ROCKWELL CITY — North Iowa Development Partners LLC has announced an agreement with the Calhoun County Economic Development Corporation to develop a new Cobblestone Inn & Suites hotel at the intersection of U.S. Highway 20 and Iowa Highway 4, just north of Rockwell City in Calhoun County.

Construction of the 45-room hotel is expected to begin in 2023. The building site is located in the Calhoun County Business Park, across the street from the Sparky’s Convenience Store that is being rebuilt after a Nov. 23, 2021, fire destroyed the original building.

Jonathan Wetter, leader of the development team, explained that county leaders first envisioned a hotel in the business park as far back as 2008. The county commissioned a feasibility study to determine the viability of a hotel in that location in late 2019. That study affirmed that traffic counts on four-lane U.S. Highway 20, construction projects in the region, summer tourism fueled by the Twin Lakes area, and other market demand factors would indeed support a successful hotel development there.

The COVID-19 pandemic in 2020 delayed any further action toward a hotel development, but in early 2022 the project was revitalized, and the proposed hotel is now ready to be funded and constructed.

“We have been working with local leaders for the past several months to ensure that the site, utilities and other infrastructure are all available,” Wetter said. “We explored several options for a hotel brand, and ultimately chose to work with Cobblestone due to their quality reputation, existing presence with locations throughout north central Iowa, and their ability to manage the entire lifecycle of the project.”

“If we are able to raise the investment capital we need, Cobblestone will build and furnish the hotel, hire the staff, implement the reservations and marketing systems, and handle every other detail in getting the hotel open right down to having cookies on the front desk and toilet paper in every bathroom on opening day,” Wetter said.

He added that Cobblestone will also be responsible for management of the hotel going forward, so the investor group will not be involved in daily operations.

Members of the development team have previously assisted with local hotel developments in Fort Dodge, Humboldt, Algona, Emmetsburg and Forest City.

“Each of the small community hotels our group has been involved in is owned by a different group of investors,” Wetter said. “Unlike some larger markets where national chains or wealthy investment consortiums will build a hotel and send the profits back to Wall Street, the goal of these projects is to pool resources from local investors who have a vested interest in the ongoing success of their community and are willing to seek a return on their investment dollar right here at home.”

“As the developers, our job is to put the project together and then present it to the community to see if there is viable financial support to get it done,” Wetter said. “We are excited to see what kind of response we get from potential investors in the area.”

Wetter added that Cobblestone Hotels have also committed to being one of the initial investors.

“Cobblestone has over 165 locations, but they don’t buy into all of them,” he said. “The owners of the company felt that a hotel in this location in Calhoun County was a winner, and they are willing to put their money where their mouth is.”

Wetter said that while construction costs are considerably higher now than in recent years, this particular hotel has a significant advantage for its investors in that it is located in a federally designated Opportunity Zone, which provides special income tax incentives, including the ability to defer and even eliminate certain capital gains from the sales of assets, as well as the ability to avoid all capital gains from the hotel investment after a 10-year holding period.

“Investors who aren’t already familiar with the Opportunity Zone benefits will be pretty excited to learn more,” he said. “While there is certainly risk associated with this project or any other investment, we are pretty optimistic that the Calhoun County Cobblestone will be successful, and the additional benefits of the Opportunity Zone really put this project over the top.”

Wetter said the total cost of the project is estimated at approximately $7 million. “The goal is to raise the entire $7 million from investors and finish the project with no debt,” he said. “With no debt service, we’ll be much better assured that the hotel will be profitable, and all profits can then be returned to the investors so we can all enjoy a return on our money as well as the tax benefits provided by the Opportunity Zone designation.”

Wetter added that once 75 percent of the capital is raised, Cobblestone will proceed with construction of the hotel.

“Once we get that close, we’ll be comfortable that we can find the remaining 25 percent,” he said.

Wetter said that there is already several hundred thousand in investment capital committed to the project, and conversations with potential new investors are now starting.

“We are happy to meet individually with people interested in learning more about the opportunity, and we also plan to host a group meeting sometime in the next few weeks with representatives from Cobblestone in case investors want to hear more details directly from them,” he said.

Wetter said if sufficient capital for the new hotel can’t be raised, then the project in its current form will be scuttled for the time being.

Potential investors may contact Wetter at 712-887-0696, or email him at investincalhouncobblestone@gmail.com.