116 3rd St SE
Cedar Rapids, Iowa 52401
Steve Emerson buys Guaranty Bank property for $2.8M, taking on redevelopment of key downtown Cedar Rapids site
Previous plans to add hotel space and restaurants fell victim to the pandemic
CEDAR RAPIDS — Steve Emerson, the prolific local developer who’s fueled the redevelopment of many downtown Cedar Rapids properties, closed Thursday on the purchase of the former Guaranty Bank property — setting in motion the transformation of a key site in the urban core.
As the COVID-19 pandemic put a previous redevelopment plan that included a nine-story hotel and two restaurants on ice, Emerson’s takeover will add either housing or hotel units to the heart of Cedar Rapids.
The $2.8 million sale includes the Guaranty Bank and Old World Theater properties off Third Street and Third Avenue SE, as well as the Dragon Building a few block away on Second Avenue SE. These were owned by Guaranty Realty and were originally listed for $3.1 million.
“It’s exciting,” Emerson said. “It’s right in the core of downtown, and I’ve been about the downtown since ’99 when I started doing this.”
Adam Gibbs, vice president of GLD Commercial, said Emerson’s purchase provides a “terrific opportunity” for downtown Cedar Rapids.
“It’s in friendly, capable hands,” Gibbs said. “It’s well-positioned for redevelopment.”
Emerson still is working through exact site plans for the property.
Mike Whalen, president and chief executive officer of the Heart of America Group, previously proposed an approximately $50 million investment to restore the Guaranty Bank building and redevelop nearby property, adding about 200 hotel rooms and restaurants to downtown. But those plans faltered amid the pandemic, and GLD Commercial listed the property for sale last summer.
Gibbs said there were “quite a few inquiries” on the property, but Emerson had the upper hand having worked with Whalen and being familiar with the property.
“It’s a complex building and (has had) additions over the years, and I think Steve has a unique skill set by being an architect that allowed him to expedite his review of what’s there,” Gibbs said.
For the old Guaranty Bank building, Gibbs said the current plan includes commercial on the first floor, and options for a hotel or multifamily housing on the upper floors.
Emerson said he’s still contemplating whether this could be a boutique hotel, apartments or a long-term stay hotel. It’s being designed in such a way to lend itself to a housing use, whether that’s a hotel or residential units.
He’s moving forward with the design phase, then will seek state and federal historic tax credits and pursue state brownfield redevelopment tax credits.
“We want to do a boutique hotel, but it’s still difficult to get financing for hospitality especially in downtown,” Emerson said. “... It’s going to be a tough project to model or make work financially. There’s a lot of asbestos in there.”
The Guaranty Bank building has only one staircase, which he said challenged Whalen, too, in his bid to turn the property into a hotel, so that’s among the hurdles complicating determining the site’s use.
Emerson anticipates starting work early in spring 2024.
First, Emerson is looking to revitalize the long-vacant historic property at 329 Second Ave. SE that formerly housed the Dragon Restaurant and turn it into a $4.2 million mixed-use building.
The Cedar Rapids City Council last month awarded a 10-year, 100 percent tax reimbursement of the increased value of the project. The project will generate an estimated $514,000 in taxes over 10 years, of which $380,000 would be reimbursed.
Emerson also is seeking state workforce housing tax credits to support that redevelopment. He also plans to apply for brownfield redevelopment tax credits for this building.
Cedar Rapids’ only Chinese restaurant was located in this three-story brick building for 55 years. It most recently held the Hazzard County saloon until the business moved across the street in 2018.
The 14,400-square-foot commercial building would include 13 apartments on the second and third floors: five studio, seven one-bedroom units and one two-bedroom unit. The first-floor commercial space would be taken up by a tenant who provides fitness coaching.
City officials have highly anticipated the overall property’s transformation, lauding it as a “cornerstone” site in the urban core.
“Mr. Emerson has completed a number of very successful projects particularly in the downtown area and we’re excited to hear about the plans for this important historic facility in downtown,” City Manager Jeff Pomeranz said.
Comments: (319) 398-8494; marissa.payne@thegazette.com
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