Review probes financial viability of 28-story Cedar Rapids structure

CEDAR RAPIDS - City officials should get the first clue by the end of the month if the substance matches the buzz for a 28-story, $103 million high rise proposed for downtown Cedar Rapids.

The city signed a contract worth up to $22,500 this month with National Development Council, a New York-based non-profit, to evaluate the finances of One Park Place, a proposal with a grocery store, rooftop restaurant, parking, condos and apartments for First Street SE near the Paramount Theatre.

The City Council favored the project, which may be the largest and most complex ever proposed here, over two others last month, contingent upon it passing the financial review.

'We want to drill down to what that gap is,” said Jennifer Pratt, Cedar Rapids community development director. 'How much city assistance is appropriate to make the project happen and how we can structure that so it works for the project and for the city?”

The project would go on city-owned tracts, although the developer has said it also needs to acquire other privately owned parcels.

In addition to the size and complexity of the project - several owners would have housing and commercial space - Jesse Allen, of Allen Development in Iowa City, and Dave Zahradnik, Cedar Rapids-based principal architect at Neumann Monson Architects, sought $23 million up front in public subsidies.

Elected leaders and staff balked at the request, noting tax increment financing is the preferred method of assistance where tax rebates allow a developer to recoup money over several years.

The consultant will provide an initial review of findings about the financial assumptions of the proposal, such as costs and lease rates for housing units in the high rise, according to the contract. That is due by June 30.

If the first phase is promising, due by Aug. 31 is a final analysis of the gap in the developer's financial plan in which city incentives are sought to fill. This aspect of the review will consider the development concept including costs, revenues, operating proformas and developer equity, according to the contract.

Pratt said the organization could provide recommendations for financing options acceptable to the city and developer.

The National Development Council identifies its focus as 'homes, jobs and community” with a mission to help investment in low-income communities, according to its website.

Pratt said the organization has a broad base of financial expertise. She and others on city staff have completed training through NDC for housing and affordable housing concepts, and she was familiar that the organization had assisted with developments in Iowa City.

Wendy Ford, economic development coordinator in Iowa City, said the city had hired National Development Council occasionally before signing a contract in 2011 for it to provide regular financial analysis. The consultant has been involved in each public development since, she said.

The analysis considers the cost to get the structure built, and secondly studies the financial plan of expenses and income. The organization analyzes if a developer is using all of its debt capacity, and how much public assistance is needed to make a development viable.

'It's a very detailed financial analysis that ensures the public's dollars are the last dollars in - and in our case we want it to be the last dollars needed - to make a project happen that wouldn't have otherwise,” Ford said.