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Mason City to bring back Gatehouse to build hotel

David Rachie, who invented Gatehouse Mason City, LLC, is back in the game with a fresh pen to sign off on checks from taxpayers.

MASON CITY – America is the land of second chances, and nowhere is that monicker more firmly displayed than Mason City, Iowa, where the City Council will consider giving Gatehouse Mason City, LLC a second shot at trying to build a hotel in the downtown area to help the befuddled Renaissance Project survive.

A Special City Council Meeting has been scheduled for Tuesday, November 27, 2018 at 4:00 PM in the Mason City Public Library. At this meeting, the council will consider a proposal from Gatehouse Mason City, LLC, to build a hotel in the city’s downtown area. Ironically, it was almost exactly a year ago that the city council ousted Gatehouse for G8 Development to try to build a hotel for a second time.  It was said at that November council meeting that taxes would go up in Mason City if Gatehouse were to be the developer.  As NIT readers know, recently, the council fired G8 Devlopment for a second time.  The city has spent hundreds of thousands of dollars on the Renaissance Project since its conception in 2013.  The project has morphed over the years, but supposedly now includes a hotel, arena, pavillion, skywalk, a 100-story skyscraper, a water park, a 1,000 car parking ramp, a 6-lane freeway to Manly, and … oh wait, what does it matter, the project will probably change again anyway.

City Administrator Aaron Burnett is recommending the council approve an agreement with Gatehouse.  His review reads:

The River City Renaissance (RCR) project has been stalled as the contract with G8 was terminated and a new path forward was considered. After this termination, Gatehouse expressed interest in returning to this project to complete the project. City staff and the partners in the project considered several factors and determined that timeframe and ability are the two most relevant considerations with respect to the developer that is chosen to complete the RCR project. Gatehouse is the recommendation for the path forward with this project due to their familiarity with the project and partners, their history of completing projects of similar scope, and their ability to start quickly on the RCR. The Gatehouse proposal has $100,000 in payment included to complete a list of activities to bring the project forward to an agreement. These include such things as updating the plan due to changes in status of land around Music Man Square, updating the market study, providing drawings, term sheets, pro-forma and budgets for the development. This payment along with the previous $150,000 would be refunded to the City 45 days after the project is funded. While the City could consider more time consuming approaches such as a Request for Qualifications or Proposals and potentially have more options, it is doubtful that any such proposals would be substantially different with respect to incentives requested and would certainly carry longer timeframes. Any further delays will likely result in the loss of partners and/or, the loss of the Reinvestment District through the Iowa Economic Development Authority.

Could Gatehouse and Mason City end up in court over their plan to build a hotel? The venue would be set ahead of time if council approves a deal Tuesday night.

City Hall must pony up $100,000 to Gatehouse by December 4. There is an alleged chance that if things work out, the city would recover the $100,000 plus $150,000 the city already paid to Gatehouse in the past. Gatehouse – perhaps ominously – makes clear in a letter to the city that should things go bad again, “The parties agree that the sole and exclusive venue for any and all disputes regarding or arising out of this agreement shall be in the state district court located in Cerro Gordo County, Iowa, and further agree that this venue is convenient and will not seek a change of venue or seek to dismiss an action.”

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