Guaranty Bank site among five Cedar Rapids projects awarded redevelopment tax credits

CEDAR RAPIDS — Among the five Cedar Rapids projects that were recently awarded redevelopment tax credits from the Iowa Economic Development Authority, local developer Steve Emerson’s proposed transformation of the old Guaranty Bank block received a major boost.

The former Guaranty Bank and World Theater building at 222 Third St. SE, as well as the building that once housed the Dragon Chinese restaurant at 329 Second Ave. SE, received brownfield/grayfield redevelopment tax credits from the IEDA board.

These tax credits help transform sites that are abandoned, blighted or underused. Brownfield sites are industrial or commercial properties where there’s environmental contamination. Grayfield sites are public buildings, industrial or commercial properties that have infrastructure in place, but the property is otherwise underused.

After the COVID-19 pandemic put a previous redevelopment plan that included a nine-story hotel and two restaurants on ice, Emerson bought the property earlier this year and is pursuing a $30.95 million renovation of the former Guaranty Bank and neighboring World Theater building. This grayfield tax credit is worth up to $1.5 million.

Plans include six commercial bays on the first floor of the Guaranty building. Emerson said the main commercial floor will possibly be filled with service providers such as a salon, a convenience store or clinic-type places. The 80 market-rate apartments on the second through sixth floors will be designed to have hotel amenities so they can later be turned into a hotel or Airbnb rentals, he said.

There may be an event center component geared more toward competitions or private training in the Old World Theater, he said. The main driver of doing a fitness center use was that it’s essentially ready for use, just needing showers and locker rooms added, Emerson said, whereas an event center would require more upfront capital.

To redevelop the Dragon building, Emerson’s $6.615 million project calls for commercial space on the first floor of the three-story building. He’s proposing 13 high-end market rate apartments on the two upper floors. The brownfield tax credit is worth up to $600,000.

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Emerson said it’s likely work would start in the spring on the Dragon building, probably not long before the Guaranty Bank building. The Dragon building’s roof may need to be replaced now ahead of the winter months because it’s leaking, he said. The first commercial floor can be done quickly once construction starts, he said, with a fitness center or the Cedar Rapids Boxing Club “to possibly find a home for them there.”

City Manager Jeff Pomeranz said with high construction costs and inflation, work is extra costly for developers, so the state’s financial assistance is key to making projects come to life. He said the city and the Cedar Rapids Metro Economic Alliance have supported these developers’ tax credit applications.

“These are really significant because you need all these different layers of assistance in order to make projects right now happen,” Pomeranz said.

Emerson pursues other downtown projects

The Iowa Building, at 211 Fourth Ave. SE, has kept its first- and second-floor commercial tenants in the building while third through seventh floors are turned into apartments. The housing conversion should be done in February. Jimmy John’s will continue to operate on the first floor.

That project was awarded $5.5 million in historic preservation tax credits last spring. The IEDA also previously awarded $975,559 in workforce housing tax credits toward the building’s redevelopment, as well as $750,000 in brownfield/grayfield tax credits. Both awards were announced in 2021.

Emerson also is planning to redevelop the Principal building, first seeing if the property — built in 1900 — is historic. If it is, he will apply for historic tax credits, likely in 2024, to convert the empty office space at 200 Second Ave. SE into multifamily housing.

“I’m trying to convert any office space to housing that I can because nobody’s looking for office,” Emerson said.

Other projects awarded redevelopment tax credits

At 611 Second Ave. SE, across from Quarter Barrel, KN Properties 15 is pursuing a $3.318 million investment to renovate the vacant two-story brick building into a first-floor restaurant with market-rate apartments on the second floor. The project qualifies for a grayfield tax credit of up to $300,000.

A proposed $2.39 million project by Rubrik Holdings will build a new dental office at the former Collins Community Credit Union building at 1755 First Ave. SE. The project will demolish the existing structure. The new 4,000 square-foot dental office will be equipped with modern amenities and eight operatories, and also be entirely compliant with the Americans with Disabilities Act. The developer will receive up to $207,706 in grayfield tax credits toward the renovation.

The parking lot adjacent to the former US Bank in Czech Village, at 123 16th Avenue SW C, also is slated to get a makeover. Modern Home Builders’ planned $4.1 million project calls for building a two-story mixed-use building with 10 detached residential units. It’ll include a new restaurant as well. The project was awarded up to $400,000 in grayfield tax credits.

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