A “cornerstone” project that will bring two new hotels to downtown Cedar Rapids is a go after City Council agreed Tuesday to a major tax incentive.
The Heart of America Group has agreed to restore the historic Guaranty Bank Building and partially restore the Old World Theater into hotels under the Marriott flag, encompassing most of the block at Third Street and Third Avenue SE.
“With this help we are prepared to move ahead,” said Kirk Whalen, vice president of the group with offices in Moline, Ill., and Des Moines. “This is the kickoff of almost a whole city block of renewal.”
City Council members on Tuesday unanimously approved the two development agreements and praised the developers for the project they view as adding quality of life, civic pride and raising the bar for the core of the community.
Council member Ann Poe called the project a “community cornerstone.”
“We appreciate everything you are doing for our downtown,” Poe said to Whalen, who was in the audience. “That sense of civic pride in taking this beautiful, historic building and renovating, and then adding to it. Thank you. I can’t wait.”
Council member Ashley Vanorny recalled a conversation with another council member where she said, “it doesn’t even look like it belongs in Cedar Rapids because it’s so beautiful and because we’re so used to just the same old same old. But this is what we deserve. We deserve this creativity.”
Council member Scott Overland called it a “game-changing project for Cedar Rapids,” but urged leaders not to get complacent. Instead, continue to “push very very hard” to work with talented developers, he said.
Cedar Rapids Mayor Brad Hart predicted people would “come from everywhere just to see it” and said it was the perfect spot for such a project in the community because it repurposes two historic buildings.
Whalen said while the construction timeline still is hazy because historic tax credits are being pursued, developers hope to start work on both projects by October and have them complete within two years.
“They will be going up simultaneously,” he said.
The agreement is set up in two parts.
The terms for the Guaranty Bank Building, 222 Third St. SE, include a minimum $20.3 million investment and renovation and adaptive reuse of the 78,500-square-foot building, including a Johnny’s Italian Steakhouse on the first floor and 75 to 80 guest rooms on floors two through six.
This is slated to be a Courtyard by Marriott.
The terms of the second part include redeveloping vacant land where a parking lot now exists in the 300 block of Third Avenue SE. The agreement calls for a minimum investment of $30.5 million, construction of a nine-story, 84,000-square-foot hotel including a shared health fitness center on the first floor and 115 to 125 guest rooms on floors two through eight. On the rooftop, there will be a restaurant and bar called The Republic and 1,500 square feet of event space.
This is slated to be an AC Hotel by Marriott.
Each agreement calls for 15 hours per year of free use of event space for the city or city-approved nonprofits; $1.5 million grant from the city to the developers within 60 days of completion of the project; a 20-year, 100 percent tax break based on the new value; and city approval if a change in the hotel brand is desired.
“We wanted to ensure there’s a threshold for the type of project that is being incentivized here,” said Caleb Mason, an economic development specialist for the city.
In total, the city would provide $13.6 million in incentives, including the $3 million in grants and $10.6 million from the tax break. The city typically does not provide the grant payouts.
Meanwhile, the city estimates generating $16 million in that time from hotel-motel tax collections, property tax collections on the value before improvements, contributions to the flood protection system through the debt service levy, and the downtown district tax known as a SSMID.
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