CEDAR RAPIDS — Westdale is getting a “reset.”
That’s how John Frew, of Frew Development Group, views a City Council decision on Tuesday allowing Frew to refinance two loans, which Frew said will free up cash so he can continue rebuilding what is now called Westdale Town Center.
“This hits the reset button for everybody,” Frew said. “Our job is to start building again.”
The council unanimously approved a $21.75 million refinancing plan, extending the loan through 2036 with NBH Bank of Colorado. City staff said the new pact includes higher benchmarks for property value and job creation and reduces the city’s exposure.
“This will allow more time to grow the taxable base of the TIF,” said Casey Drew, the city’s finance director. “This creates time to put things in place to grow the taxable value.”
The city was required to sign off because it guaranteed an $11.5 million loan and agreed to tax increment financing (TIF) incentives worth at least $20 million, including $5 million up front, in 2013. A TIF allows Cedar Rapids to set aside property taxes on newly created value for use on Westdale.
Under the new plan, public incentives could reach $33 million, but Drew noted this higher amount is only based on new development that would not have occurred without the refinancing.
Frew took on the struggling mall, which was 70 percent vacant when he acquired it in 2013, with plans for a $90 million overhaul of the 71-acre site.
By the numbers, the project has been mainly successful, albeit with a different class of retailers, such as PetSmart, Ross Dress For Less, Burlington and a Tru By Hilton Hotel, than initially forecast.
The assessed value of Westdale has grown from $7.3 million to $51.9 million in four years, and the project has met all tax value and job creation metrics, according to the city.
Frew’s blueprint has shifted from retail and green space to incorporate housing, and potentially three new restaurants next year and a fitness center, he said.
“We are only halfway done, and we are years ahead of projections,” Frew said.
Frew had run out of cash to keep building because of the national retail decline and restrictive loans, he said. For example, loan terms discouraged him from selling property and encouraged him to try leasing them, he said.
Among the new terms of the agreement with the city, the assessed property value target increases from $60 million and 500 jobs by fiscal 2022 to $75 million assessed property value and 600 jobs by fiscal 2024. The city also will withhold naming rights payments of $90,000 over four years — $360,000 total — for the Cedar Rapids Convention Center, which Frew helped develop.
Refinancing, which Frew said will close on Friday, pays off the $5 million advance in the development agreement\ and creates a reserve of $2.26 million — compared to $780,000 in the old agreement. That is enough to cover debt service for a year, according to the city.
The city would have a “moral obligation” obligation to repay the cash reserve if it is depleted, with the expectation Frew would repay the city, but the city’s overall exposure would be reduced from $8.5 million over 14 years to $7.4 million over 20 years, Drew said.
Lawrence Wenclawski, of Cedar Rapids, was the lone voice of protest.
“It’s not good enough to help them up, but we have to make them full,” he said during the public hearing. “We’ve got to stop opening the floodgates and giving money to everyone who asks.”
Council member Scott Olson, supporting the refinancing, noted, “It’s something we need to continue.”
“Maybe out of adversity comes opportunity to make it a different kind of development than just a couple of years ago,” he said. “(And) it gives more flexibility to meet his goals and our goals.”