Cedar Rapids wants state, feds to bend rules for redevelopment

CEDAR RAPIDS - Not all rules are black and white, are they?

That's the question four years after the flood as Cedar Rapids seeks a little leeway for redevelopment inside the 100-year flood plain, where tens of millions of federal disaster dollars have been or are being spent to buy out and demolish some buildings.

A flood-protection system would make things easier. It would take this buyout property out of the 100-year flood plain and end the need for exceptions. Such a flood-protection system, especially for the west side of the Cedar River, is far from certain, though.

City officials and neighborhood leaders want some ability to redevelop in three commercial districts that have seen numerous buyouts - New Bohemia centered on Third Street SE; the area directly across the Cedar River from downtown, dubbed “West Village” and centered in and around the historical Louis Sullivan-designed bank; and along parts of Ellis Boulevard NW.

City and state officials will address which bought-out buildings that are still standing qualify as “historic” and so might qualify to be redeveloped. They also will consider what exceptions might be allowed that would permit building on now-vacant lots.

Fearing that no building will be allowed on buyout lots in the 100-year flood plain, City Council member Monica Vernon joked recently that the flood-damaged Barron Motor Supply building at 222 Third Ave. SW - which she has suggested is largely an old Quonset hut - never looked more beautiful as a historic renovation prospect. Better that than another vacant lot near the Sullivan bank, she said.

Rules that came with disaster funds limit building

City officials didn't question the prohibition established by the Federal Emergency Management Agency against building in the 100-year flood plain on property bought out with FEMA flood-mitigation funds.

However, the city has used only about $7 million in FEMA money for about 100 buyouts, while it has access to $168 million in federal Community Development Block Grant disaster funds, which are being used for the bulk of some 1,300 property buyouts.

Tim Waddell, the administrator at the Iowa Economic Development Authority who has overseen the CDBG piece of Cedar Rapids' disaster recovery, said a team of state officials from different agencies sat down after the 2008 disasters across Iowa and developed a policy, which adopted a prohibition like FEMA's on property bought out using CDBG dollars.

“The bottom line should be stated,” Waddell said. “We have a fiduciary duty to the federal government to ensure almost $170 million is being spent productively.”

That means, in part, that no further federal disaster assistance would be needed where it has already been expended, he said.

Waddell notes, too, that the U.S. Department of Housing and Urban Development, which administers CDBG funds, changed its policy for disaster-funding recipients since 2011 to prohibit redevelopment on properties in the 100-year flood plain. That does not apply under federal rules to 2008 disasters like Cedar Rapids', he adds.

In the four years since the Cedar Rapids flood, key players have changed: the governor, the head of Iowa Economic Development, as well as the mayor, city manager, flood recovery director and some City Council members.

“History gets cloudier,” Waddell said. “… I would say we're going to keep an open mind on this, but we want Cedar Rapids to understand our fiduciary obligation. We are monitored by HUD.”

Options include paying back the disaster money

Joe O'Hern, Cedar Rapids' director of flood recovery and reinvestment, and Christine Butterfield, director of the city's Community Development Department, say the city is heading into meetings with Waddell and the Iowa Economic Development Authority to assess options for specific sites on a case-by-case basis.

For instance, neighborhood leaders in New Bohemia wonder what it will take to allow new building on the former Brosh Funeral Home site on Third Street SE, next to the NewBo City Market.

If granted, an exception would need to meet a national objective, such as removing slum and blight, Waddell said. One option, he adds, is for the city or a developer to pay back the CDBG funds for a property's buyout and demolition - thus removing the state's policy restriction.

Exceptions have been and will be available for historical properties, like the Louis Sullivan-designed bank at First Street SW and Third Avenue SW, if steps are taken to lessen the flood risk. That doesn't mean everything else is historical, too, Waddell said.

One case that helped bring the issue to a head was the City Council's recent decision to replace the flooded and demolished Time Check Recreation Center with a new recreation center on buyout land on highly traveled Ellis Boulevard NW. The thought was that such a location could spur economic development along the boulevard. Then the city learned that the rules would not permit construction of a new facility on buyout property.

“Each of these is going to have its own story,” O'Hern said of city efforts to check options for the individual buyout sites.

Exceptions to the rules wanted so no empty holes

Maura Pilcher, chairwoman of the city's Historic Preservation Commission and assistant director of the Brucemore historic site, said it would be shortsighted to insist on rules that will result in a bunch of vacant lots intermingled with historical buildings.

New buildings on newly vacant lots in those areas will create an urban core that will benefit the city, she said.

“The core of our city doesn't need a central park. I prefer to see actual buildings and commerce,” Pilcher said.

Cedar Rapids architect Jim Novak and a graduate-student intern in his office, Julie Mickens, recently completed a master plan for New Bohemia and Oak Hill neighborhood around it. The plan envisions the addition of two-story and three-story buildings, with commercial uses on the first floor and residences above, on vacant lots in the heart of New Bohemia.

Flood protection is going to play an important part in the neighborhood's success, Novak adds.

Mickens understands why the city bought out flood-damaged properties in New Bohemia, but the cost of the buyouts will be even greater if the Third Street SE commercial corridor there becomes “an incredibly important street with big holes in it.”

Some of the holes, like the former Brosh funeral home next to the NewBo City Market, likely would attract a buyer quickly if building on the site is permitted, she adds. Without the ability to fill in vacant lots, New Bohemia could end up having as many parking lots as buildings, she said.

The Southside Investment Board in New Bohemia commissioned the planning work of Novak and Mickens, and Dale Todd, president of the board, agrees with Mickens: “You can't have gaps between redeveloped properties.”

Council member Vernon said newly vacant lots are missing teeth for a commercial district like New Bohemia.

Linda Seger, president of the Northwest Neighbors Neighborhood Association, agrees that the city and the state should modify buyout rules that stand in the way of redevelopment along Ellis Boulevard NW.

“It's time we allow commercial developers to put their money in the game and build what many of them are prepared to build,” said Seger.

The city, she adds, doesn't need and can't afford to maintain all the open space along the Cedar River where Time Check homes once stood. Houses will be built on some of that land someday, she predicts, when a flood-protection system is built.

“And one will be,” she adds.

For now, Waddell said he doesn't foresee Iowa Economic Development changing its rules or allowing widespread residential construction unless a flood-protection system removes the land from the 100-year flood plain.

New Bohemia a model for development potential

Richard Luther, an urban planner who was with the city's Community Development Department at the time of the flood and during the initial stages of flood recovery, said the state rules for property bought out with CDBG funds are more restrictive than the federal government requires and ought to be changed.

Luther, the owner of Creative Development Solutions Inc. in Cedar Rapids, has had some success in securing exceptions to the buyout rules to allow for renovation of a historical building in Czech Village and the historical A&W restaurant on Ellis Boulevard NW.

“Circumstances have changed over the last four years, and the community now needs the ability to develop these properties as part of riverfront neighborhood revitalization,” said Luther.

New Bohemia will have fewer vacant buyout lots than it otherwise would have because Jon Jelinek stepped forward and made an acceptable proposal to City Hall and Iowa Economic Development to renovate three historical buildings - all purchased by the city with CDBG buyout funds - at Second Street SE and 12th Avenue SE. The buildings include a 150-year-old former carriage factory at 208 12th Ave. SE.

“We've got to go through a lot of hoops - elevation (measurements), floodproofing, putting money in escrow to pay for demolition if the plans fall through, purchasing flood insurance,” said Jelinek, a former contractor who will do most of the renovation with his son, Nick.

Jelinek has been a post-flood force in New Bohemia. He owns the Parlor City Pub and Eatery, the commercial building next door and two houses next to that, all of which he has renovated or is in the process of renovating.

“People are still nervous after the flood,” he said, but he is confident the city will secure funds for flood protection in the years ahead. Flood protection will take New Bohemia out of the 100-year flood plain and free up what isn't developed yet, he said.

One sunny morning last week, he was standing outside his new renovation projects with his son, daughter-in-law Stephanie and 10-month-old granddaughter Camilla. His idea, he said, is to have his own commercial corner of New Bohemia to hand down to his children and their children.

“She's ready to start waiting on tables,” he said, playing with Camilla's hair.

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