New Office Tower Proposed for Downtown Cedar Rapids

By Rick Smith, Reporter

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By Adam Carros

CEDAR RAPIDS, Iowa — The city’s downtown skyline is poised to greet its first new office tower since the GreatAmerica Building went up in 1998.

John Smith, board chairman of trucking firm CRST International and president of Cedar Rapids Real Estate Group LLP, has told the city of Cedar Rapids that he wants to compete to buy the city-owned riverfront lot between Second and Third avenues SE and across the street from the Alliant Tower where the city’s aged First Street Parkade had been until it was demolished in 2011.

"I really have become over the years more and more convinced that we need to put more emphasis in the core city and get that built up," Smith said Saturday afternoon. "And I think this will give it a little bit more buzz if we’re successful doing this building."

Smith, who retired as president/CEO of CRST International in 2010, has spelled out to the city via letter that he and his wife, Dyan, and their real estate entity want to build a "significant downtown office project" that would house the Cedar Rapids trucking firm’s corporate headquarters plus provide leased space for other companies.

In the letter, Smith states that his expectation is to build a $20-million, "signature-quality, Class A" structure that would provide between 75,000 and 100,000 square feet of office space.

In addition, he states that the building could contain lower-level parking for 200 to 350 vehicles in up to another 90,000 square feet of space. The proposed building, he adds, also would be designed to fit into the city’s flood wall protection system.

"We plan on creating a building of lasting importance to the city, and this site is perfect for that endeavor," Smith writes.

On Saturday, Smith joked that Tom Aller, president of Alliant Energy’s Interstate Power and Light Co. and part of long-standing downtown development group, "has been on my case for 25 years to come downtown."

"And it just seemed like a good time to think about it," Smith said. "I think it would be good for the city. I just seems like the right thing to do."

City Manager Jeff Pomeranz said on Friday that Smith approached him about the idea of building a new downtown office building several months ago. Pomeranz said he stayed in touch with and encouraged CRST International and their representatives to move ahead on the project, and now they are, he said.

"We have a local company — one of our most successful local companies — that wants to develop a corporate headquarters on that site," the city manager said. "It is truly exciting to see that kind of commitment of jobs and financial investment in our city.

"We think it’s going to be a signature building, meaning it’s going to be a very attractive addition to the downtown skyline."

Pomeranz said the building may stand eight to 10 stories tall, depending on how many levels of parking it features.

City Council member Scott Olson on Saturday said Smith has suggested to city leaders that his proposed office building with lower levels of parking will be of a similar height to the GreatAmerica Building on the city’s riverfront at 625 First St. SE. The temporary surface parking lot, which opened in late 2011 on the proposed CRST building site, always was intended to give way to "a higher and better use" such as an office building, Olson said.

"So it is pretty exciting that a company — a local company with the solid reputation and the philanthropy that has occurred over the years with CRST and the Smith family — would consider downtown Cedar Rapids for a corporate headquarters," Olson said.

The City Council on Tuesday will set a public hearing for May 14 to initiate the city’s property-disposition process for the site, a process that has been used a number of times as the city seeks to sell land long owned by the city or flood-impacted land acquired by the city through its flood-recovery buyout program.

In fact, the council will conduct a similar public hearing on May 14 to start the city’s competitive property-disposition process for 7.5 acres of city-owned land across the Cedar River from downtown on which the Steve Gray-led casino investor group, Cedar Rapids Development Group, wants to build its $100-million casino project.

In recent weeks, the council has used the competitive process as it prepares to sell city-owned properties in New Bohemia and in the commercial district across from downtown that is being called Kingston Village. It also has used the process, for instance, in the sale of the former downtown library site and for the pending sale of Riverside Park to Penford Products Inc.

In his letter this month to City Hall, John Smith said his interest in building a new downtown office building for CRST’s headquarters was being driven by two forces — CRST’s need for more office space and the downtown’s ongoing effort to recover from the June 2008 flood.

Smith’s commitment to the city’s flood recovery has shown itself before.

Back in July 2009, he and his wife donated $1 million as seed money to the Block by Block neighborhood-rebuilding initiative, a joint flood-recovery effort by Matthew 25, the Affordable Housing Network Inc. and the United Methodist Church. Block by Block renovated 270 homes in 25 flood-hit city blocks and leveraged the Smith’s donation to raise a total of $7 million in private and public funds for the work, Clint Twedt-Ball, co-executive director of Matthew 25, said on Saturday.

Subsequently, the Smiths also donated $100,000 to the city’s post-flood riverfront amphitheater project — which doubles as entertainment venue and a flood levee and which is being built across the river from downtown — to help the project get close to its private fundraising target.

City Manager Pomeranz and council member Olson both emphasized that the Smith proposal will have to compete against any others that might come forward for the riverfront site, which Pomeranz called "a very important piece of undeveloped property in downtown Cedar Rapids."

"This property is not promised to any one company," Pomeranz said.

Under the city’s proposed timeline for the sale of the property, proposals would need to be submitted to the city by June 17. A City Hall evaluation team then will make a recommendation to the City Council for its consideration on June 25.

Smith on Saturday said he would like to break ground this fall if his proposal is picked and it moves forward.

Olson noted downtown employees now using the existing surface lot will have to scramble a little to find parking if and once construction starts.

The city has leased the site for three years at $1 a year to a group of downtown employers, who paid about $270,000 to construct the paved lot in late 2011 and add lighting to it. Monthly parking fees go to pay off the construction costs. The city, though, retained the right to close the lot at any time if a development project came along, with any outstanding costs for the lot’s construction to be covered in the new development arrangement, Olson explained.

Olson, a Realtor for Skogman Commercial, said a similar effort is under way to convert a newly vacant lot next to the Paramount Theatre into a temporary parking lot for about half the vehicles that now use the lot on the site of the proposed Smith project.

Both Pomeranz and Olson said the parking levels under the proposed Smith building could include some for the building’s use and some for general city use. Olson said some downtown employers might be willing to sign commitments to use some of the spaces.

Cedar Rapids’ downtown has seen two other new private-sector buildings go up since the 2008 flood. Intermec is completing a new two-story building on Second Street SE and developer/architect Steve Emerson built a new three-story office building in 2012 at 600 Third Ave. SE.

In terms of recent skyline-changing buildings, the GreatAmerica Building was built in 1998 and the Town Centre building, at 223 Third Ave. SE, was built in 1991, according to the City Assessor’s website.

Mayor Ron Corbett, who is employed at CRST to work on special projects, on Friday referred any comments on John Smith’s building proposal to the city manager, saying he had distanced himself from any involvement in the project to avoid any real or perceived conflict of interest.

In recent weeks, City Hall critic Lisa Kuzela filed an ethics complaint against Corbett, accusing him of an ethics violation for voting with the City Council last October to support the Cedar Rapids Development Group’s casino proposal should the investors succeed in a petition drive to get the matter on the local ballot and should the ballot referendum on casino gaming in Linn County subsequently be approved by voters. It was on March 5.

Two of the 60 or so casinos investors are CRST’s John Smith and David Rusch, CRST president/CEO.

Steve Gray, who is heading up the casino investor group, made the names of the investors public on Feb. 4. Corbett has said he did not know that Smith and Rusch were among the investors when the council voted last October.

In January, CRST received an economic-development incentive from the City Council — one that has become somewhat standard for development projects — to support what the company said will be a $3-million investment to expand its training facility at 3930 16th Ave. SW.

The city’s tax incentive will give the company an estimated 44 percent property-tax break over 10 years on the new tax revenue coming from the increased value of the property.

Corbett was out of the city and did not attend the council meeting when the matter was approved by the council.

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