East-side downtown recovery outpaces that of west side in Cedar Rapids

CEDAR RAPIDS - The east-side heart of downtown has made significant strides since the flood, downtown leaders say.

Doug Neumann, vice president at the Metro Economic Alliance, reports that much of the first-floor space at the Town Centre building is filling in, restaurants are now in the Witwer and Roosevelt buildings, and smaller, vacant first-floor spaces are slated to have new tenants.

“We no longer have the dramatic, visible vacancies that we had between 2008 and 2011,” Neumann said. “The 200 block of Second Street SE has some noticeable vacancies, but otherwise, it is getting very close to a typical, expected level.”

Scott Olson, a City Council member, downtown property owner and commercial Realtor, suggests that office and retail tenants are coming back because they anticipate the city will have a flood-protection system.

The Army Corps of Engineers is at work on a $12.3 million design and engineering phase for its recommended east-side plan. Total construction costs, including design, are estimated at $104 million. The city is awaiting federal funding. The non-federal share of the cost is 25 percent for preconstruction expenses and 35 percent of construction costs.

“You got to assume someday you have to have flood protection,” Olson said.

Skittishness about a future flood is offset to a degree, he adds, by the realization that more people will be coming downtown - once the new federal courthouse opens in the fall, city government occupies the renovated former federal courthouse in the summer and the county returns to its central office on First Street SW in late summer.

“That means another 1,000 people coming into the core of the city,” Olson said. “So we're now starting to see more first-floor activity.”

City Assessor Scott Labus said his office's analysis of property values downtown, on both sides of the river, has resulted in a return of much of the property value on the east side of the river, but not so on the west side.

About 15 percent of the first floors in the east-side downtown core remain vacant, estimates Labus' chief deputy, Beth Weeks.

On Jan. 1, 2009, six months after the 2008 flood, Labus' office lowered downtown property values by 25 percent to 40 percent on both sides of the river. Some of the loss was tied to damage to individual properties and some to the economic loss suffered by the downtown area as a result of the flood. A year later, values were reduced an additional 10 percent.

By Jan. 1, 2011, however, Labus saw improvements to the downtown and removed the 10 percent reduction. This year, Labus said, he will remove all the value reduction on the east side. A 20 percent value reduction will remain on west-side properties because of the area's post-flood economic losses.

“We just haven't seen many improvements over there. I think it's still kind of wait and see what's going on there,” he said.

Properties on both sides of the river will still receive value reductions for first-floor spaces that remain unfinished, he adds.

“We work with both private and public economic development people, and from what we're hearing, they are seeing more and more demand for downtown,” Labus said. “It's going to take some time - three to five years to really start to move fast. The new federal building and convention center will help quite a bit.”

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