116 3rd St SE
Cedar Rapids, Iowa 52401
In their pitch Friday to a state board for $39.5 million in assistance, Cedar Rapids officials touted locked-in private sector backing for multimillion-dollar projects in the city’s urban core they expect to expand entertainment for residents and attract new out-of-town visitors, too.
Six Iowa communities, including Cedar Rapids, were invited to present proposals to the Iowa Economic Development Authority board under the state’s Reinvestment District program, which awards $100 million to help “transformational” developments. The city seeks $39.5 million of that to support 15 percent of its proposal encompassing an estimated overall investment exceeding $261 million across six projects, which would generate nearly $7 million a year in property taxes.
Cedar Rapids made the largest request of all the communities, which together had applied for a total $201.6 million in funding. The IEDA board narrowed the pool to proposals it scored high enough. The other communities that made that first cut and also were invited to make presentations were Des Moines, Fort Dodge, Newton and Ames and Urbandale, which teamed up with Des Moines.
The competitive program reinvests sales and hotel-motel tax revenues to cities for use in developments that improve the quality of life and create or enhance recreational opportunities — and ultimately attract more people.
Funding awarded to Cedar Rapids would give a needed boost to keystone downtown projects at development-ready sites, City Manager Jeff Pomeranz said. The projects would tap into underutilized sites and connect residents and visitors with the Cedar River, fueling growth in the city after it has been stricken by natural disasters including the 2008 flood and last summer’s derecho.
“We're extremely excited about these transformational projects,” Pomeranz told The Gazette. “They're going to truly make a difference.”
The city’s proposal encompasses the mixed-use First and First West development featuring a Big Grove microbrewery; Marriott hotels at the Guaranty Bank Building and Old World Theater site; a high-rise near the Paramount Theatre; and a Fourth Avenue SE plaza. It also includes some public projects: a mixed-use Eighth Avenue SW pump station and a 5-in-1 Dam bypass channel with white-water rafting and other water recreation.
“It really meets a lot of city objectives, community objectives, and we think that's why it's been so widely received, particularly with the private sector support,” Pomeranz said.
In a video shown to the board, narrator Mayor Brad Hart said the proposed district encompasses 30 acres of prime real estate downtown, targeting high-priority development-ready sites with committed users.
“These projects would be transformative for any community, but for Cedar Rapids after facing last August’s derecho, these projects will transform a city scarred by a disaster into one of the most dynamic and vibrant cities in the entire Midwest,” Hart said.
City Economic Development Manager Jasmine Almoayyed noted that the downtown area heavily relies on office users, so this Reinvestment District would help bring a mix of entertainment, retail and multifamily residential development to life also. That would help area restaurants, bars and retailers, she said, but also give a boost that officials hope would make it easier for the Cedar Rapids Tourism Office to attract larger conventions and book more overnight guests in local hotels.
“Coming out of COVID, I think, has made this extra important because I think the future of downtown is anyone’s guess at this point,” Almoayyed told The Gazette.
Given the complexities of this level of infill development and the economic conditions emerging from the pandemic, Almoayyed said it “kind of necessitates the need for dollars for some of these projects in order for them to be viable.”
The projects would not necessarily be sunk without the state aid, but the funds would help the city “realize the full extent of these projects on a much shorter timeline.”
Not only would it help get those keystone downtown developments online, Almoayyed said, it would have “multiplier effects” for other projects like the grassroots ConnectCR initiative to revitalize Cedar Lake north of downtown and build a pedestrian span called the Smokestack Bridge over the river south of downtown. Additionally, it would leverage local, state and federal dollars by incorporating segments of Cedar Rapids’ permanent $750 million flood control system with a proposed mixed-use pump station.
“It’s all lining up for us,” Almoayyed said of the timing of the projects and the possibility of leveraging an additional economic tool to support these developments.
Cedar Rapids estimates the district would bring 300 jobs to town and create 360 temporary construction jobs by its 20th year. And officials anticipate each year there would be $102.7 million in direct spending as well as $51.7 million in indirect and household spending by that point. It would generate almost $77 million in sales and hotel-motel taxes.
The city, in its presentation, emphasized its partnership with the private sector. First and First West developers Nate Kaeding with Build to Suit and Joe Ahmann with Hiawatha-based Ahmann Companies, as well as representatives with the Heart of America Group, which is the developer of the Guaranty Bank Building site, also participated.
Members of the board pressed Cedar Rapids and other Iowa city officials on preparedness to ensure the projects in their proposals would be ready to capture the state’s portion of sales and hotel-motel tax revenues around 2022 or 2023, not long after the final funding award in 2022.
Although the Cedar Rapids projects are in various stages of design and planning, developers shared with the board a timeline of completing the projects in the coming years.
Kaeding said a component of the project could be open next fall, and the Big Grove microbrewery would possibly be open by fall 2022.
Ajay Singh, vice president of Johnny’s Italian Steakhouse brand development for the Heart of America Group, said the project-to-opening timeline for the redevelopment of the Guaranty Bank Building into hotels — which will be the primary driver of the hotel-motel tax revenue in the proposed district — is expected to be about 18 months.
A board member said the private component seems to already be “pretty much teed up.”
Alaina Santizo with the IEDA said the next step is for the board to make provisional awards at its May 21 or June 18 regularly scheduled meeting. Provisionally approved applicants then submit a final application by February 2022.
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