City, developer mum on potential purchase of former Hammons-owned properties

The assets of late hotelier John Q. Hammons transferred to his largest creditor in 2018 through a settlement reached in bankruptcy court. In recent years, a local development group has discussed purchasing a handful of those assets in a multifaceted deal that involves the city of Springfield and possible incentives, according to documents from the municipality.

The city provided Springfield Business Journal with more than 12,000 documents, dated 2022-24, included in a Missouri Sunshine Law request by the Springfield Daily Citizen. SBJ reached out to the city after the Daily Citizen published a May 8 article, titled “Proposed sale of Hammons Tower, parking garage could spur investment in downtown Springfield.”

Officials with the city and the development group referenced in the documents were largely mum on the status of the discussions when reached by SBJ.

The documents provided by the city indicate the development group has been in talks with Atrium Hospitality to purchase Hammons Tower, the John Q. Hammons Building and the Jordan Valley Car Park adjacent to the tower. Atrium Hospitality operates the buildings – as well as University Plaza Hotel and other local properties – on behalf of JD Holdings LLC and owner Jonathan Eilian, according to SBJ archives. JD Holdings in 2018 took over Hammons’ assets in a roughly $1 billion deal approved in bankruptcy court – about five years after the hotelier died and two years after John Q. Hammons Hotels & Resorts filed for Chapter 11 bankruptcy protection.

Though the name of the development group is not specifically stated, the documentation shows correspondence between local developer Riley Shantz and city of Springfield officials, as well as a Hammons Tower one-sheet prepared by Mallonee Real Estate Group. Mallonee Real Estate LLC was registered by Debbie Shantz Hart and organized by William Hart with the Missouri secretary of state’s office in 2016. Debbie Shantz Hart is a partner with her son, Riley, in DHTC Development LLC, according to past reporting.

While largely declining to comment, Debbie Shantz Hart said an entity called M6E LLC is the company behind the purchase proposal and that DHTC is not. M6E LLC was organized with the Missouri secretary of state’s office in June 2022 by Ben Shantz, an attorney with Spencer Fane LLP and son of Debbie Shantz Hart. The latter businesswoman also has a history with the properties, as her legal career included 13 years as general counsel for JQH Hotels & Resorts, SBJ previously reported.

Reached by SBJ, Riley Shantz declined to comment.

Cora Scott, director of public information and civic engagement for the city, provided a statement to SBJ in response to questions on the documentation.

“It is not our practice to share information about any form of business negotiation during the course of the negotiation,” the statement reads. “This would apply to questions regarding status of discussions, having discussions, timing of council action, project contingencies, etc.”

Potential opportunities
A PowerPoint presentation that appears to have been created by the city for a May 2023 closed meeting indicates “a development group has a portfolio purchase opportunity for three properties owned by Atrium.” It references Hammons Tower, the JQH Building and the Jordan Valley Cark Park and notes that “for feasibility purposes” the developer would like to sell the parking garage to the city.

The developer has some $22 million in financing available, including $9 million in equity and an $11 million senior loan, according to the PowerPoint.

“For Hammons Tower and JQH to be competitive again, both buildings will need initial investment along with ongoing annual investment over the next 10-15 years to create downtown class A office,” the PowerPoint presentation reads.

Should a deal come to fruition, possible renovations on deck at Hammons Tower include additional office space, potential multifamily housing or condominiums, and amenities such as a bar, gym and coffee shop. The JQH Building may be in line for a new lobby and improvements on each floor, city documentation shows.

The PowerPoint discloses a potential purchase price of the parking garage by the city of $16 million to $17 million. An August 2023 appraisal report prepared for the city by Southwest Valuation LLC estimates a fair market value for the parking garage of $3.8 million to nearly $6 million.

A white sheet from the Springfield Business Development Corp., the economic development arm of the Springfield Area Chamber of Commerce, points to the economic development opportunities that could come about if the center city buildings change ownership. It’s unclear what entity the white sheet was created for, and chamber President Matt Morrow told SBJ that confidentiality agreements in place limit what he’s able to share.

The white sheet states project goals that include an increase in office occupancy at Hammons Tower to 90% from 50% with 500 new workers in the building, and to “increase economic activity and attractiveness of urban core through facilitation of private development along historic Route 66 corridor and entrance to downtown.”

Beyond the benefits of local ownership and the reinvestment in the properties by the developer, the white sheet indicates the city’s purchase of the parking garage could result in benefits to Hammons Field, the city-owned stadium that’s home to the Springfield Cardinals.

The long-term development potential “frees up the Cardinals surface lot for development, potentially as a Ballpark Village-style mixed-use project,” according to the white sheet.

The white sheet also points to the potential by Atrium Hospitality to upgrade University Plaza Hotel, possibly into a “higher-tier Marriott hotel.”

Possible incentives
The city documents show discussions for Chapter 100 bonds related to the building purchases and potential improvements. An April 2023 email from Riley Shantz that carbon-copies Debbie Shantz Hart was sent to Springfield Director of Economic Vitality Amanda Ohlensehlen, and it points to a document outlining the request for Chapter 100 bonds.

“Given the amount of deferred maintenance and lack of investment over the years, we are requesting [that the] city support this redevelopment by supporting incentives such as ... Chapter 100 bonds in order to help with the ongoing investment the buildings need,” the document reads. “Hammons Tower and JQH office building are irreplaceable iconic assets in Springfield’s downtown. These buildings not only create the skyline for Springfield but are featured on every piece of marketing for the city. Our goal is to preserve these iconic buildings and revitalize these assets to attain full occupancy, attracting new workers back to Springfield’s business hub.”

The developers are requesting that the use of Chapter 100 bonds mirrors Chapter 353 abatement, abating property taxes for the first 10 years and then moving to 50% abatement in years 11-25.

“This will allow all of the saved tax to be invested in the building over the next 25 years as the building replaces mechanical systems, redoes office space and creates the kind of amenities the city is lacking. By reinvesting the saved tax dollars along with additional private investment, we can update both buildings,” the document reads, noting current base property taxes are $211,000 for Hammons Tower and $100,000 for the JQH Building.

The Chapter 100 documentation also indicates the 197,397-square-foot Hammons Tower is 49% occupied and that the 57,000-square-foot JQH Building is 66% occupied.

Also called industrial development bonds, Chapter 100 bonds “may be used to provide real and personal property tax exemption and to provide sales tax exemption” for certain commercial developments, according to SpringfieldMo.gov. Chapter 353 is used “to encourage the redevelopment of blighted areas through property tax abatement,” according to the website.

Hammons history
The buildings that could transfer ownership were among some 35 hotels and nearly 150 other assets taken over by JD Holdings in 2018.

SBJ’s editorial staff that year recognized the asset transfer as the No. 1 business story of the year in a special publication.

Hammons, who died in 2013 at 94 years old, developed around 210 hotel properties across 40 states over five decades, according to SBJ archives.

The 22-story Hammons Tower was completed in 1987 with a $15 million price tag, SBJ archives show.

Atop the tower is the Tower Club, a members-only restaurant and public event venue that has been largely inactive in recent years. University Plaza’s website continues to advertise the space for rentals.

The John Q. Hammons Building, also built in the 1980s, is home to the likes of Kutak Rock LLP’s Springfield office.

The Jordan Valley Car Park was competed in 2003 for roughly $12 million, according to SBJ archives.