Maverik, new owners of Kum & Go, plans regional headquarters in downtown Des Moines
Virginia Barreda, Des Moines Register
Updated 6 min read
The new Utah-based owners of Kum & Go plan to establish a new regional headquarters across the Pappajohn Sculpture Park from the Krause Gateway Center, home of the convenience stores' former parent company, in downtown Des Moines.
Des Moines City Council on Monday will consider preliminary terms of a development agreement for FJ Management Inc., which owns Maverik convenience stores, to lease space in one of the Nationwide Insurance buildings, 1100 Locust St.
The deal would require the company to acquire and retain 250 jobs in Des Moines and enter into a 10-year lease in the 40,000-square-foot office space, according to a council communications memo. And in a first for Des Moines, employees would be required to work in person at least part of the week in exchange for financial incentives.
Maverik CEO Chuck Maggelet told Axios in August the company plans to keep Kum & Go's 250 employees who currently work at the Krause Gateway Center, 1459 Grand Ave. A spokesperson for Maverik could not be reached for comment.
The new owners of Kum & Go plan to lease space in the Nationwide Insurance building, 1100 Locust St., for a regional headquarters.
Deputy city manager Matt Anderson said Maverik's plans are a "nice testament" to the "attractiveness" of downtown Des Moines as a workplace.
"We are very grateful for Maverik's commitment to downtown and commitment to those employees ... they could have moved out of the Krause Gateway Center and moved to West Des Moines or Altoona or Urbandale," Anderson said. "They obviously didn't do that. It was a conscious decision to stay in downtown."
If approved by the City Council, FJ Management would get a $250,000 grant to be paid in annual installments of $25,000 over 10 years, according to the council memo. The company would be required to maintain at least 250 jobs at or above an average salary of $98,000 and have employees work from the downtown Des Moines office an average of three or more days per work week.
Maverik plans to spend about $1 million renovating the space, according to the city.
In-person work requirement a first for the city
Anderson said the in-person work requirement is a new concept for economic incentive deals.
"It was something we never had to think about before. We just assumed if somebody was leasing 40,000 square feet of office space that all of their employees would be downtown," he said.
He said the city understands hybrid work will be a part of most workplace cultures post-COVID-19, but providing an employee retention benefit for someone who is going to work from home most weekdays "defeats the purpose."
Nationwide Insurance began consolidating its employees during the COVID-19 pandemic, shedding the 1200 Locust St. building, which the city of Des Moines is considering buying for offices and a new police headquarters. Nationwide moved its employees to 1100 Locust St., a 732,000-square-foot building.
Nationwide spokesperson Ryan Ankrom said in an email the company could not comment on pending lease transactions or potential tenants, but confirmed that Nationwide has actively been marketing space in the seven-story west wing of 1100 Locust St.
"Nationwide workspace has been consolidated to the east and central wings of 1100 Locust allowing us to repurpose the rest of the building for use by third-party tenants," Ankrom wrote. "With our successful move to a hybrid work model, and with 50 percent of our roughly 3,000 Iowa-based employees permanently working remotely, we need less space."
What happens to Krause's incentives for the Kum & Go headquarters?
Krause Group, parent company of Kum & Go, has a development agreement with the city that requires it to maintain a headquarters for Kum & Go or a related business at the Krause Gateway Center in exchange for an estimated $10.9 million in tax increment financing. The agreement also requires the company to host 275 jobs in the building, which could inevitably change with the Maverik deal, Anderson said.
Anderson said the agreement requires Krause to provide a job report every year on June 30 to check if the company remains in compliance. While the company was in compliance this year, he said it's difficult to determine what next year's figures will show.
There are a number of other Krause-owned businesses at the Krause Gateway Center, but Anderson said the development agreement's phrasing on "related businesses" is a gray area. Representatives from the Krause Group recently told the city it would continue to grow its holdings, though it's unclear how the company will backfill its employees to meet the 275-person count, Anderson said.
"If they report to us and they have 200 jobs in the building ... there's a mechanism to adjust the grant accordingly and it can go up and down annually," he said.
A spokesperson for Krause Group did not respond to a request for comment.
What's happening with Krause's proposed soccer stadium?
The Maverik deal, announced in April and finalized last month, comes as Krause Group CEO Kyle Krause continues to negotiate financing for a soccer stadium. USL Championship, the second tier of U.S. professional soccer, awarded Krause a franchise in January 2022 on the condition that he build a new stadium.
The Iowa Soccer Development Foundation, a nonprofit that would own the stadium, projects construction will cost $95 million. The nonprofit has received $25 million from the private sector and up to $7 million from Polk County. The Iowa Economic Development Authority allocated $23.5 million in future sales tax revenue to the project.
Meanwhile, Des Moines city officials have offered an undisclosed amount of money for the project, which would put the 6,300-seat stadium south of downtown at the former location of the Dico tire and pesticide factory, a remediated U.S. Environmental Protection Agency Superfund site.
While Des Moines officials have not said how much money they have offered, city and county elected leaders told the Des Moines Register in July that Krause asked both governments to increase how much they've pledged. Polk County Administrator John Norris said at the time that Krause was trying to close a $29 million funding gap.
There have been no firm offers to Krause, but Anderson said the city told the company there are "levers" they could pull to help get it closer to its goal. Anderson said the city has considered options such as helping with environmental costs and infrastructure, or increasing tax increment financing. It would be up to Krause to find the remaining sources, he said.
Register reporter Tyler Jett contributed to this story.
Virginia Barreda is the Des Moines city government reporter for the Register. She can be reached at vbarreda@dmreg.com. Follow her on Twitter at @vbarreda2.
