116 3rd St SE
Cedar Rapids, Iowa 52401
The provisional funding, from the Iowa Economic Development Authority, will not be enough to assist private projects that were in the original $39.5 million plan — like the Guaranty Bank redevelopment or a high-rise near the Paramount Theatre.
Developers and city staff say those projects remain in the works but some aren’t far enough along to make the final cut for the Reinvestment District funds.
“We want to go to the board with very sure projects that we have a great deal of confidence in occurring in a reasonable time period,” City Manager Jeff Pomeranz said.
Most of the millions the city is hoping to get will go toward helping the development of the First and First West project, also known as Kingston Landing.
Specifically, Cedar Rapids will put $6 million toward a city-owned, 550-stall parking ramp to support the mixed-use project there that features a Big Grove microbrewery.
Another $1.5 million will go to an Eighth Avenue SW pump station with a mixed-use community space and festival grounds.
And $1.5 million will go toward a 5-in-1 Dam bypass channel with white-water rafting and other water recreation.
Projects not included in the 20.58-acre district are the redevelopment of the Guaranty Bank Building and Old World Theater site into Marriott hotels or the proposed 25-story high-rise near the Paramount Theatre.
The Iowa Economic Development Authority wants “very firm commitments to these projects, and we made the determination that those potential projects were not mature enough in the planning and financing stages to be able to submit under the guidelines of the program,” city Economic Development Manager Caleb Mason said.
City staffers submitted the city’s final application to the Iowa Economic Development Authority last week. They expect to have another opportunity to make their pitch to the authority’s board and answer remaining questions before receiving a final award.
The competitive program reinvests sales and hotel-motel tax revenues produced over a 20-year period into projects that enhance the quality of life and create or expand recreational opportunities — ultimately attracting more people to a city.
Without the two private developments in the mix for Cedar Rapids’ final application, both the sales and hotel-motel tax revenue projections are lower that they originally were.
Chicago-based Johnson Consulting, which the city hired to do a feasibility study, projected $49.4 million in new sales and hotel-motel tax revenue in the district over 20 years, making the project eligible for up to $30.1 million in state funding.
The original application projected $60.5 million in tax revenue over 20 years.
The state typically does not award the full amount sought by cities, so if revenues fall short of projections, cities are not on the hook to pay back any portion of the award.
Cedar Rapids is one of six communities vying for a share of $100 million the state has to award.
The other communities that received provisional funding were Des Moines, Fort Dodge, Newton, and Ames and Urbandale, which teamed up with Des Moines.
• $233 million in gross tax revenues
• 202 ongoing jobs (FTE) by year 20
• 218 temporary jobs and $147.6 million in spending throughout the construction period
• $71.2 million in annual direct spending as a result of project development in year 20
• $20.6 million in annual indirect and induced (household) spending in year 20
• $15 million in annual employee payroll when build-out is complete in year 20
• $64.4 million in new sales tax and $4.4 million in hotel/motel taxes leveraged communitywide as a result of new economic growth in the district over 20 years
• $16.8 million in new Iowa income tax revenues generated over 20 years
Source: City of Cedar Rapids
A development agreement for the site at First Street and First Avenue West — which will feature a boutique hotel with 100 rooms, Pickle Palace bar and grill in addition to Big Grove — is slated to come to the City Council in late March, Mason said.
It will be done in three phases through 2028, eventually including the parking ramp, a mix of housing and retail, a public plaza and an entertainment center.
The council in September unanimously approved a term sheet outlining the scope of the project at the site, which has sat vacant since the 2008 flood and was once earmarked for a casino until the Iowa Racing and Gaming Commission twice denied Cedar Rapids a license to operate a gaming facility.
Developers include Nate Kaeding with Build to Suit, Joe Ahmann with Hiawatha-based Ahmann Companies and Big Grove co-founder Matt Smith.
Pomeranz said focusing on this development makes sense because “that's where the investment is going to be made” and because of its “amazing” location in proximity to the urban core, visible from Interstate 380.
“It's going to be another key focal point for downtown Cedar Rapids development,” Pomeranz said.
Conversations between developers and city officials are ongoing for the Paramount high-rise and the Guaranty Bank redevelopment.
Mike Whalen, president and CEO of the hospitality and real estate Heart of America Group, the developer of the hotels at the Guaranty Bank site, said conversations with the city team remain positive.
Cedar Rapids leaders are glad to get the state funds, he said, but added, “I think we all were discouraged because we thought that it was a transformational project and that’s what those funds are really designed to facilitate.”
Whalen said in a best-case scenario, construction would start in early 2023.
“We’re hoping to circle back in a couple weeks, really lay out the plans for the path forward,” Whalen said. “I think the likelihood of trying to seek financing will improve throughout the year.”
As for the high-rise, developer Steve Emerson said original plans for the site — from before the COVID-19 pandemic — likely will need to be reworked.
Originally, plans called for a grocery store, parking, office space and high-end condos. With less of a need for downtown parking as offices continue remote working, the parking may be reduced, Emerson said.
The development could include condos blended with a hotel or short-term housing, Emerson said. He’s looking at studies to figure out what makes the most sense now.
Emerson said other funds and incentives could come into play, and the project could become smaller “if there’s only so much available for funds.”
It also will depend on what makes sense for the city and from a budget standpoint, as inflation pushes construction costs higher.
“We don’t want to just build something to build it,” Emerson said. “ … A project like this, it definitely needs to come in line, or we’ll figure out a way to build it more affordably.”
The Reinvestment District could later be amended to include the Guaranty and Paramount private developments.
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