116 3rd St SE
Cedar Rapids, Iowa 52401
CEDAR RAPIDS - A proposed $32.3 million complex on a long underdeveloped block in the core of the city - dubbed the 'Banjo block” - was met Tuesday with praise from some City Council members and concern from another who felt the generous subsidies being sought open a 'Pandora's box” of exceeding city standards.
Council member Scott Olson said he felt 'uncomfortable” with providing a 100-percent tax break on the new value for 20 years. That tax break would be for twice as long as the city's standard for urban housing.
City staff say the project meets the criteria of a 'community benefit,” which allows for exceeding the standards.
'Developers will be coming in ... saying, ‘Hey, what is that community benefit? We think our project benefits the community,'” Olson said during a meeting Tuesday. 'This does not have a major affordable component. It is going to have smaller units that still rent above what is affordable for most people. I am very uncomfortable going to 20 years. We are opening Pandora's box and it is going to be hard to say ‘no' to anybody else.”
Despite his concerns, Olson joined colleagues in unanimously directing staff to negotiate a tax incentive capped at $5.2 million over 20 years.
The council would need to vote at a later date, possibly in June or July, to finalize the development agreement with <URL destination="https://www.thegazette.com/subject/news/cedar-rapids-downtown-development-banjo-building-project-near-greene-square-20190510">SC Bodner Co.
The Indianapolis firm is proposing </URL>redeveloping the block at Fourth Avenue and Fifth Street SE adjacent the downtown library and near Greene Square. The block long housed Banjo Refrigeration, but now is mostly empty buildings and vacant lots.
The proposal includes a five-story structure with 184 market-rate apartments, a four-story parking garage with 222 spaces, a workout facility, bike shop, a rooftop deck, an interior pool courtyard, and space for retail with a small plaza.
The city's website describes a 'community benefit” as a project with a demonstrated financial gap and public purpose, long-term benefit to the community and is financially viable. Examples cited include expansion of a local business or a headquarters facility.
The Bodner project meets the exemption because it is infill development using existing infrastructure, would enhance nearby property value and would encourage others to invest in the downtown, said Jennifer Pratt, the city's community development director.
'I am excited to create something new and different for Cedar Rapids,” said Steve Bodner, of SC Bodner. 'Our opinion is the development will provide a long-term benefit growth-wise and the building itself sets a new standard for Cedar Rapids.”
Construction would begin by March 1, 2020, and be done by Sept. 30, 2021.
'Projects like this indicate Cedar Rapids is on a roll,” said council member Scott Overland. 'These projects would not have occurred 10, 15 years ago, and we are seeing almost one after another.”
Olson, who's background is in commercial real estate, said he supported the project but urged staff to better define what qualifies as a community benefit.
Olson noted the property is underused but has stagnated because the owners had been seeking a premium price.
He fears some of the public incentive would offset an inflated purchase price, though he said he did not know details of that price.
'I spoke with the developer, and they said, ‘This is the package. This is what we want or we are not going to build.' And I don't appreciate that. But lets negotiate.”
Pratt said the purchase price is aggregated into the project costs, which Bodner provided. Those costs help the city determine if Bodner's estimates are consistent with the market. The council would be able to see if the price is reasonable before approving an agreement, she said.
l Comments: (319) 398-8310; email@example.com