Proposal: Mutual to acquire second downtown block, city to buy insurer’s parking garages | Local Business News8 min read
Mutual of Omaha would acquire an additional downtown block as part of its new $443 million headquarters project, while the City of Omaha would purchase the parking garage that’s part of the new skyscraper.
Those are just some of the new details spelled out in the development agreement between the city and Mutual that will go before the City Council later this month.
In addition to acquiring the block occupied by the downtown Omaha library, Mutual of Omaha also plans to buy the block to the east to ensure space for future growth.
For its part, the City of Omaha would pay $99 million to buy the 2,200-space parking garage that’s part of the project, charge the company to lease parking for its employees, and make the parking spots available for other public uses outside the workday.
Similarly, the development agreement calls for the city to acquire and operate for public use the three parking garages on the current Mutual of Omaha campus in midtown.
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The 138-page development agreement contractually sets out the rights and obligations of both Mutual and the city in the massive project — not the least of which is the requirement that the city develop a streetcar line linking downtown and midtown.
That provision underscores what Mutual has said since the new headquarters skyscraper was first announced: The streetcar is vital to making the finances work of the project for the Fortune 500 insurance company.
Having the streetcar run by Mutual’s current midtown campus enhances the property’s redevelopment value, helping defray the cost of building the new high-rise downtown.
“The streetcar really does enable the economics to work,” Mutual of Omaha CEO James Blackledge said in a recent interview. “This is a very expensive project. So we just want to help people understand that connection, and hopefully provide some encouragement to folks to continue to move that down the road here.”
Mayor Jean Stothert in January pledged her support for the $306 million, 3-mile streetcar line, which was announced in conjunction with Mutual’s plan to anchor its headquarters in downtown’s corporate core by 2026.
Kevin Andersen, a deputy chief of staff to the mayor, said the city’s participation in the agreements — including the purchase of the parking garages — will not only help promote construction of the new tower, but also will help spur other future growth in Omaha’s urban core.
“We think not only supporting the Mutual development, but the transactions that take place within the agreements, also helps position the city to take advantage of growth opportunities downtown and around the midtown area,” Andersen said.
Blackledge likewise called the projects and the agreements spelling them out a “win-win” for Mutual and the city.
When it opens in 2026, the new Mutual tower figures to reshape downtown Omaha. It’s the first significant addition to downtown Omaha’s skyline in almost a generation. And there may never have been a bigger single infusion of workers into Omaha’s downtown core than the move of Mutual’s workforce of 4,000.
Blackledge said the exact height of the Mutual building still has not yet been determined. Yet he continues to say it will be on the scale of the First National Bank Tower, Omaha’s tallest building.
Many aspects of the agreement publicly released last week have previously been disclosed, among them the $68 million in public tax-increment financing dollars that will help fund public improvements and other costs of the project.
Mutual’s planned acquisition of the block to the east bounded by 13th, 14th, Douglas and Farnam is new. However, city officials have previously said the block — once part of Gene Leahy Mall — was slated to be redeveloped.
The ongoing reconstruction of Gene Leahy Mall causes the block to be lopped off the west end of the mall by busy 13th Street. The mall had been constructed decades ago as a valley that dipped beneath 13th Street, but the new layout for the revamped mall is set at street level.
During the four-year construction period for Mutual’s tower, the block would serve as a staging area for construction. That’s the same role it is now serving for the ongoing Gene Leahy Mall overhaul.
After the tower opens in 2026, Mutual expects to develop the block into a temporary public space pending future growth needs, Blackledge said.
“It’s not going to just sit there with dirt on it,” he said.
If it’s found over time that Mutual will not need the block, the land will be sold back to the city to ensure it will be redeveloped.
“The mayor’s office understood our need and was helpful in getting that into the agreement,” Blackledge said.
While Mutual’s initial interest in the block is for expanded office space, Andersen anticipates room for additional development on the property. Whatever is developed must be an aesthetic fit with the tower to the west and the park to the east.
“We knew that the development of those two blocks had to be very carefully coordinated,” Andersen said.
No sale price has yet been set for the block, which will be based on its current market value.
The agreement obligates the city to purchase from Mutual the 12-story parking garage that’s part of the tower project. The $99 million sales price is based on $45,000 for each of the estimated 2,200 stalls, which Blackledge said is the cost per space to build the garage.
The city would be the owner and operator of the garage. The city would finance the purchase with bonds and pay them back over time with parking revenue from Mutual and other users.
Blackledge noted the shared use of the garage — by Mutual workers by day and other community uses at other times — fits with the recent urban core plan released by the Greater Omaha Chamber. That plan emphasizes shared parking as a way to maximize the density of both business and housing development.
Because the city will ultimately own the garage, it has the right to approve final plans for it.
The City of Omaha currently owns and operates six other parking garages, including Park 8, where it leases spots to Union Pacific for its workers. The city previously announced it intends to purchase a parking garage associated with a new development in Blackstone for $19 million.
Similarly, the agreement calls for the city to acquire two parking garages that Mutual owns at its current headquarters near 33rd and Dodge and as well as another it owns at Midtown Crossing. The $53 million price is based on $15,000 for each of 3,552 stalls. As with the downtown Mutual garage, the city would finance the purchase over time with bonds and would charge the public for use.
Once the streetcar is operating, Blackledge said, the midtown garages could become park-and-ride parking for people headed downtown for work or other events.
City officials express confidence in the viability of the parking garage purchases, which they say will aid the city’s plans for redevelopment both downtown and in midtown.
“The thing I stress is that we look at parking and mobility as a system rather than these stand-alone structures,” Andersen said. “As a system, we’re confident in the investment and what that means for the city in supporting these important (redevelopments).”
City ownership of the midtown garages will not only facilitate the reuse of Mutual’s existing campus, but also help spur other new development in the area, he said.
“That is a very important aspect of this, and a really exciting opportunity for the city,” he said.
In related move, the city would once again assume maintenance obligations for Turner Park, located just to the east of Midtown Crossing.
Mutual had signed a 25-year agreement to maintain the park when it developed Midtown Crossing more than a decade ago. With Mutual now planning to leave the neighborhood, the agreement would be terminated early, with the city taking over the maintenance obligation sooner.
A public hearing on the redevelopment agreement will be held by the Omaha City Council on May 10 at 2 p.m. in the city’s legislative chambers, 1819 Farnam St. Council members will vote on the agreement May 17.