Westdale Mall developer asks for more upfront money to keep construction going

CEDAR RAPIDS — Developer John Frew is asking the city for $11.5 million more in upfront public money to keep his $90-million-plus transformation of the Westdale Mall moving ahead.

Sufficiently significant is the request that City Manager Jeff Pomeranz is asking the City Council on Tuesday to create a Special Westdale Review Committee to study the project's progress, review Frew's request to modify his existing 2-year-old development agreement with the city and make recommendations to the council on Frew's request for more money upfront.

Mayor Ron Corbett said Monday the Westdale project isn't going to stop but said the city wants to take a moment to review its partnership.

'We've had a lot of stops and starts over the years on the Westdale property,' he said. 'It just has to do with how complex the property is.

' ... The Westdale redevelopment has been a priority of the community for many years. And Frew is the first developer to make some headway on it, and so we're supportive of all the progress he has made.'

The city-Frew agreement allows for amendments that are the result of an 'unavoidable delay' in the project.

And in a letter to the city dated Feb. 18, Frew said such a delay has left two local banks reluctant to loan the project money. In addition, he wrote, much of the basic infrastructure work on the site still needs to be completed and banks are reluctant to loan money for what he calls 'horizontal development.'

Frew said a lender has agreed to lend the project additional money for construction of new buildings if the city agrees to increase what it's contributing on the front end — rather than over time as the project is built and generates property-tax revenue.

In the initial deal in May 2013, the city agreed to provide $5 million in upfront money with the city's total incentive estimated about $20 million in both upfront money and property tax breaks.

Jennifer Pratt, the city's development director, said Monday the Special Westdale Review Committee would need to see if the current 14-year life of the agreement or the estimated city commitment will change.

'The amount and terms and conditions of assistance are fluid, depending on negotiations,' City Manager Pomeranz said.

Frew, president and chief executive officer of Frew Development Group LLC of Denver, Colo., isn't just any developer in Cedar Rapids.

In 2010, the city hired Frew, who at the time was chief of staff for then-Gov. Chet Culver, to manage construction of a new convention center and renovation of the arena next door. He subsequently also oversaw renovation of the hotel attached to the arena.

With those projects completed, Frew and Realtor Scott Byers stepped forward in 2012 to do what no one else would — bring new life to the failing Westdale Mall.

The mall no longer exists. But J.C. Penney and Younkers continue to operate in what are now stand-alone stores.

Frew said lease negotiations with J.C. Penney that extended over 12 months helped cause the 'unavoidable delay.'

Frew wrote that construction at the edge of property along Edgewood Road SW began in February on a new US Bank branch, while construction is expected to start on a multi-tenant building and a Chick-fil-A restaurant this spring.

To date, he said his firm has spent $10 million on the project, including the $5 million fronted by the city.

At the same time, he said prospective tenants don't want to open for business in a construction zone. Completion of the road, utilities and other horizontal infrastructure is 'critical to our success,' he said.

He said the project also faces a deadline. By June 1, work on a parking lot west of J.C. Penney and work on the west facade of the building is supposed to be complete, he said.