Cedar Rapids leaders want financial analysis before green-lighting tallest downtown building

CEDAR RAPIDS - Cautious optimism.

That was the feeling in the room Tuesday as members of the Cedar Rapids City Council held their first formal discussion regarding a developer's request for $23 million toward constructing what would be the tallest building downtown.

Before a development agreement is discussed, council members want to first determine the financial feasibility of the $103 million project.

'I think this financial review and analysis is absolutely essential,” Council member Ralph Russell said. 'We have to do this and the sooner we can get started ... the more we can know if this is going to become a reality or not.”

Council members voted unanimously to have city staff pursue a third-party financial analysis of the project proposed for One Park Place by developer Allen Homes Inc.

Council member Scott Olson was absent from the meeting.

Much of the conversation focused on the financial analysis.

'I, too, am in favor of this and I look forward to this financial analysis to ensure that we have stability,” Council member Susie Weinacht said.

Council member Scott Overland took a more cautious tone.

'It obviously needs very, very extensive vetting,” he said. 'I'm not overly excited about the city being the equity piece in this.”

Caleb Mason, economic development analyst with the city, said officials plan to hire a company with a firm grasp on the logistics of development finances, experience with gap financing and an understanding of the Cedar Rapids market. The cost of doing so has not been determined, Mason added.

'Obviously it's a significant project,” Mason said. 'Just the makeup of the total project and all of those different parts make it a little bit more complex.”

One Park Place is proposed as a 28-story tower on five neighboring plots of land - three city-owned and two additional parcels not yet secured by the developer - on the southeast corner of First Street SE and Third Avenue SE near Paramount Theatre.

Six companies, including Iowa City's Bread Garden Market and North Liberty's Kinseth Hospitality, have signed intents to be tenants in the building. The tower is proposed to include a grocery store, hotel, rooftop restaurant, spa, condominiums and a parking ramp.

Earlier this month, One Park Place was given the nod over two other projects proposed for the site, including a $33 million, 11-story proposal by Aspect Design and the $33 million, 14-story Avalon Sky Lofts.

Allen Homes Inc. has requested $23 million up front from the city in tax increment financing funds. Such a move would require the city to bond for the funds, which would then be repaid by the increased taxes generated by the project.

According to city documents, Cedar Rapids officials traditionally have avoided such deals, often opting instead to establish a TIF district which allows the developer to recoup money through a tax break.

'Upfront TIF is something that other jurisdictions do, but that is not standard practice here,” Mason said, adding details surrounding the financial request and the city's participation in the project are to be fleshed out after the financial analysis is completed. That could take two to three months, he said.

Cedar Rapids resident Chuck Wieneke, one of two who spoke to the project at Tuesday's meeting, said he doesn't oppose the structure itself, but he questions what such a massive investment by the city might mean for the community bond rating, which currently sits at Aa1.

'I think it would be a magnificent building to have downtown,” he said. 'I think it's pretty hard to come up with $23 million up front. I'm not against the idea, just how they would build it.”

Mason said the goal is to make sure investing in One Park Place is fiscally responsible.

'Our bonding capacity is very precious to us,” Mason said. 'We just want to be able to take our time and really get all of the information available that we can. This is just part of that process.”