Latest Iteration of Downtown Mason City Hotel Plan Hangs From David Rachie | Mason City and Northern Iowa

If you use Google Gatehouse Capital LLC, the first result you get is a website for a Texas-based company with a history of successful hotel developments in their home state of Florida and California.

You might also have thought that Gatehouse Capital LLC is the company behind the hotel and convention center project that has been going on in Mason City for over two years.






Mason City Mayor Bill Schickel, right, makes a statement after he and other city officials visited the hotel’s future site in the parking lot of the Southbridge Shopping Center in July 2019. David Rachie is shown in the middle of the picture.


CHRIS ZOELLER, Globe Gazette


Documents reviewed by the Globe Gazette show that the initial development agreement for the then $ 24 million project was between the city and an LLC registered in Iowa in April 2017 called Gatehouse Mason City LLC. The only managing member of Gatehouse Mason City LLC was David Rachie.

At one point, the Texas-based hotel developer was interested in a hotel and convention center project in Mason City, and he listed David Rachie on his website as one of his directors.

But that’s no longer the case, and while it’s not entirely clear when or how those ties were severed, city officials say it won’t affect results – the project is still buzzing with it. David Rachie at the helm.

HISTORY OF THE CAPITAL GATEHOUSE

Gatehouse Capital first approached the city about the development of a hotel and convention center – using Rachie as chief representative – more than four years ago.

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Ultimately, after several months of dating with Gatehouse Capital which included two successful linkage referendums, the city went with another developer, G8, in early 2018. In October of the same year, the city broke its relationship with G8 when the developer did not meet the deadlines. dictated in his agreement.

In a note to the mayor and city council in November 2018, city administrator Aaron Burnett suggested that the city approve a pre-development agreement with Gatehouse Mason City LLC for the hotel.

After the city terminated its contract with G8 Development in late October, Gatehouse “expressed interest in returning to this project,” Burnett wrote in the note.

Burnett said Gatehouse is the city’s recommendation for the project because it has “knowledge of the project and the partners, their history of completing projects of similar scope, and their ability to get the project up and running quickly”.

“While the City may consider more time-consuming approaches such as a Request for Qualifications or Proposals and potentially have more options, it is unlikely that such proposals would be significantly different in terms of the incentives requested and would certainly involve longer timeframes, ”says Burnett’s note.






Hollywoodland-Mason City / Southbridge

A render of the Hollywoodland-Mason City concept, provided by David Rachie. The new family entertainment center will include a bowling alley, brasserie, go-karts, a kind of golf course, a cinema hall, a pizzeria and a new sports bar.


Jared mcnett



But that wasn’t the Texas-based company Burnett was referring to. He was talking about David Rachie’s LLC, Gatehouse Mason City. In an email responding to The Globe’s questions this week about the Texan company’s exit from the project, he wrote that Rachie “has always been the managing partner with whom the city worked,” and that any relationship the city has interviewed with Gatehouse Capital was indirect. and by Rachie.

CROSSROADS

In a separate note, Rachie wrote to the city in November 2018, he said: “I think this is a really unique opportunity to work together and develop something extremely valuable and changing the world. give for Mason City. ” He signed it as a managing member of Gatehouse Capital, David-Elias Rachie.

At this point, Rachie was still affiliated with the Texan company as a development consultant, which he was until at least September 2019, according to a review of the Gatehouse Capital website principals page by Wayback Machine.

In a phone conversation with The Globe this week, however, Colin McDonald, vice president of development at Gatehouse Capital, said that Rachie had not been affiliated with his company for “some time and that he himself is developing the business. Mason City project “. Follow-up questions to McDonald’s about the timeline remained unanswered.

This is the original June 2019 development agreement that the city signed with David Rachie’s Gatehouse Mason City LLC.


Administrator Burnett referred the Globe’s questions about Gatehouse Mason City LLC’s relationship with Gatehouse Capital to Rachie, again noting that the city worked with Rachie and his LLC, and not Gatehouse Capital, throughout the project.

The development agreement approved by city council in July 2019 lists Gatehouse Mason City LLC as a developer. That changed in April of this year, when city council approved an amended development agreement that changed the LLC’s name from Gatehouse Mason City to MCCCH LLC. This change was also recorded on the Iowa Secretary of State’s website, along with the fact that the new LLC was now registered in Minnesota and not in Iowa. He still lists David Rachie as the sole member / manager and his home in Minneapolis as the company’s address.

NAME CONFUSION

As recently as December 2020, other entities involved in the hotel project called Rachie a representative of Gatehouse Capital, the Texas company.

As Mason City continues to move forward in the process of developing a downtown hotel, a potential business is emerging. But the proposal has yet to go through formal approval.


Email courtesy of Mason City / Hyatt


Rachie has appeared several times with city officials before the Iowa Economic Development Authority Board, which has pledged the city more than $ 9 million for reinvestment in the downtown area, and which the city has promised to s ” get involved in the hotel project once the funding has been obtained. Each time, it was listed as being affiliated with Gatehouse Capital.

In an email sent on Friday, IEDA’s communications team leader Kanan Kappelman said that through IEDA’s weekly communications with the city, he knew that “the developer had changes in the corporate structure None of these changes impact the reinvestment district Our award and contract are with the town of Mason City. Kappelman also noted that the IEDA continues to work with the town despite project delays.

In a letter dated Oct. 11, 2019, to Mayor Bill Schickel, Hyatt’s Director of Development Christina Wells wrote that the hotelier was “excited” by the proposed franchise for a Hyatt Place between his company and “Gatehouse Capital LLC” . Wells ends the letter by writing, “We look forward to building on our strong development experience with Gatehouse Capital and working in tandem with the town of Mason City. “

Gatehouse Capital has completed a Hyatt hotel complex in San Diego, California. However, Rachie’s LLC has no record of a hospitality project completed with the Hyatt flag.

Wells did not return an email requesting comment on this story.

INVESTORS AND FINANCING

The IEDA and Hyatt are not the only ones to have confused the two Gatehouse LLCs. At least two city councilors said this week they were unaware or remembered that Gatehouse Capital was no longer affiliated with the project.

Councilor Tom Thoma said he recalled voting for the name change in the amended development agreement in April.

“I, and others, I guess, trust the staff’s recommendations a lot,” Thoma said in an email. “The name change obviously didn’t raise any red flags or I and others would have dug it. And it doesn’t raise any red flags now since Rachie has always been the main man.”

In August, Rachie said city council funding for the hotel project would be complete by the end of September. This week, Burnett admitted that the city had yet to receive proof of final funding from him, but said he had spoken with investors about the project and they had told him “significant progress” were underway with banks interested in financing the deal.

“I have confidence in the efforts of David and the investor group to secure the debt required to build the hotel and conference center,” Burnett wrote. To date, the identity of Rachie’s investor group has not been disclosed.

On Tuesday, Middletown, Ohio city council will vote on whether to award $ 7.5 million of money from its American Rescue Plan Act to Main Street Community Capital LLC, which has proposed to build a 11-acre, $ 1.3 billion entertainment venue called “Hollywoodland”.

The Main Street Community Capital LLC, with its own website (https://msccap.com/), is registered in Minnesota in the name of David Rachie at his home in Minneapolis, as is MCCCH LLC of Mason City. Trademark applications for Hollywoodland Hotel and Hollywoodland Resorts, filed in July 2020, were filed by another LLC, OZ Hotels and Resorts, with the same address in Minneapolis but this time citing the state of the legal entity as being the Virgin Islands.


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