Cedar Rapids medical district means big change for residents, properties

CEDAR RAPIDS - Virginia Andersen is the type of young professional city leaders say they want to attract to the downtown area.

Andersen and her boyfriend chose to live in Cedar Rapids over Iowa City when they found an affordable apartment with historical charm, close to businesses and attractions such as the Museum of Art.

They've spent money at nearby restaurants and look forward to walking or biking to the Downtown Farmers Market and other summer events.

But Andersen, 23, and fellow renters at 824 Third Ave. SE, have been warned not to get too comfortable. The apartment building is slated to be razed for parking for a project in the Cedar Rapids medical district in an area peppered with historic properties. A forum on the issue is set for Tuesday (details, 7A).

“We were both sad to hear it's going to happen,” said Andersen, a 2009 Grinnell College graduate who works at Pearson Inc., in Iowa City. “I think there are enough parking lots in this city.”

Proponents say MedQuarter Regional Medical District, the name of the proposed district, will be a medical destination and serve as an economic engine for the city, with medical offices complemented by restaurants, hotels and housing for workers.

Conceptual drawings show tree-lined streets, green space and walking paths, but some people see a discrepancy between those plans and what is happening to the area.

Cedar Rapids historian Mark Stoffer Hunter pointed out 25 buildings in the district that are on or eligible for the National Register of Historic Places.

Four of those are slated for surface parking: the apartment where Andersen lives; the mansion next door at 834 Third Ave. SE; First Christian Church, 840 Third Ave. SE; and a former DeSoto auto dealership at 829 Second Ave. SE.

Being on the National Register doesn't protect buildings from being demolished, Stoffer Hunter noted.

He is concerned about other historical properties in the district whose owners might get an offer they can't refuse.

St. Luke's Hospital, for example, paid $447,000 for the five-plex where Andersen lives. The previous owner paid $195,000 for the building in 2003.

Business may close

“The day after (the City Council) voted to close Second Avenue, this building was sold,” said Teena Theiss, 56, owner of Teena's Classic Furniture & Interior Design.

The owner of the building, the former Swab Motor dealership at 829 Second Ave. SE, sold the site where her business has been for nearly seven years. Theiss was notified she would have to be out by November.

Retro furniture, such as 1950s couches and 1930s Duncan Phyfe bedroom sets, are quick sellers along with other consignment merchandise tastefully displayed throughout the store.

Theiss notes that her business brings in sales tax. The owner of the 1928 building was paying nearly $13,000 in annual property taxes.

“I love this location,” said Theiss, who has been unable to find another suitable site with large storefront windows in downtown Cedar Rapids. “I'm probably going to close my doors.”

Council members agreed to close Second Avenue SE between 10th and 12th streets for one of the medical district anchors. Physicians' Clinic of Iowa plans to consolidate its five locations into a 206,000-square-foot medical mall. St. Luke's is assembling the land for PCI.

Representatives of PCI said the street closure was needed to fit the mall in downtown Cedar Rapids, rather than build in open space in Hiawatha.

Two blocks of Second Avenue will close May 16. The medical mall could open in late fall 2012.

Blocks

PCI's mall is just one element of the medical district, which will encompass more than 50 square blocks, stretching between Mercy Medical Center and St. Luke's Hospital from Fifth and Sixth streets to 12th and 13th streets SE.

Five surface parking lots will surround PCI's mall, with a four-story ramp built at 10th Street and Second Avenue SE.

As much as City Council member Pat Shey supports the proposed district, he questioned what aesthetic appeal it will have.

“I didn't think that was part of the plan, that they'd buy up acres and acres of land for surface parking,” Shey said. “Shame on me for not asking what it will look like.”

Shey said the city's building requirement of seven parking spots per 1,000-square-feet might be examined.

Council member Monica Vernon said ecological impact, such as runoff, is another issue that could be considered in the medical district and elsewhere.

The council's new community development committee, which Vernon leads, may examine the effect of surface parking related to the city's sustainability goals, she said.

A variance was approved for PCI's parking, which reduced the number of spaces required from 1,402 to 1,016.

Parking needs

Mike Sundall, CEO of PCI, said the surrounding properties are needed to accommodate 400 parking spots for staff and mall tenants - a restaurant and other businesses will be in the mall - plus up to 550 spaces for patients.

PCI's development agreement with the city calls for employing 315 full-time people when the new facility opens. Currently, PCI employs 332. Sundall said the lower number is due to efficiencies of scale in consolidating buildings.

About 350 patient parking spots are needed at any given hour, he said, with overlap between appointment times.

Stoffer Hunter questioned what impact parking lots would have on the city's tax rolls, as businesses are displaced.

Wicker Hill Tea Room, formerly at 1038 Third Ave. SE, moved to Marion after its building was demolished, he noted.

Two apartment buildings in the same block with a total of 25 rental units were also razed for the medical mall.

Rather than being demolished, Stoffer Hunter wondered if some buildings could be adapted for other uses.

Progress and preservation don't have to be opposing forces, he said, pointing to Dubuque and other cities that have used historical buildings for economic advantage.

Options for church

Mike Easley, director of St. Luke's facility planning and operations, has said First Christian Church would not be razed if a private investor can move it.

Easley is also working with Charles Jones of Green Development LLC in Iowa City, who hopes to move a 1906 Josselyn and Taylor-designed building from the site of PCI's mall at 1113 Second Ave. SE.

One example of adaptive reuse is Brambles, 1200 Second Ave. SE, a gift shop that opened eight years ago in the basement of a former Baptist church.

Owner Olinger Investment Corp. pays $8,866 in annual property taxes on a site that was previously tax-exempt.

Kay DeLong, a co-owner of Brambles, is concerned, however, about the impact the closing of Second Avenue will have on business, when many motorists will opt to use First Avenue instead.

‘Good neighbor'

Further down Second Avenue, Terry Pitts, executive director of the Cedar Rapids Museum of Art, said some of his concerns about the Grant Wood Studio have been allayed.

PCI has agreed to involve museum officials in landscaping and lighting that will lessen the impact PCI's four-story parking ramp will have on the historic site next door.

The museum owns the studio at 810 Second Ave. SE, a former carriage house on the National Register, where Wood painted “American Gothic” and other works.

“They're interested in being a good neighbor to the studio,” Pitts said of PCI.

City funding

The city has agreed to provide $13.24 million for PCI's $8.04 million parking ramp and $5.2 million in street improvements.

Funding is from tax increment financing - new property taxes generated by the medical mall for 25 years.

Medical district coordinator John Helbling said signatures are still being gathered to present next month to the City Clerk's Office to establish the medical district as a self-supporting municipal improvement district.

Commercial and industrial properties that fall within the district would pay an added tax to use for security, lighting, extra snow removal or other improvements.

Churches and other non-profits will be asked to pay the additional tax; Mercy and St. Luke's have agreed to do so. The levy is estimated at $3.46 per $1,000 assessed value. Residential properties are exempt, but apartments are not.

Some property owners have expressed concern about having to pass along the tax expense to customers or renters.

But Richard Pankey, director of business development for Point Builders and co-chair of the medical district steering committee, predicts the district will be a boon for businesses.

His family owns Riley's Cafe and plans another restaurant in the medical district.

“It's a huge win for Cedar Rapids,” he said.