Health

The MedQuarter: Catalyst for growth or too-slow-moving economic engine?

Some say business development needs to be stronger priority of municipal district

The Physicians' Clinic of Iowa medical pavilion is seen at the intersection of 10th Street SE and Second Avenue SE in th
The Physicians’ Clinic of Iowa medical pavilion is seen at the intersection of 10th Street SE and Second Avenue SE in the heart of the Med Quarter in Cedar Rapids on Tuesday, Feb. 25, 2020. (Andy Abeyta/The Gazette)
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CEDAR RAPIDS — When Jennifer Aiels and her son Brandon opened their new cocktail bar and eatery this past year, the fact it was located within Cedar Rapids’ medical district was a bonus.

The building, built in the 1800s at 821 Third Ave. SE, was perfect for their vision of the business.

But since opening Moniker 86 Social Club, the owners have not seen the customers they expected. In fact, employees of MedQuarter and patients traveling to the district for appointments are not their biggest patrons.

To attract more of that clientele, the owners plan to convert the portion of the building facing Third Avenue SE into a coffee shop with quick-lunch options.

Jennifer said the idea came from her 10-year stint as an operations manager at CarePro Health Services, also in the district. There, it was common for her and co-workers to walk to nearby coffee shops on their breaks.

The renovation is expected to be complete this summer.

In that sense, the medical district — a self-taxing municipal district established nearly a decade ago — has influenced the business, Brandon Aiels said.

But some in the district who spoke with The Gazette for this report said they would like to see more done by MedQuarter to support small-business owners like the Aielses.

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“There needs to be more of a reason to come to the MedQuarter than the fact that there’s doctor’s offices,” Brandon Aiels said.

For the district’s largest players — UnityPoint-St. Luke’s Hospital, Mercy Medical Center and the Physicians’ Clinic of Iowa — further growth has been driven by their own success, leaders there said.

“I can’t say that I can see a direct correlation between the existence of the MedQuarter and the vitality of each of our organizations,” said Tim Charles, Mercy Medical Center president and chief executive officer. “I think what has been done — for example, for Mercy to grow in so many important ways — is really a reflection of the institutions’ work,” he said. “PCI would probably suggest the same, and I suspect St. Luke’s would say the same. It’s really not the MedQuarter that has done that.”

Other district officials who spoke to The Gazette said the MedQuarter is working diligently to promote development for businesses of all sizes. They emphasized, however, that progress takes time, and economic development is a slow-moving beast.

“There are many layers of factors that come into play when bringing economic development projects to fruition,” MedQuarter Executive Director Phil Wasta said.

Medical destination

Tenth Street SE is the main thoroughfare of MedQuarter, stretching less than a mile between UnityPoint Health-St. Luke’s Hospital and Mercy Medical Center, with PCI in the middle.

The period after the 2008 flood spurred a surge of economic development throughout the city, offering an opportunity to establish a SSMID, or Self-Supporting Municipal Improvement District.

Property owners within the district pay an additional tax, which stood at $3.25 per $1,000 of taxable valuation for fiscal 2020 — meaning the district saw a property tax revenue of more than $336,000.

Under the proposed fiscal 2021 budget, the district is expected to see about $317,000 in total property tax revenue.

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The self-taxing district — developed in collaboration with Chicago-based urban planner the Lakota Group — is meant to reinvest in the district’s priorities. By creating a medical destination, the hope of MedQuarter was to attract health care providers and other medical-oriented businesses to the area — which in turn, would attract other business owners in retail, food service and more.

“The promise was we’re going to improve the district,” Wasta said. “It will bring more development to the district and therefore revitalize, or at least make it a more economically strong area.”

It’s not surprising, given that the SSMID is less than a decade old, that the district has “some room to grow,” said UnityPoint Health-Cedar Rapids President and CEO Michelle Niermann.

Mike Sundall, PCI president and chief executive, said he would like to see the district act as a catalyst for growth by taking a more aggressive approach to attracting non-medical businesses.

“That’s what I keep waiting for to happen,” Sundall said.

Larry Janda agreed. He owns Brewed Awakenings coffee shop with his wife Junetta Janda and was among the business owners who told The Gazette that so far, development within the medical district has not had an impact on the business.

“If there were compatible business that posed no financial threat to a small ‘home grown’ local family owned business, that would be great,” he said.

Different Aspects of Improvement

From the standpoint of John Albert, third generation owner of Citywide Cleaners on First Avenue NE and a member of the Medical SSMID Commission, he views the development as an overall benefit. By filling in empty lots and revamping under utilized properties throughout the area, he said it has helped bring more patrons to the area.

“For us, it’s probably less about getting customers, because we already handle a large regional area,” said Albert. “ ... It’s just bringing more employees in this area, so it didn’t hurt us.”

MedQuarter does offer programs with the goal of aiding small businesses in the area, Wasta said. That includes a revolving loan fund for small-business assistance through the East Central Iowa Council of Governments and a facade improvement program, which has awarded nine grants totaling $54,000 to projects throughout the district.

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Wasta also pointed to a survey of more than 500 full- and part-time employees within the district, 59 percent of whom said they experienced a direct benefit from MedQuarter’s efforts.

“In addition, in my interviews with noninterstate businesses in the MedQuarter, which includes small businesses and health care organizations, about 40 percent of surveyed businesses plan to expand or renovate in the next three years,” Wasta said.

District improvement can be defined in a variety of ways, Wasta said, but added that the district’s main priority was to make physical improvements.

That’s why commission officials have focused energy on street improvement projects and signs throughout the district and established the facade-improvement loan program for local business owners.

“If you go back to the master development plan, which is the very first thing the MedQuarter commission did, all of the things we’ve done are in line with what that plan outlines,” Wasta said.

As with the district’s other parkway improvement projects over the years, the recent construction on 10th Street SE between Fifth and Eighth avenues SE was done in collaboration with the city. MedQuarter paid for aesthetic improvements, such as lighting and landscaping, while the city took care of the infrastructure.

“That was a huge investment from the city, but it only went because we finally pressured the city to address that section because we wanted to finish 10th Street,” Wasta said.

Niermann. of UnityPoint Health-Cedar Rapids, pointed out MedQuarter won’t see the same outcomes as NewBo and Czech Village, other Cedar Rapids SSMIDs.

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While Niermann also hopes more can be done to attract businesses to the district, she said MedQuarter has been successful in accomplishing goals it initially set out to do.

Mercy’s Charles agreed, adding that although he would like to see movement in other areas, “that doesn’t mean you abandon the idea.”

“It just means you have to take a very long view,” Charles said.

What’s ahead for the MedQuarter?

Priorities for MedQuarter in 2020 include an emphasis on marketing initiatives and more parkway improvements, including a project along First Avenue NE between Sixth and 10th streets SE that will focus on revamping the sidewalks and landscaping.

Wasta said the project also will move parking off the street to improve the aesthetic of the roadway.

Although it was included in initial discussion when the medical SSMID was formed, a hotel is not likely in the district’s future, Wasta said.

Residential properties, however, are something Wasta said he is actively pushing for. He counts only seven residential dwellings in the district’s 55 square blocks.

“Unlike NewBo and the downtown district, 90 percent of the occupants of this district leave at night. They come to work and then they leave,” Wasta said. “It’s something I’m actively pursuing because it’s hard to get people engaged when, again, they come to work and they leave.”

Jennifer and Brandon Aiels, the owners of Moniker 86 Social Club, said that above all else, more residential properties would help their business flourish.

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Residents who live nearby have been their biggest patrons, Brandon said. The owners have not taken any loans out on their business, and have no plans to use financial aid available through the district. So to expand their business, they hope for more customers.

“The roads are nice and everything, but I feel like that is the key,” Brandon said. “That would be amazing for business.”

Comments: (319) 368-8536; michaela.ramm@thegazette.com

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