Cedar Rapids council picks apartments over school to save Knutson Building

By B.A. Morelli, The Gazette

CEDAR RAPIDS - City Council members Tuesday picked a developer's plan to restore the dilapidated Knutson Building as a historic apartment complex, turning aside review panel and city staff recommendations it become a downtown Montessori magnet school instead.

In a 6-2 vote, the council backed Hobart Historic Restoration's $7.3 million full reclamation of the 1887-built structure and adjacent new construction as housing on property along the west bank of the Cedar River.

'We weren't expecting this,” said Jim Hobart, of the restoration company, which recently renovated the adjacent Mott Lofts. 'But we've been fighting hard to get this contract for three years.”

This was the third stab the city has taken - and the third bid from Hobart - to save the old red condensed milk factory since buying it for $1.5 million in 2013. The city sweetened the deal this time by including two adjacent parcels.

The Hobarts are seeking the property at 525, 529 and 533 Valor Way SW for $1 as well as other incentives, according to its proposal.

Before the vote, city staff reviewed the school proposal by Steve Emerson's Aspect Inc. in partnership with the Cedar Rapids School District.

City staff did not make a presentation about the Hobart plan. But council support swung that way.

Council members praised both plans but cooled to the school idea, saying it had too many contingencies, most notably uncertainty about the school district's ability to win a $12 million federal grant, the market for a Montessori school and the likelihood it eventually would be sold to the school district and removed from the tax base.

'I wonder if the proposal you are recommending has too many moving parts in order to get back to the main idea of saving the building,” City Council member Scott Overland said.

Council member Ralph Russell voted against the Hobart plan, preferring to delay the vote for more information. Member Justin Shields favored the school pitch, saying sometimes it's necessary to take risks to see progress.

Under the Hobart plan, the Knutson Building would be restored by fall 2017 with 12 apartments and main level bathrooms and storage space to support the nearby McGrath Amphitheatre. A second apartment building would be added later, likely with a one-year construction starting that same fall. The plan would also include green space and parking.

The Hobart project had the backing of the Kingston Square Association, made up of financial backers in Kingston Village.

'The school will have kids from all over the city,” said Fred Timko, a developer with the association. 'Few will be from our neighborhood, so I fail to see how this adds any amenity to our neighborhood.”

The second building would have somewhere between 24 and 40 apartments, but its size and scope is up in the air, said B.J. Hobart, also with Hobart Restoration. Another unknown is just how much public aid Hobart is requesting.

The proposal calls for a 10-year full tax break for each building and $367,000 up front from the city for emergency stabilization and remediation of the Knutson, which is in poor condition.

Based on a financial plan projecting $56,000 per year in taxes beginning in year 11, the city estimates an abatement request of $560,000, but that is just for the Knutson piece. There was no estimate available for the second building.

The council vote allows city staff to negotiate a development agreement with Hobart. That will be brought to the City Council for consideration by October.

A similar Hobart proposal, not including the second building, had been passed over by City Council at least twice as leaders debated whether to demolish or save the property under pressure from historic preservation advocates. The City Council had said previous proposals sought too much money.

According to the city, Hobart's previous proposal sought Urban Revitalization Tax Exemption, a market-rate housing incentive and $750,000 for stabilization.

Trace Pickering, assistant superintendent with the school district, said the district remains committed to a downtown magnet Montessori school, and is optimistic about the grant announcement before the end of the year. The grant would allow the district to convert Taylor, Roosevelt, McKinley, Iowa Big and Kenwood Leadership Academy to magnets and build one new one, he said.

Emerson noted he was 'disappointed in the process” that led to his proposal's rejection.