CEDAR RAPIDS — The city’s long efforts to see a rebirth of the “Banjo Block,” a centrally located downtown property that has sat mostly vacant for years, took a major step forward Tuesday when the Cedar Rapids City Council backed plans from an Indiana developer to build a five-story complex there.
The council approved a term sheet for Indianapolis-based TWG Development, which boasts a track record in Cedar Rapids, to build a $51 million mixed-use facility on the block at Fourth Avenue and Fifth Street SE, which is adjacent to the Cedar Rapids Public Library and Greene Square. The block is dubbed “Banjo” for Banjo Refrigeration, a business that long operated there.
“This is a site that we’ve tried to develop for more than 40 years,” council member Dale Todd said. “The fact that a $51 million project is interested in this market in lieu of COVID and the economy, it’s a real testament to the strength of downtown Cedar Rapids. And when the economy turns, which it’s going to turn, these are the kind of projects that you’re going to see more often.”
The approximately 200,000 square-foot project would feature 244 apartments, primarily one- and two-bedroom units; 1,176 square feet of ground-level commercial space, 147 parking stalls and amenities including a pool, fitness center, bike storage, community room and rooftop patio.
Construction is expected to begin March 1 and end March 31, 2023. The developer’s portfolio already includes several apartment projects in Cedar Rapids and Marion, as well as others in Iowa.
The developer would work with local historic not-for-profit organizations to salvage architectural materials from existing buildings and incorporate those through plaques, photographs or other means to honor the history of the block.
In addition to the workers employed in the commercial space, preliminary plans also call for the developer to employ four other workers at the property.
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The city would reimburse up to 100 percent of the incremental taxes generated by the project, said city Economic Development Analyst Caleb Mason, reaching a total present-day value of $6.2 million. But the state may roll out workforce housing tax credits, Mason said. If those are approved, he said the city would reduce its financial participation in the project based on the state incentives approved by the Iowa Economic Development Authority.
Mayor Brad Hart said he anticipates this project will spur additional development to the south of the block.
After some council members asked about the rent rates for apartments in the complex, council member Ashley Vanorny, who sits on the city Development Committee, said even if the complex is market-rate, “we definitely still need that in this area and we know that’ll help revitalize and bring some attention to our downtown businesses as well.”
However, a different Indiana developer — SC Bodner — dropped plans for the site in October 2019 after realizing the market couldn’t support the high-end rents built into the funding plan.
“I definitely would like to see somebody redevelop this block, but I want to make sure that somebody actually does something constructive with it,” Vanorny said.
Todd said there has been a shift in the market with the COVID-19 pandemic as developers lose interest in building office spaces while employees work from home.
“Right now, literally, deals like this are not getting financed with a commercial element and/or an office element,” Todd said. “ ... At the end of the day, if we want to make units affordable, that means we have to kick in more incentives. That is simply the only way to do it now in this marketplace.”
Council member Scott Olson, a commercial broker who’s been a licensed Realtor with Skogman Realty since 1993, said he backed the project “wholeheartedly.”
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“There is no commercial tenants out there. There’s no retail tenants out there. It’s a different world out there,” Olson said, urging creativity in city housing projects.
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