No apartments after all: Kubias project is halted

CEDAR RAPIDS - It's not every day that $2.7 million slips through your hands.

In effect, that is what happened to Hobart Historic Restoration Inc. of Cedar Rapids, which last month was awarded $2.7 million in state-administered federal housing funds. The money was intended to help the firm repurpose the historic Kubias Building at 307-311 Third Ave. SE into 18 apartments, while keeping space on the first floor for retail or office space.

Hobart also was set to compete for up to $1 million through the state's Workforce Housing Tax Credit Program to help finance the $7.7 million Kubias transformation project.

However, the entire renovation project has gone south. The building owner, Third Avenue Corporate LLC, has decided not to sell the Kubias to Hobart; instead, the owner has secured a new business tenant, according to Cedar Rapids city officials.

Hobart formally informed the city Friday that the Kubias project no longer would be going forward.

'We are very disappointed that the seller changed his mind and terminated the contract after all the work we put into due diligence and research and development,” said B.J. Hobart, an owner of Hobart Historic Restoration. 'But this kind of thing happens sometimes, and a seller for whatever reason doesn't complete the sale.”

Jon Dusek, president and CEO of Armstrong Development Co., and Thomas Slattery, president of Heritage Associates Inc., are partners in the ownership of the Kubias Building. Dusek called it 'unfortunate” that the Hobart project won't come to fruition.

Dusek said he was faced with a dilemma. As Hobart was awaiting news about the housing grant, a new company wanted to locate in downtown Cedar Rapids. Frontier Communications of Rochester, N.Y., will move in with 15 employees to start, he said.

Mayor Ron Corbett said 'it kind of stings” when a Cedar Rapids housing project must give up a substantial federal grant after securing it with city backing.

Corbett said it was unclear whether another local project that had competed for these housing funds now might be in position to get the money that had been awarded to Hobart.

'We still have a lot of momentum in the downtown for additional housing,” Corbett said. 'I don't like to have to return money to the state. But we'll continue to forge forward with downtown housing options.”

The upside for the city is that the owners are bringing a new business tenant to the building, Corbett said.

'We're always trying to get more jobs in Cedar Rapids and in the downtown,” he said.

Five other Cedar Rapids housing projects were awarded federal funds last month in the state-administered program. Those included another downtown project: developer Steve Emerson's plan to renovate the vacant, six-story former Iowa-Illinois Gas & Electric Co. building at 323 Third St. SE. Emerson plans to turn the building into 32 apartments with a first-floor grocery.