Big Cedar Rapids projects see 2020 launch after 2019 delays

Developers say they've been in labyrinth of seeking credits and financing

This revised rendering of a proposed $28 million project in NewBo was presented June 20, 2019, to interested parties in
This revised rendering of a proposed $28 million project in NewBo was presented June 20, 2019, to interested parties in the area. The propoal was tweaked to incorporate more architectural design features found in the neighborhood. (Illustration from city of Cedar Rapids)

CEDAR RAPIDS — At least eight projects valued at $20 million or more each and promising jobs and sprucing up blighted blocks were on the horizon in downtown Cedar Rapids as 2019 began, and while some have come to fruition, most — at least outwardly — have faced challenges and delays.

The pace underscores the hurdles that game-changing private development faces as it is often dependent on layers of public subsidies, government bureaucracy and private financing.

Local officials remain optimistic — and patient — with the “important and exciting projects” they anticipate coming to life this year.

“There are a lot of moving parts in almost all cases,” said Cedar Rapids City Manager Jeff Pomeranz. “There are state incentives that come into play, in some cases federal incentives, bank financing, city processes including incentives. Development of projects of this size are complicated and it takes time. However, we are very, very pleased most of the projects we’ve talked about and planned for in the past are on schedule for beginning when the weather warms up in 2020.”

Last year started on the heels of $376 million worth of building permits — a city record — issued in fiscal 2018. That slowed to $320 million in fiscal 2019, which ended June 30.

The Cedar Rapids economic development office processed 19 projects representing $171.8 million in investment and 154 new jobs, according to the city.

“Our bread and butter are smaller expansion projects — those are not as high profile, not as exciting — but that is where we are seeing jobs created and that is where we are seeing growth,” said Caleb Mason, a Cedar Rapids economic development analyst.

For the big ones, there were wins, losses, a course correction and plenty of uncertainty.


Ron Corbett, business retention and expansion strategist for the Cedar Rapids Metro Economic Alliance, said economic momentum is hard to get and easy to lose. It requires patience, he said.

A number of projects are in process outside the downtown core — industrial expansion projects, a new hotel off Highway 100 and a West Side Transport headquarters — and smaller developments in and out of the downtown area, such as a $6.3 million apartment complex by a team including former Iowa Hawkeye and NFL star Nate Kaeding, he said.

Those are signs the forecast looks strong for 2020, he said.

“Whenever you are working with multiple levels of funding and different governments, it is going to tax a project from a time standpoint,” Corbett said. “Establishing slow and steady growth, from a community standpoint, that is what you want.”

Wins, Losses and Reboots from 2019

Two major projects in the works in early 2019 have been completed.

The Physicians’ Clinic of Iowa expansion at 275 10th St. SE was completed Wednesday and is scheduled to open to patients Feb. 3. The $28 million, 100,000-square-foot new three-story medical building supports specialists in sleep, rehabilitation, podiatry, vascular surgery and imaging, among others.

United Fire Group, at the corner of First Avenue and Second Street SE, completed its $28 million new headquarters in spring 2019, combining renovation of the 10-story American Building with an adjacent, newly constructed 10-story building.

But SC Bodner of Indianapolis, Ind., dropped plans for a $32 million high-end apartment complex on the “Banjo block” that had sat largely vacant for years adjacent the Cedar Rapids Public Library and Greene Square.

The project fizzled despite $6 million in state and local subsidies with uncertainty over whether the Cedar Rapids market could support the housing rate assumptions, officials have said.

Corbett said while the project didn’t pan out, it was not a total loss.

“Yes, the Bodner project fell apart at the end, but what it did, too, was brought renewed attention to revitalize the Banjo block,” Corbett said. “It gives me belief we’ll see another development proposal on the site this year.”


After months of deliberation, Cedar Rapids rejected a proposal from Indiana developer Flaherty & Collins for a $50 million housing project on an 8-acre site once reserved for a casino, dubbed First & First West on First Avenue W.

The city preferred identifying a destination-entertainment aspect of the project first for what is viewed as one of the most valuable sites downtown — then filling in complementary pieces, such as housing.

A new request for proposal for the site is underway and due Feb. 28. The City Council is expected to select a new plan in April or May.

Questions remain around several projects.

A $51 million redevelopment of the Guaranty Bank block; a $73 million, 25-story downtown high rise; and a $32 million redevelopment of the old Loftus Lumber site in the New Bohemia District had all been projected to begin construction by the end of 2019.

That didn’t happen.

But developers say they remain committed and anticipate construction this year.

Loftus Lumber site

An unnamed high-end apartment complex is planned on a long vacant site once home to Loftus Lumber at Third Street and Ninth Avenue SE at the entrance to NewBo.

Richard Sova, of Landover Corp., of Barrington, Ill., has been delayed by redesigns as he’s received pushback on the “skin” of the building. He had hoped to begin work last summer, and now anticipates starting work before the end of February once he gets a foundation permit.

The structure would have 179 apartment units, 8,000 square feet of retail-office space and covered parking with a private courtyard above for tenants. He anticipates a 14-month build schedule with occupancy in spring 2021.

“I think we now have a project that works for everyone and works for us, too,” he said. “We are moving forward. We slowed down in the middle. We had a lot to work on and get straight. We are good now.”

Guaranty Bank block

Heart of America Group, of Moline, Ill., is working on a two-hotel concept — renovating the Guaranty Bank building at Third Street and Third Avenue SE into a boutique hotel, and saving the front of the adjacent World Theater as an entrance to a new hotel, both under the Marriott banner. The project would include a Johnny’s Italian Steakhouse and rooftop lounge.


Construction had been expected to begin last fall. But an April start for the Guaranty renovation and summer for the World Theater piece are now targets, said Mike Whalen of Heart of America.

Whalen attributed delays to the historic building tax credit process, which has state and federal applications. Whalen submitted a second part of his federal application this month — an “extensive plan” to protect the historic integrity of the 1895-built Guaranty building. While authorities have 90 days to make a decision, he is hopeful “we can accelerate that.”

Whalen is no longer seeking federal tax credits for the World Theater, which he estimated at potentially $2 million. Historic preservation advocates, who have supported Whalen’s plan, noted historic tax credits were in jeopardy for that portion because it would no longer be a theater.

“Because it’s in a historic district, you can’t do whatever you want with the building,” he said. “You have to go down this path. Arguably you can forgo the credits and do what you want to.”

For a large project, the tax credits are an important building block.

Whalen at one point had forecast $7 million in historic tax credits because of “all of the little surprises” that come with historic renovations, but now sets his sights lower, perhaps $4 million. He still is seeking state historic tax credits for the World Theater, which would need to be designated a local historic landmark.

He’s also been approved for $13 million in local tax incentives, and $1 million from the Iowa Economic Development Authority.

Paramount site

One of Cedar Rapids’ most prolific developers, Steve Emerson, still has doubters.

Months have passed since pitching his vision in summer 2018 to repurpose a city-owned surface parking lot adjacent to the Paramount Theatre to a high-rise with apartments, parking, a downtown grocer, condos, restaurants and more.

With little movement and few updates, questions abound about whether Emerson can pull through.

It hasn’t helped that the grocer originally named as part of the project backed out, or that a previous proposal to erect downtown’s tallest building there failed.


“I understand that, and I expect that,” Emerson said of the doubts. “I have been extremely quiet on this. Anyone I’ve worked with I’ve made sign nondisclosure agreements. I didn’t want someone to come in and submarine us. Until things were finalized and ready to go, I didn’t want to be out there in the public. I kept this close to the vest, intentionally.”

Emerson said the project is only weeks from advancing, and could see construction as soon as spring.

With the concept firmed up, he is awaiting cost estimates from contractors to bring to the City Council to lay out terms for local subsidies. The scale of the project is unique for Cedar Rapids, so finding contractors who can handle it has been a focus, he said.

He has secured $1 million in tax credits from the Iowa Economic Development Authority. Emerson said he still expects the project to include a first-floor grocer, and while he is getting interest he does not have a contract yet.

“We’ve been making sure it is really doable,” Emerson said. “We are confident it is. It is just knowing what numbers are and financing with the city.”

Mason, with the city, noted officials have not felt the need to set a deadline — as the city had with the previous project — because they’ve seen progress.

artTech Village

Hatch Development Group introduced ArtTech Village in 2016, and by 2018 the plan had been modified to blend in affordable housing along with a home for the Iowa Startup Accelerator. ArtTech is seen as an anchor for a new southern end of the NewBo District expected to blossom in the coming years.

The project didn’t qualify for low income housing tax credits leading to another pivot.

Jack Hatch, the former state senator and company principal, said he is now seeking financing through a 221-D high-leverage, low-cost loan for multifamily housing through the U.S. Department of Housing and Urban Development and the Federal Housing Administration. He also is counting on “opportunity zones” — state designated, economically distressed areas eligible for tax breaks for investing in certain businesses and properties — calling it “the lynch pin for the project right now.”

He anticipates finalizing a financing plan and returning to City Council for a final approval of a development agreement once estimated to be worth $3.5 million within six weeks. Closing on loans would occur over the next six to nine months and begin construction by late fall 2020.

“It is challenging to find a financing structure that will bring together all of the necessary investors and loans for such a big project, but we are getting close to securing a financial mechanism,” Hatch said.

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