Cedar Rapids council backs delayed, $11.4 million New Bohemia project

But council members continue to ask questions about project, timeline

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The celebratory feel from last spring took a back seat last night to a bevy of questions from City Council members about the proposed retail/hotel/apartment/cinema redevelopment project in the heart of New Bohemia.

Even so, the council voted 9-0 to enter into a development agreement with local developer Allen Lerch for his New Bohemia Station project on the former site of the Brosh Funeral Chapel at 1020 and 1028 Third St. SE.

The vote came with a specific timeline agreed to by Lerch and the city, which calls for the developer to break ground on the $11.4-million project by July 1 and to occupy the five-story building by October 2015.

The council enthusiastically backed Lerchís proposal last spring after picking it for the former Brosh site over a strong competing proposal led by local developer Joe Ahmann.

Construction had been expected to begin in 2014, but the project was delayed as Lerch sought an environmental assessment of the site to make sure it was ready to build on.

The assessment, which was completed at the end of August, found no contaminants, but the process delayed the project and prevented it from beginning in the 2013 construction season, Lerch, his consultant, Richard Luther, and the cityís own development staff told the council Tuesdasy night.

With what Luther said was an "unavoidable delay," the project expanded in scope and cost and in the amount of incentive sought by the developer.

A year ago, the New Bohemia Station concept called for a $6.5 million project, featuring a first floor of retail shops, a 14-room extended-stay hotel with ballroom and event center on the second floor and two floors with 26 loft apartments. In addition, a 225-seat cinema was planned for the basement.

The new concept calls for an $11.4 million, five-story building with first-floor retail, ballroom and event center, 40 extended-stay hotel rooms, eight loft apartments and a cinema in the basement.

Consultant Luther said the additional hotel rooms will allow the cityís emerging New Bohemia arts and entertainment district to be marketed as a "full-service destination." The hotel will fill a niche in Cedar Rapids hospitality market, he said.

Lerch told the council that investors will invest $2.5 million in the project and that NXT Bank in Cedar Rapids is providing a loan commitment for the project

"We will make sure the city and us are on the same page," Lerch told the council. "Ö We know this is important to the city and itís important to us."

City Council member Pat Shey asked a long list of questions about the project, as he did last week at the councilís Development Committee meeting.

Shey wanted to know what recourse the city had if it signed over the property to Lerch this spring, and Lerch didnít perform on the project.

City Hall has acquired considerable property in its federally funded, flood-recovery buyout program, and Shey said no parcel had been more sought for redevelopment than the former site of the Brosh Funeral Chapel in the heart of New Bohemia.

"And for good reason," Shey said as he checked off the post-flood reinvestment in the entertainment district next to downtown that includes CSPS Hall, New Bo City Market, Geonetricís new office building and other projects.

"I want to make sure our interests are protected," he said.

Gary Kranse, the cityís new community development director, told Shey that should Lerch not perform, any successive owner of the property would have to live up to the development agreement with the city or come in and negotiate a new one.

Last spring, Lerch had asked for a 10-year tax break equal to 40 percent of the property-tax revenue generated by the new investment, and last night asked for and received a 100 percent tax break.

Kranse said the request was in line with other development projects in the city and represented a more accurate calculation by Lerch of his project costs.

Council member Ann Poe asked where hotel and apartment patrons would park, and Kranse said the city and Lerch are working on a plan for 44 surface parking spots for the project.

To a question from council member Susie Wienacht, Kranse said the original intent of Lerchís project hasnít changed. "It just got a little taller and more expensive," he said.

Council member Monica Vernon said the city has experienced other delays in its five years-plus of flood recovery. A delay on New Bohemia Station project hasnít changed the cityís interest in seeing it built, she said.

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