Cedar Rapids City Hall takes on new Kingston Village project

Local developer Joe Ahmann is out with another new building plan, this time for the emerging commercial and historic Kingston Village neighborhood directly across the Cedar River from downtown Cedar Rapids.

At the same time, a second local developer, Allen Lerch, is back at City Hall with an updated, expanded version of his New Bohemia Station project. This time, though, he is seeking a larger city tax break for a project that was expected to be underway by now in the heart of New Bohemia on a site where Brosh Funeral Chapel stood before the 2008 flood.

Jennifer Pratt, assistant director of the city's Community Development Department, said Thursday that Ahmann's development team is proposing to build a three- or four-story brick building on now-vacant, city-owned property at 200, 210 and 212 Third Avenue SW.

The plan is for the street-level floor to house offices or retail and the upper floors to hold residential units, Pratt said.

She said the brick building design is intended to fit with a few century-old brick storefronts in this two-block area that have been saved from demolition and are being privately renovated. The most notable historic building, the Louis Sullivan-designed bank building at 101 Third Ave. SW, is being turned into Popoli Ristorante & Sullivan's Bar by developer Fred Timko.

Timko also has renovated the former bank tower next door, on Third Avenue SW, and is building a 17-unit condominium tower next to the bank on First Street SW.

The City Council's Development Committee this week approved Pratt's recommendation to bring to Ahmann project in front of the full City Council on Feb. 11.

The land on which Ahmann wants to build was acquired by the city in its extensive flood-recovery buyout program. Under federal rules and city practice, the city will seek competitive proposals for the site and will not simply award the property to Ahmann.

Lerch's New Bohemia Station project on the Brosh site in New Bohemia went through a similar competitive process almost a year ago.

Last April, the City Council selected Lerch's four-story, mixed-use building proposal in a close competition over a second, four-story one from a development team led by Ahmann. The council then asked the city's Community Development Department to enter into a development agreement with Lerch.

No agreement has yet been signed.

This week, Pratt told the City Council's Development Committee that the project has been slowed by the need to conduct a due-diligence environmental analysis of the former Brosh funeral home site. The work, which found no significant levels of contamination, was completed on Aug. 30.

The developer has been working on project design since then, Pratt told the council committee.

"I've had a lot of people ask me (about the project's delay). Now we know why. I didn't know why," said City Council member Monica Vernon, the council committee chairwoman.

Developer Lerch now has expanded the project from a four-story building to a five-story structure.

A year ago, Lerch's New Bohemia Station concept called for a $6.5 million project, featuring a first floor of retail shops, a 14-room extended stay hotel with ballroom and event center on the second floor, and two floors with 26 loft apartments. In addition, a 225-seat cinema was planned for the basement.

The new concept calls for an $11.4 million project with an additional floor and a building with 40 extended-stay hotel rooms and 8 loft apartments.

Otherwise, the building is similar, including exterior pillars on the first floor between which removable flood walls can be placed in the event of a flood.

The concept supported by the City Council last April called for the council to forego 40 percent of the property taxes generated by the new investment for 10 years. Lerch now is asking for 100 percent break on the new investment for 10 years.

At this week's committee meeting, council and committee member Pat Shey did some quick math and noted that the developer is seeking a tax break that is two-and-a-half times larger than it had been for a project that has less than doubled in expense.

Council and committee member Susie Weinacht said she had done the same math.

Pratt said the developer's additional investment would bring in more tax revenue to the city after 20 years than the smaller investment will.

Shey also asked if the Lerch project would fall apart if it doesn't get the tax break it is seeking. Pratt replied that the financial plan for the project is premised on the tax break.

In addition, Shey asked what proof of financial backing a developer must have before the city agreed to sell city-owned property and provide tax breaks.

Pratt said Lerch's company has provided a letter from a bank, which stated that the bank was willing to provide financing to a certain level in the project.

Shey asked if the Community Development Department was recommending the project as now conceived for approval, and Pratt said it was.

The department's tentative timeline calls for the city to transfer title for the Brosh site to Lerch's company in March, and Shey asked what recourse the city would have once the title is transferred should the project not come to reality.

Pratt said the developer doesn't get the tax breaks if the project doesn't come to be, and she said the city has other legal recourse.

Shey said others had sought to build on the Brosh site, and he said he has heard from some of them who have contended they would have had the project completed by now.

Developer Ahmann and his team, which lost out to the Lerch team last April, had proposed building a four-story building with a first floor of retail, a second floor of offices and two floors above for residential condos.

Pratt said the city will sell the Brosh site for $47,125, the current fair market value of the property. The money will revert to the federal government, which funded the purchase by the city through the flood-recovery buyout program.

Ahmann is involved in renovating the former Great Furniture Mart Building on First Street SE in downtown and in the development of the new Geonetric building in New Bohemia, among other projects.

He also is the developer of The Fountains upscale retail and office development in northeast Cedar Rapids.