Options running out for dilapidated Knutson Building

CEDAR RAPIDS - At least two local developers, who both were previously rebuffed, remain interested in the historic but dilapidated Knutson Building that at least nine local and national contractors backed away from.

Hobart Historic Preservation and KHB Redevelopment Group said they would be interested in restoring the vacant circa 1887 building, if the deal is right. City leaders, who say they want the city-owned building saved, already rejected bids by the companies in 2014 and 2015 because it required too much public investment.

'Probably the main driving factor is being Mott owners and how the property adjacent to the Mott is going to be used,” developer B.J. Hobart said. 'We are willing to put in the work to make it beautiful.”

Her company is weeks away from completing restoration of the nearby 115-year-old Mott Building and is about to break ground on a six-story structure north of the Knutson in a revitalized Kingston Village area.

Hobart has a vision of neighboring riverfront properties with 25 or so apartments and an urban garden between the Mott and Knutson buildings.

Tim Blumer, president of KHB, also is interested.

'If (the city) put out another (request for proposals) to do the building, I'm pretty sure we'd respond to that,” he said. 'The problem with the whole deal is the costs are going to be huge.”

The Knutson, which began as a condensed milk factory and most recently served as a haunted house, is at a crossroads yet again after local, then national contractors refused to even enter a bid to stabilize the building, in part due to environmental hazards. The stabilization was supposed to buy time for a $2.5 million private fundraising campaign to save the building - which is eligible for the National Historic Registry but is not listed there - before a city-imposed April 2017 deadline.

That plan is now likely moot since the building is unlikely to be stabilized, said Jennifer Pratt, city development director.

City officials will be confronted with two previously rejected prospects: demolish the Knutson, which some have called for, or turn it over to private developers who will ask for significant incentives to restore it. It's similar to the decision officials faced nearly a year ago.

Pratt said at least one more option exists, and others may surface before staff makes a recommendation to City Council at a March 22 meeting: The city could grant developers more flexibility for how much of the building is preserved, from as little a just a portion of the facade up to the entire building.

'Do you broaden it and give more latitude and see if there are other alternatives out there?” Pratt asked. 'We are thinking about how we can make it financially feasible and retain historic features.”

The city may include an adjacent plot of land to make it more attractive, Pratt said.

The Historic Preservation Commission, of which Hobart is a member, agreed last week to reaffirm its recommendation the City Council save the entire building, despite the setbacks with stabilization. Commission Chairwoman Amanda McKnight-Grafton said it's a positive sign developers still want the building.

'It shows there still is interest, despite the condition of the building,” she said.

Hobart is concerned starting a new bid process would push back work several months, and urged the city to resurrect and negotiate previous bids to save time. Pratt said that is not an option under city code, but acknowledged time is of the essence because the building is deteriorating.

Hobart said she believes within 10 months her company could restore the Knutson and its crumbling walls in similar fashion as the Mott - commercial on the main floor and residential above - for $3.5 million. Hobart and Blumer have said they could provide bathrooms and concessions for the adjacent McGrath Amphitheatre, which the city wants, and storage space for a removable flood wall, if necessary.

Hobart wants the city to chip in the $400,000 the city had estimated for demolition and the $167,500 earmarked for stabilization, 20 years of tax breaks as well as adjacent parcels.

'If they want to save it, giving up an additional five or 10 years is not that much to ask,” Hobart said of the tax break.

Blumer said if the city's terms are too rigid and developers can't make money on the project, no one will bid for the work, leaving little choice but demolition.