,” she said.

Merle Hay Mall, which lost both Younkers and Sears stores as anchors in the middle of a years-long rejuvenation, wants to convert the Younkers store into a 3,500-seat indoor hockey arena. Plans also call for a new Kohl’s store and added retail space at the former Sears site, and the conversion of a six-story building north of the mall into senior housing. 

Urbandale and Des Moines would apply jointly for $30 million from the state fund for Merle Hay Mall and $27 million for the Capital City district, which includes the Krause projects. Des Moines’ most visible IRA project recently was the Hilton Hotel at the Iowa Events Center. 

Council members expressed concern over multiple projects coming from one metro area. West Des Moines plans to ask the state to set up a reinvestment district for Valley West Mall and surrounding areas of University Avenue. Johnston wants to amend its reinvestment district that will include a sports and recreation project, trails, kayak launches and a sports equipment rental facility, said Adam Plagge, city economic development director. Both cities are still working on cost estimates. 

Des Moines City Manager Scott Sanders said he expects the Des Moines and Urbandale projects to fare well in the state’ scoring of potential projects in line for state aid. 

Josh Mandelbaum is a member of the Des Moines City Council. (Photo courtesy of city of Des Moines)

The city would allow Krause to use 90% of added property tax in the district over 20 years, with a cap yet to be determined. Krause plans to use $9 million from the tax increment financing for the stadium, which would be exempt from taxes because it would be owned by a nonprofit corporation. 

The office and retail development, which would include a Kum & Go convenience store in the stadium area, would be taxed. The city estimates the project would bring development assessed at $330 million, which would bring the city $190 million in tax revenue over 20 years.

Councilman Bill Gray said he has worked on the Merle Hay Mall project for four years or so. “This has generated  a lot of excitement in the northwest side of the city,” Gray told council members. He said the Sears store will be demolished soon.

Urbandale has discussed $3 million in tax increment financing for the Merle Hay project, which includes property in Urbandale and in Des Moines. That would mean newly generated property tax revenue from the development could be used to help finance the work.