116 3rd St SE
Cedar Rapids, Iowa 52401
Steve Emerson seeks workforce housing tax credits to boost $30 million Guaranty Bank redevelopment
Four other local developers also seeking state support so far
CEDAR RAPIDS — Local developer Steve Emerson is seeking state support for his $30 million mixed-use redevelopment of the Guaranty Bank and Strand Theater property that will transform the long-vacant historic property downtown.
Emerson’s request is among four others asking for workforce housing tax credits from the Iowa Economic Development Authority. The council approved these requests as part of its consent agenda Tuesday, where items considered routine are approved in a single vote with no discussion. In doing so, the council also awarded city financial incentives as a local match required to receive the state tax credits.
Emerson’s project at 222 Third St. SE would add main-floor commercial space and 70 market-rate rentals on the second through sixth floors. The project will retain the historical features and architecture of the building as required by the State Historical Preservation Office.
There would be an advanced fitness center where the theater is on the northeast end and a salon/spa where the bank is, Emerson said. The commercial space would house a clinic-type tenant and a convenience store.
“Downtown needs a convenience store — somewhere people can go buy random stuff that the bars don’t have,” Emerson said.
The city’s local match incentive program provides a 10-year, 100 percent rebate of the increased taxes a project generates. City staff estimate the project would generate $1.15 million in taxes over 10 years, of which $714,000 would be rebated back to the company.
Discussions with state historic preservation officials have progressed on preserving features such as the windows. Emerson said his team also discovered light wells, some of which let light filter in through multiple floors. The second floor — the ceiling of first — is textured glass that will be restored. That allows light to come through as a “great feature to the main floor.”
Pending city and state incentives for Guaranty, construction will start and take at least 18 months to two years, Emerson said.
Crews worked in the winter to install geothermal tubing as a replacement for an inefficient steam-boiler HVAC system and are now doing asbestos abatement, Emerson said. There has been some exploratory demolition to understand what’s behind the walls, which will guide drawings to send to state and federal officials for historic preservation tax credits.
When Emerson last year purchased the Guaranty Bank properties for $2.8 million, that also included the three-story brick building at 329 Second Ave. SE where the Dragon Restaurant — long Cedar Rapids’ only Chinese restaurant — was located 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 is slated to be transformed into 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 for fitness coaching.
It wasn’t awarded workforce housing tax credits in 2023, but Emerson is waiting on a city development agreement for local financial incentives. He does not plan to seek workforce housing tax credits for the building again this year. Otherwise, he said the project is ready to go and would take a year or less to complete after starting.
The IEDA board last year awarded a grayfield redevelopment tax credit worth up to $1.5 million for the Guaranty Bank block redevelopment. Grayfield sites are public buildings, industrial or commercial properties that have infrastructure in place, but the property is otherwise underused.
Cedar Rapids last year was designated as a “Thriving Community” by the IEDA, giving it more points when developers here seek tax credits and improving odds Cedar Rapids projects will receive funding.
Here are the other projects seeking state workforce housing tax credits:
Mixed-use development in NewBo
The Vesnice LLC, an entity of High Properties, is pursuing a $23 million project in the New Bohemia District to build 75 market-rate rental housing units and a 4,500-square-foot commercial space on the main floor. There also will be covered parking.
The council last June approved High Properties as the developer and new owner of city-owned property at 116 16th Ave. SE, across the street from Kickstand near the Cedar River Trail.
The development — dubbed the Vesnice, which is Czech for village — also is planned to feature an elevated 12,054-square-foot garden terrace and a 2,000-square-foot roof terrace.
The tax rebate would be on the increased taxes generated by the housing portion of the project. Staff estimate the project will generate $2.1 million in taxes over a 10-year period, of which $1.8 million would be rebated back to the company.
Rainbow Road
An entity of Eric Gutschmidt, D Taggart Holdings, is transforming a vacant block into “Rainbow Road” in the southwest quadrant as a symbol of LGBTQ inclusion in an area that’s visible from Interstate 380.
Gutschmidt’s $4 million project will build 15 units on 920, 926, 930 and 940 M St. SW as well as 1213 N St. SW. The previous homes were demolished and the lots are currently vacant.
Each parcel is made up of three units — one in a single-family house and two accessory dwelling units. The units also have three garage stalls and six total off-street parking spaces.
The development agreement the council approved in November required the developer to apply for these tax credits in 2024 for any parcels where construction had not started within 30 days of the application deadline for tax credits. Gutschmidt has not started construction on any of the five parcels.
The city will provide a reimbursement of 100 percent of the tax increments up to a net present value of $400,000.
Kingston Village redevelopment
An entity led by Fred Timko and Gary Rozek, 4th Avenue Properties LLC, is pursuing a redevelopment project along Fourth Avenue SW between Second Street SW and Third Street SW — 300 on Second — that would fill one of the few vacant spots left in Kingston Village to redevelop since the 2008 flood.
The project would transform the space into a $4.8 million four-story residential building with first-floor covered parking and walk-up units. There would be 29 market-rate rental units, all one-bedroom units.
Renovation of a commercial building housing Kepros Physical Therapy at 218 Fourth Ave. SW, which was part of the same development agreement as this residential space, is complete.
Downtown site to be redeveloped
KN Properties 15 LLC, an entity of Tyler Oswood, is planning a mixed-use redevelopment project at 611 Second Ave. SE.
The $3.5 million project would offer main-floor retail and restaurant space, as well as 13 market-rate units on the upper level.
Staff estimate the project would generate $159,000 in taxes over 10 years, of which $108,000 would be rebated back to the company.
Comments: (319) 398-8494; marissa.payne@thegazette.com
Daily Newsletters