116 3rd St SE
Cedar Rapids, Iowa 52401
CEDAR RAPIDS — City officials say they will press on with “transformational” downtown projects encompassed in a proposal they put forward for funding help from a competitive state program, though a state panel Friday provisionally awarded the city $9 million — falling $30.5 million short of its request.
The Iowa Economic Development Authority board provisionally awarded the aid to fuel developments in the Cedar Rapids urban core — far less than the $39.5 million the city had sought from the panel to boost downtown economic growth and attract visitors. Six Iowa communities had vied for a share of $100 million through the competitive Reinvestment District program after seeking a combined $151.6 million from the board.
“It’s still going to be really important for us to be able to get some of these projects off the ground,” said city Economic Development Manager Jasmine Almoayyed. “All of the projects that we put forward, we knew also we were planning on doing one way or another. This money was going to help us see it come to fruition hopefully faster.”
The city of Cedar Rapids sought $39.5 million — the most of all the applications — to support 15 percent of an overall proposal exceeding $261 million across six projects, which would generate nearly $7 million a year in property taxes.
The IEDA board in April narrowed an original pool of 10 applicants to six proposals it scored high enough. The other communities that made that first cut and ultimately received provisional funding 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 projects that enhance the quality of life and create or expand recreational opportunities — and ultimately attract more people.
Cedar Rapids’ district 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.
City Manager Jeff Pomeranz said the award, though less than the request, remains “significant” to Cedar Rapids and will be helpful to the projects in the district.
“At this point, we look forward to these projects actually starting,” Pomeranz said. “That’s the main thing.”
Cedar Rapids officials looked at “transformational” projects in the works with a mix of public and private investment, Almoayyed said, and particularly leveraged locked-in private support to show that the sites were development-ready with committed users.
Though Cedar Rapids officials still must determine how the $9 million in funding would be used, Almoayyed said the award could especially help kick-start development of the hotels under the Marriott flag by developer Heart of America Group as the hospitality industry wrestles with a return to normal after disruptions from the pandemic.
Asked to explain IEDA staff’s recommendation for Cedar Rapids’ award, IEDA Director Debi Durham said with all of these proposals, the authority acknowledges the presumptions communities have to make in their financial projections and that pro formas are wrong.
“I mean, it's how they work,” Durham said. “It's a 20-year program. Look at what we experienced last year — who could have ever predicted that? We would never award 100 percent of what is expected to be generated for anything, regardless. There should also be a payback to the taxpayers in that process of 20 years.”
Cedar Rapids had made the largest possible request, which was 100 percent of the $39.5 million city officials expected the district would have generated in hotel-motel and sales tax revenues over a 20-year period.
Officials said they wanted to ensure that communities and their taxpayers did not end up on the hook to pay back any portion of an award if revenues failed to hit cities’ original projections.
Cedar Rapids’ award was about 25 percent of its projected revenues from the projects, Durham said, in line with Des Moines and the joint Merle Hay project that Urbandale and Des Moines teamed up on. For those two projects, the board provisionally awarded half the money — $50 million — that is available under Reinvestment District program.
It was an “audacious goal” for Cedar Rapids to try to get the full share of hotel-motel and sales tax revenues back, Almoayyed said, but the $9 million still is a good amount.
Plus, she noted the city still has to go through the full application process, where there can be further changes. Cities have until February 2022 to submit final applications.
“You’re always going to be disappointed when you shoot for the stars and you don’t get it, but we completely understand where the state’s coming from,” Almoayyed said.
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