116 3rd St SE
Cedar Rapids, Iowa 52401
CEDAR RAPIDS — A local developer is looking to transform a long-vacant block on the main street connecting downtown and the New Bohemia District with a $36 million mixed-use building that will add 186 rental units, retail spaces, a rooftop patio and parking.
Dave Drown, president of GLD Commercial, is giving the empty land at the old Loftus Lumber site, 900 Third St. SE, another shot at redevelopment after previous plans faltered amid a legal dispute between the O’Connell family, who owns the land, and previously proposed developer Richard Sova of Illinois-based Landover Corp.
“It's been worked on for so long by so many people and it's been an eyesore to the community,” City Manager Jeff Pomeranz said of the Loftus project. “We have worked really hard to get to this point, and we're very pleased that GLD through Dave Drown has taken on this big task, and it's going to be a beautiful amenity to Cedar Rapids and to New Bohemia.”
The five-story building would have 186 market-rate rental units — a mix of studio, one-, one-plus, two- and three-bedroom units — as well as a rooftop patio and amenity area, 11,000 square feet of first-floor retail and commercial space and surface and covered parking.
Construction is set to start in April 2023 and finish in October 2024.
The City Council on Tuesday will consider city incentives for the project — a reimbursement of 100 percent of the increment taxes the development generates, a net present value of $6.4 million.
The developer also will seek state workforce housing tax credits and brownfield/grayfield redevelopment tax credits.
“Projects like this require layers of funding in order to make them happen, especially in today's economic conditions with escalating prices,” as well as increasing interest rates, delays and supply chain issues, Economic Development Manager Caleb Mason said. “All those things add cost to the project, especially one that takes so long to build. All those costs get compounded.”
Given the large size of the building — similar to nearby Bottleworks and Water Tower Place Condominiums — Drown said there was some sensitivity to the sense of scale, so it’s designed to look like multiple buildings.
He said it fits the aesthetics of the neighborhood, using identical red brick, then transitioning to different materials and design.
Early on, Drown said developers met with people in the neighborhood and city government for feedback, tried to implement much of that in the plan and used OPN Architectural Services to bring it to life.
“We’re excited for the opportunity to move forward and we look forward to adding to the downtown housing stock,” Drown said.
The O’Connells still own the land. Drown said the plan is to close on the land this fall, subject to obtaining city approvals for the project.
The O’Connells and Sova agreed to dismiss a lawsuit over the land before the matter went to trial.
Through Sova’s entities Landover Corp. and Cedar Venture LLC, he filed a lawsuit last June against the O’Connell family, alleging the family breached the contract by looking to sell the property to an unnamed third party.
According to court documents, Sova had secured all necessary financing by November 2019, when one investor abruptly backed out of the project in March 2020 about 60 days before construction was slated to start — forcing him to look for new investors.
By the time he had secured two investors for the project to move forward, according to court records, the O’Connell family had entered into a real estate purchase agreement with a third party.
Over $100 million housing investment
There are multiple housing projects on Tuesday City Council agenda, collectively exceeding a $100 million investment, which Pomeranz said is a signal of a city with a lot of momentum.
“During these economic times, it shows the interest and the support that Cedar Rapids has from the development community, and we believe that these projects are going to be very successful,” Pomeranz said.
Another project is the KCG Companies’ proposed $41.2 million redevelopment of the Midwest Athletic Club building at 1220 Jacolyn Drive SW, which was damaged in the 2020 derecho, into affordable housing units.
The developer is planning 36 one-bedroom units, 95 two-bedroom units and 50 three-bedroom units — 180 total. All units would be reserved for households whose incomes are at or below 60 percent of the area median income. It would also feature amenities including a swimming pool, dog park and fitness center.
Through the city’s local match economic development program, Cedar Rapids would give a 10-year, 100 percent exemption of the value generated by the improvements — an estimated value of $3.2 million over the 10-year period, or a net present value of $2.1 million. The developer also is seeking state aid through the Iowa Finance Authority’s 4 percent low-income housing tax credits.
Additionally, developers behind the $81.5 million mixed-use First and First West site are seeking workforce housing tax credits for 63 housing units included in a mixed-use building along First Avenue W. The overall building is around $15 to $16 million, Mason said, with $9.8 million of that being the housing component. There also is office and retail space in the building.
City incentives for that building would give a 20-year, 85 percent tax reimbursement, an estimated $2.4 million over that time period.
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