OMAHA, Neb. (Nebraska Examiner) — Mutual of Omaha’s move from midtown to downtown is now projected to spur roughly $1 billion in redevelopment — an escalated $600 million for the insurer’s new headquarters and a $400 million makeover at its old campus.
That’s the update according to the Fortune 500 company and its real estate developer, Lanoha Real Estate Co.
Jason Lanoha told the City Council earlier this week that the cost of the future skyline-changing tower has risen from $443 million to an estimated $600 million. It is to contain 800,000 square feet of office space and 1 million square feet of parking garage.
The additional cost is to be borne by Mutual and not the city, said both Lanoha and Mutual spokesman Jim Nolan.
No streetcar, no project
Driving the increase, Lanoha said, are factors including the “current economic climate,” exacerbated by inflation and supply chain kinks.
The Omaha City Council is slated to vote next Tuesday, May 17, on the nearly 140-page agreement that lays out financial and other obligations of Mutual and the city, including a $68 million tax-increment financing subsidy.
Lanoha told city officials the Mutual project “does not occur” without the planned modern streetcar whose route is to connect Mutual’s new headquarters near 15th and Farnam Streets and the 33rd and Farnam Streets campus it is to exit by 2026.
Few details have been shared publicly about what is in store for Mutual’s midtown grounds once it is vacated. But Mutual CEO James Blackledge told the Nebraska Examiner that Lanoha’s company has the first option to redevelop the property currently occupied or owned by Mutual.
That includes corporate offices, which Blackledge said were declining to the point that Mutual chose to move rather than renovate.
Midtown Crossing ups and downs
Mutual’s holdings also include a swath of land cleared over recent years between Mutual’s Midtown Crossing residential and retail campus east to Interstate 480. Mutual had been assembling and razing that property to make it more attractive for development.
Lanoha has been silent on any specific plan for the midtown campus, except for telling the City Council this week that he expects roughly $400 million to be invested in its renovation and redevelopment.
Blackledge said Mutual’s experience with its Midtown Crossing project reinforces why the insurance giant will step away from transforming that property once the company relocates.
While the $365 million Midtown Crossing constructed between 2006 and 2010 undoubtedly helped re-energize surrounding neighborhoods, Blackledge said, the return on investment has not been as robust as hoped.
“We’re really not in the development business,” he said. “I think we learned that, and we’re better off to find the experts to tell us what makes sense.”
Blackledge said Mutual currently is down to selling the last of the Midtown Crossing condominiums — a process, he said, that originally was expected to wrap up a decade or so ago.
‘Magnet’ for improvements
“We’ve been a magnet for a lot of great improvements here, so we’re not dissatisfied with what we’ve done with respect to the community and the area,” Blackledge said.
But, he added: “Financially, has it been a good investment? I’d say no.”
Mutual already has sold off various pieces of Midtown Crossing, including the hotel and apartment buildings.
Under the redevelopment agreement, the city would buy three parking garages on Mutual’s existing campus at a cost of about $53 million. It also would begin maintenance of Turner Park, which is surrounded by Midtown Crossing condos and stores.
Mutual is expected to complete its downtown office tower for its 4,000 local employees on the existing W. Dale Clark library block by 2026. The library structure is to be demolished and services moved elsewhere.
The library teardown remained a sore spot for several who testified during this week’s City Council public hearing on the redevelopment plan between Mutual and the city.
Opponents reiterated frustration about how the process regarding the library block where Mutual plans to build proceeded without enough public transparency.
Kimara Snipes, an east Omaha community organizer and former Omaha Public Schools board member, said anger rose in the absence of “real, proper, intentional and empathetic” communication.
She described a “culture of fear in this city for simply just speaking your mind” and urged council members to listen.
“The city has let it be known they’re going to do what they want and how they want,” Snipes said. “Today it’s the library, tomorrow it’s going to be something else.”
Alex O’Hanlon said she has heard a lot about the impact Mutual’s new headquarters and related redevelopment will have on recruiting young talent and combating brain drain.
She asked city leaders to include local musicians, urban farmers and other Omahans early on in the planning process to create a welcoming culture for all.
‘Feeling pretty drained’
“There’s a lot of brains in this room that are feeling pretty drained right now,” she said.
City Councilwoman Juanita Johnson told those who stood up in opposition that she appreciated their input and said their concern matters. She said she understands Omahans’ discomfort about how the “transaction originally started off,” but she noted that the vote regarding the library has passed.
She said the flow of communication from city administrators to council members, while not where she’d like it to be, has improved.
Councilman Brinker Harding, noting complications involved in such monumental projects, sought clarification of various points in the Mutual agreement. He reminded opponents that library services are not going away.
He said he looks forward to Mutual’s downtown project and how it will unlock redevelopment in midtown.
“I’m excited for the prospects this will present not only for Omaha,” Harding said, “but really for the whole metropolitan Omaha.”
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