A rendering of “Iron Quarter”

When, out of the Blue so to speak, the request to demolish part of the Whiskey Row block on Main Street suddenly got a green light from City of Louisville officials, we wondered if something had changed in the proposed Iron Quarter project.

The answer is, maybe.

Multiple sources with direct knowledge of the deal told Insider Louisville that a hotel development and operations group is working with Todd Blue and Cobalt Ventures LLC to put a W. Hotel into Iron Quarter.

The proposed $48 million mixed-use Iron Quarter complex would include retail, office space and two hotels.

Blue did not return calls for comment.

Starwood Hotels & Resorts is the parent company for the upscale W. Hotel brand. Officials at Starwood, based in White Plains, NY, didn’t reply to calls for comment.

But multiple sources confirmed to Insider Louisville the hotel development and operations group, which we were asked not to name, has the capital, clout and experience to make the hotel happen.

“This isn’t really news in the (hotel) business,” said a source with direct knowledge of the deal. “Everyone knows about it.”

If a W. Hotel goes into Iron Quarter, it would be the first of the boutique luxury hotels outside a world capital, major resort or a top-tier city.

There are 58 of the hotels open around the world, from New York City and Washington, D.C. to Hong Kong and Beijing in China.

Domestically, the closest location to Louisville is Chicago, which has two, and Atlanta, which has four, according to the W. Hotel website.

News of a possible W. Hotel comes just as city officials settle a federal suit with Blue, agreeing to allow the demolition of seven buildings in the block of 100 W. Main Street, a block east of the new KFC Yum Arena.

Blue bought the vacant Whiskey Row buildings in 2007 with plans to work the unique facades into Iron Quarter. The plan stalled after the economic downturn began and Humana Corp., which owns several buildings nearby, canceled expansion plans that might have incorporated part of the space.

Louisville Metro Mayor Greg Fischer agreed to Blue’s demolition plan earlier this week. City officials decided the federal judge hearing Blue’s suit seeking to demolish the buildings might rule the structures an imminent danger and order them razed without a chance to save the facades.

Chris Poynter, spokesman for Fischer, said the hotel wasn’t the reason for the compromise.

“Mayor Fischer faced a choice – risk allowing a judge to order an immediate demolition without any chance for the city to save anything, or working to save the facades, per the compromise,” Poynter wrote in an e-mail response to a query.

“He chose the latter.”

Several historic buildings have collapsed downtown during the last two years, including one incident last September in Butchertown, just east of Whiskey Row. In March 2009, a stairwell collapsed in a building at 810 W. Main Street, just west of Whiskey Row, seriously injuring Alan DeLisle, director of the Downtown Development Corp.

Fischer told Courier-Journal reporter Sheldon Schafer Blue and city officials will have 90 days to decide if the unique iron facades can be retained, with the city agreeing to pay $450,000 to help pay the cost.

Preservationists are opposing the plan, but four buildings in the same block have been restored and now house a number of restaurants including Doc Crow’s Southern Smokehouse & Raw Bar, scheduled to open next week.

The W. Hotel at Iron Quarter is one of several hotel projects planned for downtown.

Bill Weyland, who is proposing to build a seven-floor Hotel Indigo brand boutique hotel at Fourth and Chestnuts streets, said he is aware of Blue’s plan.

Weyland, managing partner of commercial developer CITY Properties Group, has completed a number of major projects, including converting the 83-year-old YWCA Building at Third and Chestnut streets into the Henry Clay boutique hotel, residence and events space.

A hotel at Iron Quarter would have no affect on his plans, he said.

“Louisville is a series of niche opportunities,” Weyland said. “At the Henry Clay, we serve the (nearby) medical community. We serve our wedding clients. We serve Kindred (Healthcare) and other corporate clients down on our block.”

Outside those in the the hotel business, most Louisvillians don’t realize Louisville has had a net loss of hotel rooms during the last five years, he added. The 250-room former Holiday Inn Louisville has been converted to the Hotel Louisville, a homeless shelter, and the Executive Inn near Louisville International Airport was demolished last March, Weyland said.

“We’ve lost more rooms than most cities at a time when our convention offerings have increased, and that creates an opportunity.”

(Editor’s note: Insider Louisville’s raison d’etre is to use the latest technology to disseminate news and information as quickly as possible. In reporting sensitive stories, Insider Louisville reporters are required to ask that sources go on the record by name. However, should a source give a clear and compelling reason why doing so would lead to retaliation, financial loss or physical harm, Insider Louisville editors may agree to protect that source’s identity.)