The boutique hotel taking over the historic downtown Omaha Saunders Kennedy building is to open in spring of 2019 — with a new name that nods to its feathered falcon friends next door.
Nirav Shah of Chattanooga, Tennessee-based ViaNova Development said his company likes to identify its real estate projects with something outstanding about the host neighborhood or city.
In the case of 203 S. 18th St. — the 105-year-old downtown landmark that’s being converted to a high-end Hilton Curio brand — investors were fascinated by the once-endangered and fast-flying birds that nest atop the neighboring Woodmen Tower.
Thus was born the hotel’s name: the Peregrine.
The peregrine falcon theme is to come alive in various ways throughout the 90-room hotel. The wall in the main elevator lobby, for example, will have a feathered look.
One of the social rooms might be called the 389 Club, Shah said, reflecting the top speed clocked by a peregrine falcon (389 kilometers an hour). Guest rooms will contain a wooden falcon figurine. Artwork will reflect the bird’s majesty.
And the rooftop restaurant and lounge will take on a name related to the peregrine as well. (Both it and the ground floor restaurant will be open to the public.)
The hotel stands out for another reason: It’s in line to be the first Omaha project to tap a new financing tool approved by the Nebraska Legislature and the Omaha City Council to upgrade energy, water and utility systems in local commercial properties.
Known as PACE financing (Property Assessed Clean Energy), the program aims to improve energy efficiency in either new or retrofitted structures.
About $3.4 million in PACE funds are to fill a gap in the overall $13.6 million cost of converting the seven-story downtown structure to the hotel, said Rob Shear of PACE Sage Capital LLC, which helped arrange the private financing for ViaNova. He said the PACE loan is to close later this month.
Shear calls the new financing mechanism, which is used already in some other states, a boost to economic development. He said it can breathe life into commercial projects that otherwise might never get off the ground.
How does it work? System upgrades are paid for with a private loan to be paid off through an extra assessment on the building’s property taxes. The extra assessment stays with the property, even if sold.
Kevin Andersen, Mayor Jean Stothert’s economic development aide, said the program will not use any tax dollars. While the city takes on extra work in processing applications and submitting information to the county assessor, he said, it is to be compensated through the loan’s fee structure.
“It’s fairly revenue-neutral for the city,” Andersen said.
What the city stands to gain, he said, is an increased number of buildings with beefed up energy and water conservation elements.
“This is one more tool in the tool kit to help spur additional investment in some of these properties,” Andersen said.
He and Shear said the PACE mechanism differs from the main development tool now used by the city — tax-increment financing — in that, under PACE, local governments won’t forgo property tax revenue increases from improved projects.
Theoretically, the private loan in the PACE scenario is paid off with savings realized from lower utility bills.
Since TIF can be used only in blighted areas, PACE is seen as a tool with a broader reach available to modernize and repair energy systems of properties in any part of the city. Said Shear: “There are hundreds in every city: those old, tired buildings that people don’t have the capital to pay to retrofit.”
He said developers and property owners should find PACE financing attractive because it diversifies a project’s financing stack and payments can extend beyond the life of a typical construction loan.
”We’re unique in the sense to be able to finance those long-term measures in a property that banks typically won’t and can’t do,” Shear said.
If a project were to fail, Shear said, the assessment stays with the property and would be inherited by the next owner. He said state law gives the existing mortgage lender the right to veto a PACE request.
He said Omaha’s ordinance allows PACE financing to be used for commercial, industrial and multifamily buildings containing more than four units — but not for single-family homes.
To date, the Peregrine Hotel is the only Omaha project to submit a PACE application to the city.
But City Councilman Brinker Harding said he anticipates interest will grow.
“It will become more popular as people look at it as another financing option to help buildings become more energy efficient,” he said, adding that such modernization should help build a property’s value.
Separately, the council earlier approved $1.9 million in TIF for the Peregrine project. Omaha’s Clarity Development also teamed up with ViaNova to help assemble the overall financial package, which also taps historic tax credits.
Built in 1914 as the Saunders Kennedy building, the future hotel structure was deemed significant by the local landmarks commission in part because of its history — it is the remaining section of what, at one time, was the largest structure in Omaha. The Saunders Kennedy was designed to match the adjoining Brandeis Theater building. Early on, the pair appeared as a single eight-story building that stretched from 17th to 18th Streets along Douglas Street.
The building’s roots connect to influential Omahans at the start of the 20th century, including architect John Latenser. Real estate agent Charles Saunders and lawyer John Kennedy were developers of the structure, which soon after was owned and operated by real estate whiz Harry Wolf.
In 1948, the building was purchased by the World Insurance Co., and its name was changed to reflect the new occupant. Also, according to the landmarks application, the building later sold to Woodmen of the World Life Insurance Society, which eventually sold it to a private developer.
Today, Omahans might recognize the structure more for mosaic tile murals that wrap around it, depicting scenes of Native American and pioneer life. They were not original to the facility, and developer Shah said his company has yet to determine their fate. He said the murals most likely will not remain on the structure “because we are trying to restore the building back to as close to the original as possible.”
Meeting rooms, a banquet hall and gym also will go in the hotel.
Shah said he’s had his eye on Omaha’s hotel market for a while, attracted in part because of the city’s mid-tier size and high-profile tourism events, including Berkshire Hathaway’s annual meeting and the College World Series.
His company also is set to open hotels in Chattanooga and St. Louis, and plans to name those after the local art district and transportation hub they’re in.
Even with the surge of new hotel rooms in Omaha, Shah believes profit and success are ahead for the Peregrine.
“We do believe the demand is still there,” he said.