Hyatt House Rochester breaks ground.

Byline: William Morris

Construction has begun on a high-end extended-stay hotel not far from Mayo Clinic's downtown campus in Rochester, Minnesota.

California-based EKN and Utah-based PEG are developing the Hyatt House hotel at 315 First Ave., formerly the site of the American Legion building. The developers paid $2.85 million for the sub-acre site in July 2018, and on Thursday they broke ground on the project with a ceremonial Retiring of the Colors by the Legion's Color Guard.

The project, about two blocks north of Mayo's downtown Methodist Campus hospital, was proposed in 2017, and originally planned to open by June 2019. It is now scheduled to open in summer 2020.

The project has benefited from several government incentive programs, including $3.9 million in tax increment financing from the city and the Destination Medical Center Corp. overseeing the planned $5.5 billion redevelopment of downtown Rochester. The project also qualifies for tax benefits due to its location in a federal opportunity zone, a program created by the December 2017 Tax Cuts and Jobs Act. The Hyatt House is the first Opportunity Zone project to begin in Rochester.

"Federal policymakers designed the Qualified Opportunity Zone Program to stimulate economic activity across the...