Study: One Park Place needs $20.5M to be viable

CEDAR RAPIDS - Cedar Rapids officials are moving forward with what would be one of the largest development projects in the history of the city after affirmative findings from a six-month financial review.

New York-based National Development Council calls the One Park Place project financially feasible and viable, but calculated a $20.5 million gap where city financing would be needed to build the $103 million, 28-story building on a city owned parking lot on Third Avenue SE near the Paramount Theatre.

Despite the gap, Cedar Rapids officials say they plan to continue working with the developer, Jesse Allen.

'We are pleased to hear the outcome of the NDC's thorough review that One Park Place remains financially viable,” City Manager Jeff Pomeranz said in a news release. 'Continued diligence is needed to successfully bring this project - and its many components - to fruition, but we are excited to work with Jesse and his team to begin the next phase of this project by negotiating a development agreement.”

In proposing the development, which promises a hotel, grocery store, rooftop restaurant, apartments, condos and multi-floor parking ramp, Allen sought $23 million up front in financial assistance to bring his vision to life.

The Gazette was unable to reach Allen for comment on Monday.

Before entering negotiations, city officials hired National Development Council in June to study the proposal and determine if it was viable and what the true financial gap was between what the developer could afford and the cost of the project.

'It's a big project, but it would be phenomenal to have downtown, not just for the tax base but all of the jobs it would create,” Cedar Rapids Mayor Ron Corbett said. 'But, it would be a stretch for us to put this financial package on the table (up front).”

Corbett supports using tax increment financing, an economic development tool used to rebate taxes back to a developer. That model has a built-in safeguard because the rebate only kicks in when value is created. The mayor, though, has concerns about how much money the city could put up front.

It's unusual but not unprecedented for the city to provide money up front, Corbett said, noting assistance for the Westdale Mall redevelopment and the Physicians' Clinic of Iowa relocation to downtown Cedar Rapids.

'I don't think there's anyway I would support $20 million up front,” Corbett said. 'There might be some seed money for them, but most would come in some form of abatement in property taxes.”

Caleb Mason, an economic development analyst for Cedar Rapids, said city staff is recommending providing $5 million upon project completion in 2020, with the remaining $15.5 million provided in the form of tax reimbursements over 16 to 18 years.

Corbett said One Park Place appeared to have a solid foundation of revenue, such as Alliant Energy contracting space in the parking ramp. Many of the tenants would also be owner-occupied. Kinseth Hospitality and the Bread Garden Market are among several companies that have signed letters of interest to be part of the project.

The City Council is going to be asked at its Dec. 6 meeting to authorize city staff to begin negotiating a development agreement with Allen and his partners.

Corbett said it likely won't be until 2017 a deal is in place.

l Comments: (319) 339-3177; brian.morelli@thegazette.com