Bea 'never dreamt' that DMC EDA would not support $63M project
That’s how Javon Bea, the Oronoco health care executive and businessman who’s at the top of the Rochester real estate investment world, described the collapse of plans to build a $63 million hotel project across from Saint Marys Hospital.
The developer, St. Cloud-based Brutger Equities, in February withdrew the proposal to build a 225-room Holiday Inn and Suites at the corner of 13th Avenue and Second Street Southwest, after nearly six months in Rochester and DMC’s approval process with no apparent way out.
In an email to the Post-Bulletin last month , CEO Larry Brutger attributed the project’s failure to a lack of support and no clear path forward with Destination Medical Center’s Economic Development Agency.
Local real estate sources and city officials have said they can’t recall a project of that size ever failing to move forward here.
The biggest loser in the deal was Brutger, of course. Sources say they believe Brutger put at least a few hundred thousand dollars into the project, only to see it run aground.
Bea was most likely the second biggest loser. He owns the site across from Saint Marys on which Brutger wanted to build, and they had a deal that sources say was worth close to $10 million. In addition, Bea bought an adjacent property in December for $1.6 million to help move the project's approval along after it hit a roadblock with the DMC Corp. board a few weeks earlier.
All for naught. Now he's starting from scratch, and he has a deadline for getting new development on that block or he risks losing city approval of the parking lot he now operates there.
I caught up with Bea last week and he was as mystified by the city and DMC's handling of the project as Brutger was.
"I thought it was extremely unfortunate," Bea said. "I was really disappointed. To me, it was a wonderful project. I never dreamt that the EDA would not support it."
Among other features, it could have included a pedestrian tunnel to the hospital that would launch subway connections to properties on the north side of the street. "Ever since the days when I worked at Saint Marys, people were talking about that," said Bea, who in addition to his hotel interests (Kahler Hospitality Group) and development projects (the Hunter Valley residential and retail project at 18th Avenue and 55th Street Northwest) is CEO and president of Mercy Health System , based in Janesville, Wis., and Rockford, Ill.
Bea followed up with an email statement Sunday:
"I, like many developers, do not understand the DMC development process and the specific approval roles of the City, DBA, DBA board and DMC board. Brutger’s experience proved there is not currently a clearly defined, specific process.
"Other developers from the Twin Cities, Chicago and Milwaukee have told a local engineering company they are backing away from Rochester as a result of the difficult and costly process of developing in Rochester.
"I lost a great deal of money during the nine months of standing by and supporting Larry in engineering and many other related development expenses. I did not get paid a dime by Brutger and I paid Peter Pasalis three times what his property was worth because I wanted to help Larry get his deal done.
"A personal motivation for me is my strong belief, from my 14 years working at Saint Marys, that a tunnel is needed for the patients and families to cross Second Street with our long winters in Rochester."
Bea wouldn't comment during our phone conversation about reports that he or associated business interests are nearing an announcement on an apartment project on the Miracle Mile Shopping Center site, about five blocks northwest of the hotel site -- "we're kicking some things around," he said. But he believes that city and DMC officials "put a lot of caution into a lot of developers" by their handling of the hotel proposal.
Others say that a major announcement is near on a project that could transform the area just west of Saint Marys Hospital, and EDA Executive Director Lisa Clarke has told me she doesn't believe the outcome of the Holiday Inn proposal has dampened interest in the Rochester/DMC market at all.
Regardless, Bea is one of the very biggest real estate investors in the city. He, like Brutger, invested a lot of money in a project that went nowhere. His perspective on this deserves attention.