CEDAR RAPIDS — City Hall isn’t giving away the land for commercial use — to casino investors or anyone else — that sits across the Cedar River from downtown and that the city now owns and obtained through the flood-recovery buyout process.
Mayor Ron Corbett and City Council members Don Karr and Justin Shields, all casino backers, say the latest advertisement from the Just Say No Casino campaign isn’t true when it states, “Cedar Rapids plans to give casino investors CITY-owned land … and we MAY not see a dime.”
Joe O’Hern, the city’s flood-recovery chief, and Rita Rasmussen, the city’s senior real estate officer who has overseen the city’s buyout effort, explained this week that federal law and state policies dictate the competitive process for how the city disposes of flood-damaged property purchased with federal funds.
And one option on commercial property isn’t to give it away, Corbett said. “They bid. They can’t get it for free.”
At the same time, the casino investor group Cedar Rapids Development Group LLC has talked in its advertisements about how it is not going to ask City Hall for any financial incentives in exchange for building a casino.
Even so, the casino investors may find the purchase price of city buyout land across from downtown attractively reasonable.
According to Rasmussen, federal and state rules relating to the sale of buyout property for commercial use in the 100-year flood plain come with two options:
A more expensive option requires the buyer to reimburse the federal Community Development Block Grant disaster program for, in this instance, 107 percent of the property’s purchase price plus administrative and demolition costs.
However, the Cedar Rapids City Council last year secured an exemption for commercial property in “historic” districts or a “viable commercial corridors” in the 100-year flood plain, a special permission that allows the city to sell property there through a competitive proposal process.
With this option — which is the one almost certainly that will be used on west-side land that the casino is interested in — those competing to buy the property must pay the current fair market value of the now-vacant, post-flood property. It is a value established by a city-hired appraiser, Rasmussen said. The money from the sale, likewise, reverts back to the federal CDBG disaster program.
The second option, using the fair-market value, “generally” will cost the buyer less than the first option, Rasmussen said.
City Council member Karr, a west-side advocate and business owner, said he and other council members sought the exemption early last summer because it was needed to attract investors to develop city-owned buyout land in New Bohemia, in Czech Village, along Ellis Boulevard NW and across the river from downtown.
“The casino didn’t have anything to do with that,” Karr said.
The city, the mayor said, wouldn’t get any of the proceeds from the sale of buyout land, but taxpayers do because the money reverts from where it came, the federal government’s disaster program.
Steve Gray, a lead casino investor with Cedar Rapids Development Group LLC, acknowledged on Friday that the casino investor group may see a cost-savings in the purchase of land because much of the land that they want to buy for the casino is owned by one owner, in this instance, the city through its buyout program. Dealing with many owners at once can drive a project’s land cost up, he said.
At the same time, he said, any relatively lower purchase price for buyout land also comes with the added cost of being required to elevate the site potentially several feet to get it above the 100-year flood plain, plus added costs associated the investors’ interest in incorporating flood protection into the site.
Sam Roecker, a consultant with the Just Say No Campaign, on Friday didn’t back away from the campaign’s contention that City Hall was giving land to the casino investors and that “we wouldn’t see a dime.”
Rather, Roecker suspected that the casino investors, in the end, would get a sweetheart deal in any event.
The competitive bid process, he said, is apt to attract just one bid for the proposed casino site, from the casino investors.
“The Gray-led led group hasn’t faced a competitive bid at any point in the process,” Roecker said. He noted that both the City Council and the Linn County Board of Supervisors agreed to support the group’s casino plan without regard to what another plan might offer. The Gray-led group also got its way in what it will steer to the local community from gaming profits, he said.
Earlier this week, the casino investor group identified two “preferred” west-side spots for a new casino, one directly across downtown on the south side of Interstate 380, the other on the other side of Interstate 380 across from the Quaker Oats plant.
At the same time, Gray reported that the investor group had signed contracts to purchase most of the land not in the buyout program and not owned by the city between First and Second avenues SW and First and Third streets SW across from downtown, a move that seemed to signal that a casino is apt to go there.
Corbett said that he preferred that the casino go directly across from downtown, where he said there was the best chance to “build critical mass” for more extensive redevelopment.
The investor group, Gray said, decided to put a casino on a site where much had been bought out and demolished, not because of the price of the land, but to find a site that the Iowa Racing and Gaming Commission might approve. The commission has to grant the casino project a state license.
The downtown site provides easy access to and great visibility from Interstate 380 and puts some distance between a Cedar Rapids casino and existing ones in Riverside and Waterloo. Both casinos, worried about the loss of business to a Cedar Rapids casino, are funding the Just Say No Casino campaign in the run-up to the March 5 vote in Linn County on casino gaming.
Gray added that the investor group also sees the preferred casino site as a way to “invigorate a blighted area,” help build a piece of west-side flood protection and use the city’s nearby hotel and entertainment assets.
Council member Karr pointed to the recent sale of vacant buyout land near the proposed casino site for which the city sought proposals. Developer Fred Timko, who is renovating the former Wells Fargo Bank and building a new residential condominium tower next to it on First Street SW, submitted the winning proposal and paid $12,000 for the property.
“We’re not giving any favorite treatment to anybody,” Karr said. “We go by what we’re instructed to do by the state and federal government.”
West-side council member Justin Shields, who has driving force behind the casino proposal and who sits on the newly created, non-profit Linn County Gaming Association board, on Friday said much of west-side commercial area across from the downtown had seen sparse investment for years before the flood and is “almost barren land” now five years after the flood.
“But it’s good valuable land for the city, and we want to get it redeveloped and back on the tax rolls,” said Shields, adding that the casino can help to fuel the redevelopment.