Developer seeking tax credits to transform derecho-damaged MAC building into affordable rental units

CEDAR RAPIDS — The Cedar Rapids City Council on Tuesday signed off on a resolution authorizing local tax incentives toward a new proposal to redevelop a 2020 derecho-damaged Midwest Athletic Club building into affordable housing.

The developer, KCG Companies, is seeking competitive 9 percent Low-Income Housing Tax Credits through the Iowa Finance Authority to transform the building at 1220 Jacolyn Dr. SW into a $16 million, three-story multifamily building. The city’s incentives were part of the required local match to apply for tax credits.

Under the proposal, there would be 58 units — a mix of one-, two- and three-bedroom units renting to tenants who earn at or below 60 percent the area median income, and some would rent to those at the 40 percent threshold.

Proposed amenities include a community clubhouse, community kitchen, walking paths, gazebo, sports court and playground with large green space.

The city’s local match program provides a 10-year, 100 percent exemption on the value generated by the improvements. Of the $1.9 million in total taxes generated over a 10-year period, $1 million in taxes would be exempted — a net present value of $668,000.

In June 2022, the council approved a local match application for the 4 percent non-competitive Low Income Housing Tax Credits at the same property. Economic Development Coordinator Scott Mather said the project was paused because of rising construction costs and lack of funding availability, but the developer is again proposing to acquire the property to seek funding through the competitive program.

The old proposal, for $41.2 million, included 36 one-bedroom units, 95 two-bedroom units and 50 three-bedroom units — 180 total.

Council member Scott Olson said he was pleased to see the developers give this site another try. He said the city needs housing at such an affordable rate, and tenants will benefit from the nearby services and the new westside public library being built in the area in the coming years.

Planning is underway for the 27-acre site of Cedar Rapids’ new westside library, which still is in the design phase. Located at the corner of 20th Avenue and Wiley Boulevard SW, it will mix with natural elements and other amenities — adding green space in a part of town that lacks it.

“They're saving the trails and the ponds and the things that were already there, plus some of the courts that were with the fitness club, and plus this is right on the bus route for services close, Fareway groceries and others real close, so I think it's a great reuse of that location,” Olson said.

IFA will review and decide on applications for tax credits later this year.

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