Cedar Rapids to enter negotiations for One Park Place incentives
Negotiations for the 28-story building would include land sale, incentives
CEDAR RAPIDS — Cedar Rapids City Council unanimously has authorized city officials to negotiate public incentives for what would be the tallest building in the city.
During a meeting on Tuesday, city staff presented the framework for a possible development agreement between the city and Jesse Allen, the developer behind One Park Place, a 28-story, $103 million high rise proposed on Third Avenue SE.
“This is a fantastic addition to the downtown and the city, if we can make it happen,” City Council member Scott Olson. “I just want to make sure, as we look at these final pieces, we feel confident in what may occur.”
Allen initially had sought $23 million up front for his project, which would include a grocery store, hotel, parking ramp, condos, apartments and a rooftop restaurant. But negotiations are moving forward with no public money up front.
Formal negotiations should begin after a six-month financial review by the National Development Council, a third-party consultant. That review, released on Nov. 21, called the project financially feasible but also identified a $20.5 million gap where public money was needed.
Negotiations will center on five points:
- Sale of city land at 101 and 111 Third Ave. SE and 312 First St. SE for $630,000, per an appraisal.
- City financial incentives that would include up to $5 million upon project completion, estimated in 2020, and the remaining $15.5 million gap reimbursed through tax rebates. Financing would bring the cost $20 million.
- Tax reimbursements are not to exceed 20 years.
- A minimum assessment agreement, which is the basis for property taxes and the rebate.
- Approval of commercial financing before the city transfers the property.
Inclusion of flood-mitigation measures, such as building a foot above the 100-year flood plain, locating mechanical equipment above the ground floor and having removable panels to protect the first floor.
In addition, Allen would need to provide third-party reports about the sale and rental housing market, commercial rental data, and hotel market data. Also, he’d have to provide internal financial information, including projected terms of investment from the lenders, the post-development appraised value, a breakdown of building ownership and operating deficit guarantees.
Jennifer Pratt, the city’s director of community development, recommended the city proceed with negotiations.
“It would be based on key terms we’ve reviewed today and contingent on providing additional documentation we reviewed with you, as well as the financing, the sales and lease contracts, and private financing terms,” Pratt said.
Pratt estimated the negotiations could take 90 to 120 days, after which city staff would bring the agreement back to the city council for approval.
After the meeting, Allen said he took the unanimous support to move from the city council as a sign a sign of confidence for his project and said he heard “good comments.”
Of the city’s desire to provide no upfront money, Allen said, “We will have to look at the proposal and run our financial models.”
City council members supported moving forward but raised a number of questions.
Cedar Rapids Mayor Ron Corbett noted while this type of city participation in a project is not the norm, it’s also not unprecedented. He noted past deals for Westdale shopping mall and Physicians’ Clinic of Iowa.
Corbett urged staff to discuss use of local labor and businesses. He said he was supportive because of the increase in city tax base, job creation and a “multiplier effect” from construction activity.
Council member Kris Gulick urged the agreement include deadlines. Council member Scott Overland added it is important for resident know the city hasn’t committed any money yet.
“While this project is exciting and the potential is huge, I think the city needs to be careful in that we protect the city’s interest,” Overland said. “The risk of this project has to be born primarily by the development group.”
Also on the agenda:
City leaders set aside objections from residents, and pushed forward on a plan to annex 70 acres of land on the southeast side toward Ely, which a landowner hopes will open the door for development.
City Council gave an initial 8-0 vote of support for a 100 percent voluntary acquisition of the land east of Ely Road SW and south of Ivanhoe Road, as requested by Correll Land Development Corp., which owns the land.
Annexing the property means future development would be entitled to city services. However, City council members pointed out annexation doesn’t guarantee development.
A stream of neighbors spoke against development of the area, and some of those who objected submitted a petition with 118 signatures.
Officials approved the city’s first-ever topsoil rule, which will require builders to leave four inches of topsoil when they finish a construction site. The rules go into effect Jan. 1, 2017. Properties that have been the through preliminary platting will be exempt.
Officials approved parking code changes to update meter rates, fines and definitions after a Cedar Rapids resident and retired U.S. Attorney complained the outdated code makes parking tickets unenforceable.