The wait has ended for construction of the 33-story 515 Walnut apartment tower in downtown Des Moines.
Crews have begun preliminary work on the parcel at the northwest corner of Walnut Street and Fifth Avenue, Joe Teeling, head of development firm St. Joseph Group, confirmed as Des Moines City Council on Monday approved a final agreement for up to $3.8 million in incentives.
“This has been a long time coming,” Mayor Connie Boesen said. “We know these are trying times and changing times, but we look forward to a successful 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 the St. Joseph Group boasts on a sign at one of the blocked skywalk connections will be the “highest housing building between Denver and Chicago.”
Workers on the site of the 515 Walnut apartment tower on Friday in downtown Des Moines.
It also will be the largest downtown construction project in decades.
Construction of the tower could begin as early as January.
“There’s always change, and none of us can predict the future. One thing we do know is that we have approval,” Teeling told the Des Moines Register. “We’re good to go.”
What brought the project back to life?
St. Joseph Group originally planned to finance the project through tax-exempt municipal bonds. But “out of nowhere,” Teeling said, interest rates on those bonds rose. Even with the group’s 18 investors, it wouldn’t have been able to finance the whole project.
The initial date for groundbreaking, October 31, 2023, came and went. Teeling and Seth Sojka, also of the St. Joseph Group, began looking for a new source of funding. They met with an East Coast equity fund, started negotiations and came to an agreement.
Previously: Will interest rate drop spark start of long-planned 33-story downtown Des Moines apartment tower?
“They’re going to loan us the money for the whole project,” Teeling said.
He declined to provide the name of the firm.
The original plan for the tower goes back to 2016, but the then-developer, Blackbird Investments, 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, a one-time Blackbird president, emerged in 2022 with his proposal to revive the project, using the same plans.
When will 515 Walnut be complete?
Teeling expects construction to take 26 months.
The tower will open in 2027.
How tall will the tower be?
St. Joseph Group plans a 33-story apartment tower at 515 Walnut St.
The new tower is slated to be 360 feet tall, which would make it Des Moines’ — and Iowa’s — fourth-tallest building. It would unseat the downtown Des Moines’ Financial Center at 345 feet and fall close behind the Marriott Hotel at 365 feet. In second place is the Ruan Center, at 459 feet.
The addition of 515 Walnut will create the most significant change to Des Moines’ skyline since Iowa’s tallest building, the 630-foot-tall 801 Grand, was completed in 1991.
“It’s going to add a huge imprint to the city of Des Moines,” said City Council member Mike Simonson, owner of Simonson & Associates Architects.
What’s in the plans?
The 515 Walnut tower is expected to have 390 apartments comprised of a mix of studio, one-bedroom and two-bedroom units. Of that number, 39 will be priced to be affordable to households that earn 65% of the area median income — or $51,415 for a single person.
Aside from housing, 515 Walnut also is projected to have a coffee shop and bike storage on the first floor, as well as a dog park. The second floor will have shared workspaces, conference rooms, fitness rooms and a yoga studio. The top floor will include gaming and dining lounges with a deck and pool.
The exterior of the building will be composed of varied panels of reflective and clear glass.
The original development agreement called for a skywalk link, which was severed when the eastern section of the Kaleidoscope at the Hub mall, which formerly occupied the site, was demolished. It’s to be restored in 2026 whether or not the project is complete. It’s not clear if that provision still holds.
Where will all those people park?
The parking garage on Fifth Avenue between Court Avenue and Walnut Street in downtown Des Moines, Thursday, Nov. 14, 2024.
In the final terms of the project’s development agreement with the city, it was disclosed that tower will lease up to 390 parking spaces in the Fifth and Walnut parking ramp across the street.
That garage was built to serve an even larger project called the Fifth that floundered when the city revoked a development agreement and a bank foreclosed. The fate of the land, still owned by the developer after it won a lawsuit against the city, remains undetermined.
How much will this all cost?
The 515 Walnut project is expected to cost $148 million. Des Moines has proposed giving the St. Joseph Group $3.8 million in tax increment financing over 14 years and an additional $500,000 in American Rescue Plan Act funding when the tower is complete.
St. Joseph Group plans to file for a 10-year declining residential tax abatement on the project.
What does the city get in return?
Once complete, city staff expect the total assessed value of 515 Walnut for taxation, including the building and land, to be $69.5 million. Pre-development, it’s currently worth just $849,100.
In 20 years, the tower will have generated $22 million worth of tax revenue. In 30 years, that number will jump to $44,200,879, though the city won’t be able to reap the full benefits for 15 years due to the tax abatement.
If the mostly empty Kaleidoscope mall had been left intact, it would only generate $838,210 in tax revenue.
Addison Lathers covers growth and development for the Des Moines metro. Reach her at 608-931-1761 and ALathers@registermedia.com, and follow her on X at @addisonlathers.
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This article originally appeared on Des Moines Register: Des Moines to get long-awaited 33-story apartment tower, 515 Walnut
