After months of back-and-forth, HDR’s proposed 16-story, $152 million downtown headquarters finally crashed under the weight of 100 valet parking spots.
There were other unresolved points of contention between Omaha Performing Arts and HDR by the time the architecture and engineering firm rejected the downtown site early this month. And HDR has said a rising cost of the entire project also contributed to the decision to pull the plug.
But several people close to the situation say a disagreement over 100 valet parking spots for arts patrons was a tipping point that came before HDR pushed the project off the 11th and Dodge Streets site.
OPA pressed for a 100-year lease on the parking spots, which were to be built in a garage as part of HDR’s new headquarters; HDR wanted a 70-year lease.
Even as the HDR plan unraveled, Mayor Jean Stothert tried two last-minute sweeteners to save the project: The city would pay nearly $20 million for a new parking garage across the street from the proposed HDR headquarters site, or the city would build HDR’s own garage to the tune of $20 million to $25 million.
The sweeteners didn’t work.
HDR said it still will build its new headquarters in Omaha, just not on the 11th and Dodge Streets site. Parking on that site has been a thorn in the side of the project from almost day one.
The 11th and Dodge site HDR picked for its headquarters is now a parking lot. The parking was set to be replaced — and more spots added — by a parking garage and educational facility OPA had proposed to build on the site of three century-old buildings east of the Holland Center, which OPA operates.
When OPA in February backed off a controversial plan to demolish the three buildings, it set off a scramble to replace the more than 500 spaces that would have been in the OPA parking facility. OPA didn’t consult HDR about scrapping the demolition and related expansion plan, the arts group said. It also didn’t consult the city, Stothert said.
The arts group was set to lose more than 250 spots in selling its 11th and Dodge land to HDR. Because OPA wouldn’t be able to build its own parking garage, the arts group told HDR it wanted 300 spots in the garage HDR was set to build as part of the tower project, Stothert said.
HDR, in turn, said it would need spots in a garage under construction at the Capitol District across the street, she said. That’s the garage Stothert offered to buy.
According to sources who wouldn’t be named, the performing arts group wouldn’t settle on details to seal the deal. A sticking point was the terms of the lease for 100 valet parking stalls that OPA wanted for Holland Center patrons in the HDR garage.
“The only question we had left on the deck,” said OPA Chairman John Gottschalk, who was involved in the negotiations with HDR, “was whether this valet parking was going to be 50 years, 75 years or 100 years,” referring to the length of the lease term.
Gottschalk said he thought the “hang-up” could have been resolved. He said there must have been other issues unrelated to the lingering parking questions that killed the deal.
HDR Chairman and Chief Executive George Little declined to comment for this story.
In a statement earlier this month, Little said the downtown deal fell through because of escalating costs and because of delays resulting from the loss of previously planned parking — the parking facility OPA was to construct east of the Holland Center.
Meanwhile, contributing to conflict between HDR and OPA, the sources say, was OPA’s pressing on points that were viewed as quibbles — like HDR paying for fencing and lighting to surround a temporary parking lot during construction.
Eventually, HDR gave up on the 11th and Dodge site.
Stothert tried to save the project, she said, by offering to have the city buy the parking garage under construction at the Capitol District project on 10th Street at Capitol Avenue. That’s the garage where HDR was to have about 300 spots, Stothert said.
She said the $19 million garage would have been paid for with city redevelopment bonds, or by revenue bonds, whereby fees from parkers would be turned back to pay off the bonds issued for the construction of the garage. She said the public would have been able to park in the city garage.
“Of course we understand that parking is an issue downtown,” she said. “And that’s what we’ve been working on since this started.”
City planning consultant Steve Jensen said the city also made a last-minute offer to build a city-owned garage on the HDR site instead of the company building its own. He said the proposal was made so late he didn’t know if the company even considered it.
Stothert said she still would be willing to buy the Capitol District garage if it would help HDR move to another downtown site.
Mike Moylan, whose Shamrock Development is leading the $205 million Capitol District project — which includes a new Marriott Hotel — said HDR came to him looking for additional parking. He said his project still is willing and ready to accommodate HDR’s needs.
HDR had wanted to begin construction downtown in June. The lease on its current headquarters near 84th Street and West Dodge Road expires at the start of 2019.
OPA officials have said they wanted HDR as a neighbor but they also had to protect a vision to expand the performing arts campus in the future. They also needed parking, they said.
Gottschalk, chairman of the performing arts group and a former publisher of The World-Herald, said in a statement that he and HDR’s Little verbally had agreed to new sale terms on March 11. He said they turned over the details to their “respective administrative and legal teams,” and then each left town for several days.
At the time, Gottschalk thought the lease length of the 100 valet parking spots was the only issue yet to be resolved between OPA and HDR, he said in an interview.
“I didn’t feel we had a big, lingering issue when I left,” he said.
OPA board member David Slosburg also was involved in the negotiations. He didn’t return requests for comment.
At some point while Gottschalk was away, OPA stalled the negotiations.
Upon Gottschalk’s return on April 5, he said, he learned there were no signed documents for the sale of the 11th and Dodge lot.
HDR pulled out of the site two days later.
On Friday, Gottschalk said he would have accepted a shorter lease length than the 100 years on the valet spots.
The parking issue was contentious, Stothert said, because OPA wanted stalls in HDR’s garage “basically for free” for 100 years.
And a parking stall costs money: $17,000 to $20,000 per stall to construct a parking garage, according to the city’s parking manager, Ken Smith. Each stall costs between $450 and $500 to maintain annually, he said.
Stothert said she met with Little in her office the day before HDR pulled out of the site. She said Little told her the company had not reached an agreement with OPA.
“It sounded like the frustration of still not having the property secured was a problem,” she said.
Stothert didn’t take part in all of the negotiations, but her administration worked on broader downtown parking issues for both HDR and OPA.
Architectural and engineering giant HDR now is back to the drawing board, leaving downtown supporters upset by an abrupt about-face on the decision announced almost a year ago to build on the downtown surface lot mostly owned by OPA. (The city also owns a small portion of the lot.)
According to city records, OPA owns about 180 stalls in the lot bounded by Dodge Street and Capitol Avenue, 11th to 12th Streets. The City of Omaha owns the rest of the 263-stall lot and leases those stalls to OPA.
The performing arts group leases some of the spaces on the lot to employees and tenants of The World-Herald, whose headquarters is a few blocks away.
“The World-Herald did everything asked of it by HDR, Omaha Performing Arts and the city to find a solution that worked for everyone,” the newspaper said in a statement.
The 100-year-old HDR, founded in Omaha, pledges to stay in its hometown, but it’s now searching for a different place to grow its more than 900-member local workforce — perhaps a site with no parking issues.