City to forego redevelopment of historic Knutson Building
May 2015

City to forego redevelopment of historic Knutson Building

The City Council rejected bids Tuesday, Feb. 24, 2015, to redevelop the Knutson Building, but will allow new bids to be submitted. (photo/Cindy Hadish)
Despite a valid offer to redevelop the Knutson Metal Co., city documents show that demolition will be pursued for the building, one of the oldest commercial structures on the west side of Cedar Rapids.  (photo/Cindy Hadish)

By Cindy Hadish/Save CR Heritage

CEDAR RAPIDS – Despite bids to redevelop the Knutson Metal Co. site, the city appears poised to demolish the historic building, even as Cedar Rapids finalizes its historic preservation plan.

An agenda item for this week’s City Council meeting, scheduled for 4 p.m. Tuesday, May 26, notes that city staff will recommend demolishing the 1887 structure, one of the oldest commercial buildings on the west side of Cedar Rapids.

The city’s Historic Preservation Commission, however, was able to have the item removed from this week’s City Council agenda. Instead, staff will discuss the proposal at this week’s commission meeting, set for 4:30 p.m. Thursday, May 28, at City Hall. The meeting is open to the public.

The city received three proposals to redevelop the property, located along the Cedar River at 525 Valor Way SW.

According to city documents, a stakeholder review panel  found only one of the three proposals, from KHB Redevelopment Group, LLC, to be responsive to the required criteria of the city’s request for proposals.

Even with the valid proposal, city staff will recommend that  council members authorize demolition, using Iowa taxpayer funding for flood mitigation through a state program.

The city purchased the Knutson Metal Co. property in 2012 for $1.5 million, far more than its assessed value of $98,891, according to the City Assessor’s website.

At the time, City Council members cited the owner closing his scrap metal business as part of that expense and the city also wanted to assist with cleanup of the area adjacent to the newly constructed amphitheatre.

Since that time, the city has done nothing to stabilize or “mothball” the building, which was flooded in 2008. No one on the city staff has been able to say if the building was ever mucked out after the flood and broken windows and other issues went unrepaired.

A tree grows from the upper level of an addition of the Knutson Building this summer in Cedar Rapids, Iowa. (photo/Cindy Hadish)
A tree can be seen growing from the upper level of the city-owned Knutson Building last summer in Cedar Rapids. (photo/Cindy Hadish)

A memo issued earlier this spring by John Riggs, manager of the city’s Building Services Department, noted that the roof is leaking, causing deterioration throughout the structure.

Former City Council member Don Karr, who was part of the negotiating team for the Knutson Metal Co. property, said the building was in solid condition at the time of its purchase.

Karr has said he was not surprised that the structure was allowed to deteriorate, as city leaders had been asked to “get rid of” the Knutson Building long ago by at least one downtown business owner, who viewed it as an eyesore.

Built as a condensed milk factory, the Knutson Building also has housed a woodworking plant for gunstocks, the Warehouse bar, and a haunted house, in addition to the scrap metal business.

Hobart Historic Restoration, which purchased the nearby Mott Building from Linn County, and River Town Builders, LLC, submitted proposals for the Knutson property, as well as KHB.

KHB initially proposed privately constructing a flood control system for the property. That approach would have included an increased cost of $100,000 to convert a portion of the levee to a floodwall, according to the city, and the city would have to ensure the levee and floodwall construction were consistent with U.S. Army Corps of Engineers standards.

Instead, the city removed private flood control from the proposal. The project then faced a $750,000 funding gap, for which the city says funds are unavailable, or the city could opt to mothball the building until the time that flood protection is built, which could take 10 to 15 years and, because of the level of the building’s deterioration, could be costly.

The five-story Smulekoff's building, seen along the Cedar River in February 2015, will be sold by the city for redevelopment. Work on the 11-story CRST International building headquarters continues in the foreground. (photo/Cindy Hadish)
The five-story Smulekoff’s building, seen along the Cedar River in February 2015, will be sold by the city for redevelopment. (photo/Cindy Hadish)

Those options contrast with the city’s sale of the Smulekoff Building, on the other side of the Cedar River, which is included in Tuesday’s City Council agenda.

A review panel recommends offering the Smulekoff Building, at 97 Third Ave. SE, to Aspect, Inc., which will include the potential to recruit an unnamed company to relocate its headquarters to the site.

The city paid $4.7 million for the 100,000-square-foot building in December. According to the Cedar Rapids City Assessor, the property was assessed at just $2.4 million in 2014.

Six proposals were received to redevelop the building. Unlike the Knutson Building, the city did not require the Smulekoff Building to be moved, as it was in the initial Knutson proposal. No mention is made of flood control for the Smulekoff Building, which also sits along the Cedar River.

Under the proposed agreement, the developer will pay fair market value for the building, which has been estimated at the assessed value of $2.4 million, and city taxpayers will provide a 10-year, 100 percent tax rebate in the form of tax increment financing, something that Cedar Rapids has offered liberally for developers in recent years.

That TIF will provide matching funds for a Workforce Housing Tax Credit, for which Aspect will apply.

The agreement also will require historic preservation of the Smulekoff Building.

Cedar Rapids hired a consultant to help develop the city’s Historic Preservation Plan to guide community preservation efforts that will be incorporated into its long-term “EnvisionCR” plan.

“Together, we can identify strategies to preserve Cedar Rapids’ architectural, archaeological, cultural, and historic resources,” the city notes on its website.

Somewhat ironically, the city cites the fledgling historic preservation plan in recommending that the Knutson Building be demolished.

“Staff recommends Option 3, demolition of the Knutson Building, with a request to pursue a long-term funding strategy, such as a Revolving Loan Fund, to support Historic Preservation activities in the community,” the city’s documents note. “This is consistent with the strategy proposed in the draft Historic Preservation Plan, which was reviewed by the Development Committee in April.”

The draft preservation plan can be found here.

See related stories:

City finds code violations in its own building

Smulekoff’s open for bids

Saga of Knutson and Mott buildings


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