Oak Park Heights agrees to sell land for hotel, deal won’t be final unless development agreement is reached

The city of Oak Park Heights has agreed to sell a parcel of land south of Highway 36 (marked above) for use as a hotel site, if a development agreement is reached. (Credit: Google Maps)

The Oak Park Heights City Council has reached a purchase agreement to sell 2.4 acres of city property for development as a hotel.

The property is located on Memorial Avenue North, just south of Highway 36, between Stillwater Motors and Century Power Equipment and Sports.

Earlier this year Madison Hospitality Group proposed a purchase price of $875,000 for the parcel. The city is willing to accept that price, with assurances that a hotel would be built on the property.

There’s still a long way to go before the sale is finalized, but the city now has “a framework for the sale to be complete,” according to City Administrator Eric Johnson.

“In effect they’ve secured the land to go through a planning process, a zoning process,” Johnson said.

Among the conditions for the sale is the negotiation of a development agreement that requires the hotel to be built. Johnson said the agreement would need to have teeth to ensure the developer would follow through and build a hotel.

“There would be financial penalties or clawbacks or some of those things that will need to be determined,” he said.

Negotiating a development agreement will take at least six months, Johnson expects.

So far Madison Hospitality Group hasn’t given the city details about the proposed hotel. The group’s other properties include the Holiday Inn Express in Bloomington, the Grand Ely Lodge and hotels in Alexandria and Ottertail.

The city purchased property in question several years ago from Stillwater Motors, Johnson said.

“Originally it was bought with the intention that maybe someday we would need a third well,” Mayor Mary McComber said. “Now we’ve had evaluations that we don’t. … It would be nice to get the property back on the tax rolls.”

Johnson said the city will recoup the original purchase price, which was around $850,000, but won’t make much profit. But he said the project adds value to the city.

McComber agreed.

“There is a need for more hotels in this area,” she said, referring to an assessment by the local convention and visitors bureau. “And now that the bridge is open, all these people are coming to town.”

Contact Jonathan Young at [email protected]