(January 15, 2025) The Davenport City Council voted to approve a revised agreement with a development team looking to build a hotel and office building/event center on the triangle-shaped property located at 3rd and LeClaire Streets in downtown Davenport.
Click here to view the City Council agenda packet and public documents, including the development agreement.
What are the developer's plans?
The proposal includes 2 buildings: a 4-story hotel and a 4-story commercial building.
1. Hotel
- Marriott Townplace Suites Hotel with extended stay options
- 82 rooms, including a pool and rooftop patio
2. Commercial Building
- Mixed use - restaurant, two floors of office space and top floor event center
What’s the City of Davenport’s role in the plans?
The developer is asking the City for a tax rebate over 15 years, beginning upon completion of the project. For the first ten years, the City would repay the developer 75% of the City’s share of revenue collected through the hotel/motel tax. For the remaining 5 years, the rebate would drop to 50%. The developer has also requested an Urban Revitalization Tax Exemption, an exemption from paying the increase in property taxes resulting from improvements made to the property.
The City Council approved the financial incentive agreement. No other aspect of the project was part of the Council’s decision-making.
What are terms of the agreement?
To be eligible for the incentive, the developer agrees to enroll both parcels and satisfactorily complete the Iowa Department of Natural Resources’ Land Recycling Program. The developer and the City of Davenport also acknowledge that the property is located within a designated floodplain and floodway. The City has no obligation, responsibility, or liability to provide any flood defense measures or protections for this property, whether temporary or permanent. The City will also allocate the portion of the hotel-motel tax revenue generated under this agreement exclusively for park maintenance.
The City can also terminate the deal if construction does not begin by the end of 2025.
Additional background information
Based on Council discussion and follow-up questions, Bruce Berger, Community and Economic Development Director, provided a robust memo answering each in detail. The entire memo is available for download. The below is a high level summary of the memo from November 13, 2024.
What are occupancy rates of hotels in Davenport?
Davenport has 27 hotel properties with just over 2,400 rooms. Three of those hotels are in the downtown area, with 431 rooms.
Davenport hotel occupancy rates averaged around 55% over the past 3 years. (National average is 64%) Source: Visit Quad Cities
What are the office vacancy rates for Downtown Davenport?
There is no specific metric for office space vacancy in the Downtown. In general, office vacancies are trending higher in the Quad Cities market, as they are nationwide post-COVID. Source: NAI/Ruhl 2024 market report
However, of note for this project, the developer has expressed that there is already interest to fill the entire office square footage.
How much hotel/motel tax revenue for the City is expected if the project is built? What does that revenue typically pay for?
As written, the agreement would refund 75% of the City’s portion for 10 years and 50% for five more years. Based on the developer’s annual projections, the City would rebate roughly $3.6 million to the developer and retain $1.9 million in revenue from the hotel over the 15 year life of the agreement.
A development at this site would also generate $4.3 million in new property taxes ($1.5 million net). The City is currently receiving less than $3,000 annually from this property.
Hotel/Motel tax revenue adds to the funding of City properties and services including the RiverCenter and River’s Edge and contributes to the Putnam Museum, Visit Quad Cities, CASI (Center for Active Seniors) and the Mississippi Valley Fair. In FY 2024, the City collected $3 million from Hotel/Motel taxes.
Have any other hotels received this sort of deal?
The Blackhawk Hotel redevelopment (2008) received an HMT rebate agreement over 20 years. The Current Hotel (2015) also has an HMT rebate for 18 years.
Is there enough parking for this development?
Per City zoning code, off-street parking requirements do not apply within the downtown zoning district. However, outside the downtown area, hotels are required to provide one off-street parking stall per hotel room. The proposed Marriott Towneplace Suites hotel is planning 82 rooms. The developer’s plans reflect roughly 140 parking spaces.
What are the environmental issues at this site?
The concerns are partially related to environmental work in the 1980s that identified “coal tar” on the adjacent QC Times site. However, based on information provided by the Iowa Department of Natural Resources, data from this site shows only residual contamination. The developer’s proposed plans involve bringing in two to three feet of clean fill to elevate the site as part of the floodplain mitigation, which could help with potential contamination.
The Iowa DNR encourages contaminated sites to be safely redeveloped and supported this project’s application to State of Iowa’s Redevelopment Tax Credit Program. The program provides funding to mitigate, clean-up, or otherwise help redevelop hard-to-develop sites which have real or perceived contamination.
The QC Times site was successfully and safely redeveloped with some oversight and mitigation of the environmental issues. From the Iowa DNR’s standpoint, this site will be easier to redevelop than the QC Times building site.