10
Apr
2001
Part two of two
The press conference last month announcing Davenport's completion of an application to the Vision Iowa program was filled with bold statements. In explaining the name River Renaissance, Davenport Community and Economic Development Director Clayton Lloyd invoked the Renaissance of the 14th and 15th centuries. "We believe there are definite parallels," he said.
And Dan Huber, executive director of DavenportOne, boasted, "This is the best project in the state of Iowa."
Such hubris might be premature, given that the board of directors for the $180-million Vision Iowa program - created by the state legislature last year to fund infrastructure projects that will increase tourism and improve quality of life - has yet to award any money, and Davenport's application has only begun the review process.
Just as importantly, it's unclear how the board will treat a project with key elements that are relatively new and don't have the same level of detail as other communities' proposals. The projects that have already gotten a tentative green light for funding - three communities have entered into financial negotiations with the Vision Iowa board - featured components that have been in development far longer and are more fleshed out than elements of Davenport's application.
Yet in terms of its potential to re-shape a community, Davenport's application does lead the pack.
At the heart of the city's application is a new, ambitious, and somewhat speculative concept: an AgTech Venture Capital Center that could re-define the Quad Cities' economy, backers say. While most of the other communities being considered for Vision Iowa money plan to construct arenas or exposition centers to chase tourist dollars, Davenport is trying to build a more vibrant arts community and establish itself as a center for a new economy, helping finance and guide new businesses in the agricultural-technology field.
"It's more than tourism," Huber said. "We intend to use the state's investment ... as a means for primary economic development."
"Davenport and the Quad Cities need a new economy," said Chuck Ruhl, partner in Kaizen Company of America. Ruhl and Kaizen partner Kent Pilcher are the major investors in both the AgTech Venture Capital Center and the re-development of the Redstone building into office condominiums and a new River Music History Center. (Both men also have close ties to DavenportOne. Ruhl volunteers as chair of the organization's Economic Development Division, while Pilcher is chair of the Community Development Division.)
Both the AgTech and Redstone projects would benefit from Vision Iowa money. But unlike other major components of Davenport's plan, neither will likely move forward without state funding from the program.
The Proposal
Several members of the Vision Iowa board are impressed with Davenport's application.
"Davenport's done a great job," said Brad Parks, a Vision Iowa board member from Dubuque. He called the city's application "innovative" and "forward-thinking."
Mary Ellen Chamberlin, a Vision Iowa board member from the Quad Cities and president of the Riverboat Development Authority, said that "Davenport has taken a completely different approach" than other communities. "I think the executive summary is excellent."
Davenport is applying for $34.2 million in Vision Iowa money for projects totaling $70.1 million. The full River Renaissance package totals $113.4 million, but that figure includes several components of the Vision Iowa application that are "local matches" (such as Isle of Capri's new boat for its Rhythm City casino) even though they would not get any state funding.
The River Renaissance project is made up of three north-south corridors, each with a major new-project anchor.
The New Economy Corridor (farthest to the west among the districts) features a planned AgTech Venture Capital Center on the southeastern corner of Third and Ripley streets. The components in this area would try to establish Davenport as a center for new commerce in the field of agricultural technology. The corridor would also feature a city-built parking ramp.
To the east is the Arts Corridor, with the $33 million Figge Arts Center as its centerpiece on Second Street between Harrison and Main. This section would also include platform parking and an "arts walk" across River Drive that would connect the new art museum to the Mississippi River.
Further east would be the River Music Corridor, featuring the River Music History Center in a renovated Redstone building at the southeastern corner of Main and Second streets. Other elements of this corridor include a skywalk bridge connecting a new city-built parking ramp to the riverfront; a courtyard; and improvements to the Adler Theatre.
Certainly, the elements of River Renaissance didn't start as part of a cohesive whole. Some components - such as a new riverboat casino to replace the President, the two city-built parking ramps, expansion of the Adler Theatre stage, and the Museum of Art Foundation's Figge Arts Center - were all in development before Vision Iowa was signed into law last year.
But Huber bristled at the assertion that the River Renaissance application was cobbled together. "This is a single, wholly integrated project," he said.
What Davenport has done is add onto the major pieces smaller, thematically related amenities. This is most evident in the area surrounding the River Music History Center. Davenport has included a skywalk, a courtyard, and a large-scale kaleidoscope, all fully paid for by Vision Iowa. The three anchor projects - the music center, the art museum, and the ag-tech center - have at least half their funding from private sources, while many of the smaller elements of the proposal would get all their money from Vision Iowa.
Huber said that downtown Davenport has a lot already going for it - with the Adler Theatre, RiverCenter, the riverboat casino, and other key properties. "We need to manage those assets and strengthen them by connecting them," he said. In addition to providing new anchors for downtown, that's what the River Renaissance project is supposed to do.
Pulling It Together
Wisconsin-based consultant Brian Vandewalle, who worked with the city and DavenportOne on the Vision Iowa application, outlined six downtown-Davenport "corridors" in a December presentation, but those had been whittled down to the current three by the time the city submitted its proposal.
This is just one of many changes that happened over the course of developing the Davenport application.
The area's Vision Iowa project was originally meant as a Scott County riverfront application that would have included all the Davenport projects as well as a new performing-arts center, a marina, and an expanded conference center in Bettendorf. The two cities spent a lot of time and energy establishing connections between them, Huber said. Davenport and Bettendorf together planned to apply for approximately $60 million in Vision Iowa money.
But in mid-February, Bettendorf pulled out, claiming it was having difficulty raising the private match required by Vision Iowa legislation. Without multiple jurisdictions involved, Scott County also withdrew.
"Reconfiguring it [the application] was a big task," Huber said.
Bettendorf's withdrawal also allowed Davenport to increase its funding requests for certain projects. Dana Wilkinson, executive director of the Museum of Art Foundation, said the art-walk and parking components of the Figge Arts Center are requesting more money from Vision Iowa because the application now includes only Davenport.
At about the time Bettendorf pulled out of the application, Vandewalle & Associates delivered its draft of the application. "It was not fully satisfactory," Lloyd said. "We wanted to move it forward. So we chose to complete the application ourselves." DavenportOne, the City of Davenport, and the Eastern Iowa Community College District re-wrote the application, he said.
Lloyd said Vandewalle & Associates will be paid the full amount of its contracts to write the Vision Iowa application - up to $66,000 - even though what it submitted was not the final draft. (Attempts to contact Vandewalle for comment were unsuccessful.) The Eastern Iowa Community College District was not paid for its work drafting the application, Lloyd said.
Pilcher said that as Vandewalle & Associates was finishing its draft application, it was becoming clearer that the Vision Iowa board wanted a more specific and detailed application than what the consultant was preparing. "This was really moving beyond a plan and into grant-writing," he said. The city enlisted Eastern Iowa Community College because of its grant-writing expertise, he said.
Huber said that the proposal's content came from Vandewalle & Associates and that the application "was fine-tuned by lots of different people."
The city submitted its application to the Vision Iowa board on March 9, and Huber said he hopes the city is allowed to give a presentation at the body's May meeting. In as little as a month, then, Davenport could be negotiating with Vision Iowa for funding.
The Key to Success?
What makes Davenport's project unique is the AgTech Venture Capital Center. Even though it represents only $2.0 million in requested Vision Iowa funds, this component has the potential to have the most impact on the local economy.
River Renaissance's economic development is not limited to new jobs stemming from increasing numbers of tourists. If it works, the Davenport plan would bring tourists and new residents because of new attractions and amenities, but it would also become a magnet for new agricultural-technology businesses that need a boost or some help in getting started. It will become a hub for the "green economy," proponents say.
Ruhl explained that agricultural technology will in the next few years become a booming field. The world economy has progressed through coal, steel, and plastics phases, and now it's ready for the "green" economy - one featuring agriculture-based products (thus renewable) that can be used as substitutes for products made from nonrenewable resources such as petroleum. Packaging, clothing, and even lubricants can be made from basic crops, although the most prominent example is the use of corn-based ethanol as a gasoline additive.
The federal government has shown an interest in increasing development of these bio-based products. In August, President Bill Clinton signed the New Uses Executive Order setting a goal of tripling new uses for renewable resources by 2010.
Vandewalle first floated the idea of the AgTech Venture Capital Center in Davenport, and the consultant employed a similar concept in helping develop Waterloo's Vision Iowa application.
Vandewalle has said he envisions a boom similar to what happened in California in the 1980s and '90s, a "silicon prairie."
Although Vandewalle & Associates has consulted with two communities competing for a chunk of the same Vision Iowa pot (and employing a similar ag-tech concept), Huber said each city will play a different role in this new economy. While Davenport's application focuses on creating a finance center for the green economy ("We were a finance center to agriculture," Vandewalle has said), Waterloo wants to become a manufacturing and processing hub. "You're dealing with an entire economy," Huber said, and there are opportunities for other communities to focus on different facets.
Davenport's Vision Iowa proposal would help build "the business-development infrastructure" needed for new businesses in the agricultural-technology field, Huber said.
If both Davenport and Waterloo get their agricultural-technology projects funded, Huber said, the two communities could have a "real complementary relationship."
Ruhl and Pilcher think Davenport can capitalize on this impending new economy. Ruhl said a group from Davenport will have a meeting with a foreign bank April 24 in London. "We've discussed their intent of starting a [venture-capital fund] for $100 million," Ruhl said. Aside from ironing out a few details, the only thing holding the deal back is uncertainty about Vision Iowa funding, he said.
The first phase of the AgTech Venture Capital Center would be a two-story building constructed by Kaizen for $4.6 million. The company would own one floor and operate it as a "business development center" in which new companies could connect with lenders and others in the ag-tech business to arrange financing. Companies providing those business-startup services or venture capital would lease space from Kaizen.
The other floor would be purchased by the DavenportOne Foundation for $2.0 million and be leased to young businesses at below-market rates. Businesses would also have access to shared personnel, such as accountants and attorneys. Ruhl envisions this setup as an incubator for young businesses. A new not-for-profit board associated with DavenportOne would be established to manage this portion of the project, according to the city's Vision Iowa application.
A second phase of the AgTech Venture Capital Center - but not part of the city's Vision Iowa application - would be a 150,000-square-foot office tower that would be built by Kaizen on top of the planned city parking garage. Ruhl said that businesses using space in the first phase of the center might "graduate" to the second-phase office tower as they became larger and self-sufficient.
Huber said he didn't know yet how much federal, state, and corporate interest there is in the AgTech Venture Capital Center. He said the center has a development plan listing people and companies that will be contacted about potential involvement, but it doesn't have commitments. "We're at a very early stage here," he said. "This is more of a research project right now."
The same might be said about another DavenportOne Foundation-Kaizen project. Also under the River Renaissance proposal, Kaizen would renovate the Redstone building. The company would sell some of space as commercial condominiums and sell the rest to the DavenportOne Foundation.
The two entities would not be working together as closely as in the AgTech Venture Capital Center, however. Kaizen would sell the third and fourth floors of the building for office condos, while a new River Music History Foundation would be established by DavenportOne The new foundation would purchase the basement and first two floors of the building for the River Music History Center for $4.3 million.
Kaizen's net investment in the Redstone building will be $3.8 million.
Kaizen will also build the Rhythm Courtyard and sell it at cost ($2.25 million) to the River Music History Foundation.
The River Music History Foundation would create exhibit and performance spaces (totaling 17,360 square feet) on the second floor and mezzanine while using the lower level and first floor for a restaurant, two bars, and retail space. Huber said the DavenportOne Foundation will seek operators or subcontractors for the retail and club spaces, and that those relationships could cover operational expenses for the River Music History Foundation.
A major issue will be how much involvement the local music community will have in the development of the River Music History Center. Huber said there's been one outreach meeting with local jazz and blues organizations, but decisions on questions such as the center's focus and board will wait until it's known whether Vision Iowa funds are coming.
Huber added that he was not concerned that the vagueness of some elements in the application might hurt Davenport's chances of receiving Vision Iowa funds. "I don't think we're at the front or back of the class in terms of the maturity of the components," he said.
Risk
Most of the organizations with a financial stake in River Renaissance are not-for-profit or government groups. Two exceptions are the Rhythm City Casino and Kaizen Company of America. And Kaizen will be the only company with its investment intermingling with Vision Iowa money in the same project.
Although they're working closely with the city, the Kaizen partners said they're not getting special treatment with the AgTech Venture Capital Center.
The city has not agreed to pay any increased costs that result from ensuring the parking garage can structurally support the second-phase office tower of the AgTech Venture Capital Center, Ruhl said. Pilcher added that design changes to the parking garage would add less than 5 percent to the cost of construction.
And any parking spaces from the city-built garages (either for the ag-tech center or the Redstone project) will have to be leased at full market value because of restrictions put in the development agreements for the garages, said Dee Bruemmer, the city's director of public works.
"There will be no discussion of free parking," Ruhl said.
Breummer added that one parking ramp could meet the parking needs of the AgTech Venture Capital Center as well as those of currently vacant office space as it is leased. Allocation of spaces in the ramp near the River Music History Center has not been determined, she said.
Kaizen is in the strange position of being involved in the components of the Vision Iowa application with the most question marks.
The company will be spending $12.7 million on the Redstone and AgTech structures, but it will be getting $6.3 million - nearly half - from the DavenportOne Foundation, which will be using exclusively Vision Iowa funds to purchase the property
That significantly reduces the risk undertaken by Kaizen. Aside from the reduced monetary risk, half the space in both the River Music History Center and the AgTech Venture Capital Center is already spoken for because of the DavenportOne parts of the projects, and that makes it easier to attract other tenants.
But Kaizen's risk is still more than $6 million for purchase, construction, and renovation. "There hasn't been that much private money invested in the downtown in years, if ever," Ruhl said.
"If we were doing this for return, we'd put our $12 million right here in this neighborhood," Ruhl said, pointing out a window at Biaggi's on Utica Ridge Road And 53rd Street. "It's highly speculative considering what we could do. ... [But] we believe it is time to invest our capital and our commitment ... in downtown."
Ruhl added that it would cost Kaizen $900,000 a year to hold its portion of the Redstone and AgTech properties if they remain vacant, and that the company has already invested $150,000 in the two projects.
"We'd be willing to trade places with anybody," Pilcher said. "Nobody else has stepped out to take those risks."
Without Vision Iowa money, though, Kaizen will walk away. Ruhl said Kaizen has an agreement to purchase the Redstone building from the Putnam Foundation, but that pact is contingent on Vision Iowa money coming through. "We have an out if we need it," he said.
Pilcher said redevelopment of the Redstone could still happen without state money involved, but its history doesn't suggest it's going to happen quickly. He said projects generally need to be two-thirds pre-leased before they can move forward, and that would be nearly impossible with the 64,000-square-foot Redstone property.
"We've believed it's a very viable property," said Pilcher, who's been trying to put together a deal on the building for several years. The key was finding a tenant - such as the River Music History Center - to reduce the amount that would need to be pre-leased to a more reasonable level. "It needs an anchor," Pilcher said. Yet even though the Kaizen projects are the most tenuous, hinging fully on the state's willingness to help out through Vision Iowa, other parts of the River Renaissance plan aren't sure things.
The Museum of Art Foundation, the entity charged with acquiring the property and building the Figge Arts Center, has only purchased one piece of land for the museum and has not come to terms with five others. "Not every owner even wants to talk to us," said Bruemmer, who serves on foundation board.
The Museum of Art Foundation board continues to negotiate with property owners, but if that fails, Bruemmer said the museum will ask the Davenport City Council on May 2 to take over negotiations. The city has the authority to condemn the property and force its sale, and Bruemmer said owners might be more willing to negotiate with that threat looming. Wilkinson said she noticed some "movement" among property owners when the foundation board announced that it planned to turn negotiations over to the city.
But the Museum of Art Foundation is running out of time. To meet a targeted spring 2004 opening date, construction needs to start this year. "Their schedule is to acquire the property in the summer and move on," Bruemmer said.
The Kaizen, Museum of Art Foundation, and Bettendorf situations show that what Davenport proposed to the Vision Iowa board might not come off as planned. There are too many variables to assume that anything is going to happen, with or without Vision Iowa money.
Yet Huber said he was confident that the core of the River Renaissance plan will become reality, no matter what. "Many things, most things, hopefully all things will still happen," he said.
Last week's part of this story, discussing the challenges faced by the Vision Iowa board in considering projects statewide, is available on our Web site.
And Dan Huber, executive director of DavenportOne, boasted, "This is the best project in the state of Iowa."
Such hubris might be premature, given that the board of directors for the $180-million Vision Iowa program - created by the state legislature last year to fund infrastructure projects that will increase tourism and improve quality of life - has yet to award any money, and Davenport's application has only begun the review process.
Just as importantly, it's unclear how the board will treat a project with key elements that are relatively new and don't have the same level of detail as other communities' proposals. The projects that have already gotten a tentative green light for funding - three communities have entered into financial negotiations with the Vision Iowa board - featured components that have been in development far longer and are more fleshed out than elements of Davenport's application.
Yet in terms of its potential to re-shape a community, Davenport's application does lead the pack.
At the heart of the city's application is a new, ambitious, and somewhat speculative concept: an AgTech Venture Capital Center that could re-define the Quad Cities' economy, backers say. While most of the other communities being considered for Vision Iowa money plan to construct arenas or exposition centers to chase tourist dollars, Davenport is trying to build a more vibrant arts community and establish itself as a center for a new economy, helping finance and guide new businesses in the agricultural-technology field.
"It's more than tourism," Huber said. "We intend to use the state's investment ... as a means for primary economic development."
"Davenport and the Quad Cities need a new economy," said Chuck Ruhl, partner in Kaizen Company of America. Ruhl and Kaizen partner Kent Pilcher are the major investors in both the AgTech Venture Capital Center and the re-development of the Redstone building into office condominiums and a new River Music History Center. (Both men also have close ties to DavenportOne. Ruhl volunteers as chair of the organization's Economic Development Division, while Pilcher is chair of the Community Development Division.)
Both the AgTech and Redstone projects would benefit from Vision Iowa money. But unlike other major components of Davenport's plan, neither will likely move forward without state funding from the program.
The Proposal
Several members of the Vision Iowa board are impressed with Davenport's application.
"Davenport's done a great job," said Brad Parks, a Vision Iowa board member from Dubuque. He called the city's application "innovative" and "forward-thinking."
Mary Ellen Chamberlin, a Vision Iowa board member from the Quad Cities and president of the Riverboat Development Authority, said that "Davenport has taken a completely different approach" than other communities. "I think the executive summary is excellent."
Davenport is applying for $34.2 million in Vision Iowa money for projects totaling $70.1 million. The full River Renaissance package totals $113.4 million, but that figure includes several components of the Vision Iowa application that are "local matches" (such as Isle of Capri's new boat for its Rhythm City casino) even though they would not get any state funding.
The River Renaissance project is made up of three north-south corridors, each with a major new-project anchor.
The New Economy Corridor (farthest to the west among the districts) features a planned AgTech Venture Capital Center on the southeastern corner of Third and Ripley streets. The components in this area would try to establish Davenport as a center for new commerce in the field of agricultural technology. The corridor would also feature a city-built parking ramp.
To the east is the Arts Corridor, with the $33 million Figge Arts Center as its centerpiece on Second Street between Harrison and Main. This section would also include platform parking and an "arts walk" across River Drive that would connect the new art museum to the Mississippi River.
Further east would be the River Music Corridor, featuring the River Music History Center in a renovated Redstone building at the southeastern corner of Main and Second streets. Other elements of this corridor include a skywalk bridge connecting a new city-built parking ramp to the riverfront; a courtyard; and improvements to the Adler Theatre.
Certainly, the elements of River Renaissance didn't start as part of a cohesive whole. Some components - such as a new riverboat casino to replace the President, the two city-built parking ramps, expansion of the Adler Theatre stage, and the Museum of Art Foundation's Figge Arts Center - were all in development before Vision Iowa was signed into law last year.
But Huber bristled at the assertion that the River Renaissance application was cobbled together. "This is a single, wholly integrated project," he said.
What Davenport has done is add onto the major pieces smaller, thematically related amenities. This is most evident in the area surrounding the River Music History Center. Davenport has included a skywalk, a courtyard, and a large-scale kaleidoscope, all fully paid for by Vision Iowa. The three anchor projects - the music center, the art museum, and the ag-tech center - have at least half their funding from private sources, while many of the smaller elements of the proposal would get all their money from Vision Iowa.
Huber said that downtown Davenport has a lot already going for it - with the Adler Theatre, RiverCenter, the riverboat casino, and other key properties. "We need to manage those assets and strengthen them by connecting them," he said. In addition to providing new anchors for downtown, that's what the River Renaissance project is supposed to do.
Pulling It Together
Wisconsin-based consultant Brian Vandewalle, who worked with the city and DavenportOne on the Vision Iowa application, outlined six downtown-Davenport "corridors" in a December presentation, but those had been whittled down to the current three by the time the city submitted its proposal.
This is just one of many changes that happened over the course of developing the Davenport application.
The area's Vision Iowa project was originally meant as a Scott County riverfront application that would have included all the Davenport projects as well as a new performing-arts center, a marina, and an expanded conference center in Bettendorf. The two cities spent a lot of time and energy establishing connections between them, Huber said. Davenport and Bettendorf together planned to apply for approximately $60 million in Vision Iowa money.
But in mid-February, Bettendorf pulled out, claiming it was having difficulty raising the private match required by Vision Iowa legislation. Without multiple jurisdictions involved, Scott County also withdrew.
"Reconfiguring it [the application] was a big task," Huber said.
Bettendorf's withdrawal also allowed Davenport to increase its funding requests for certain projects. Dana Wilkinson, executive director of the Museum of Art Foundation, said the art-walk and parking components of the Figge Arts Center are requesting more money from Vision Iowa because the application now includes only Davenport.
At about the time Bettendorf pulled out of the application, Vandewalle & Associates delivered its draft of the application. "It was not fully satisfactory," Lloyd said. "We wanted to move it forward. So we chose to complete the application ourselves." DavenportOne, the City of Davenport, and the Eastern Iowa Community College District re-wrote the application, he said.
Lloyd said Vandewalle & Associates will be paid the full amount of its contracts to write the Vision Iowa application - up to $66,000 - even though what it submitted was not the final draft. (Attempts to contact Vandewalle for comment were unsuccessful.) The Eastern Iowa Community College District was not paid for its work drafting the application, Lloyd said.
Pilcher said that as Vandewalle & Associates was finishing its draft application, it was becoming clearer that the Vision Iowa board wanted a more specific and detailed application than what the consultant was preparing. "This was really moving beyond a plan and into grant-writing," he said. The city enlisted Eastern Iowa Community College because of its grant-writing expertise, he said.
Huber said that the proposal's content came from Vandewalle & Associates and that the application "was fine-tuned by lots of different people."
The city submitted its application to the Vision Iowa board on March 9, and Huber said he hopes the city is allowed to give a presentation at the body's May meeting. In as little as a month, then, Davenport could be negotiating with Vision Iowa for funding.
The Key to Success?
What makes Davenport's project unique is the AgTech Venture Capital Center. Even though it represents only $2.0 million in requested Vision Iowa funds, this component has the potential to have the most impact on the local economy.
River Renaissance's economic development is not limited to new jobs stemming from increasing numbers of tourists. If it works, the Davenport plan would bring tourists and new residents because of new attractions and amenities, but it would also become a magnet for new agricultural-technology businesses that need a boost or some help in getting started. It will become a hub for the "green economy," proponents say.
Ruhl explained that agricultural technology will in the next few years become a booming field. The world economy has progressed through coal, steel, and plastics phases, and now it's ready for the "green" economy - one featuring agriculture-based products (thus renewable) that can be used as substitutes for products made from nonrenewable resources such as petroleum. Packaging, clothing, and even lubricants can be made from basic crops, although the most prominent example is the use of corn-based ethanol as a gasoline additive.
The federal government has shown an interest in increasing development of these bio-based products. In August, President Bill Clinton signed the New Uses Executive Order setting a goal of tripling new uses for renewable resources by 2010.
Vandewalle first floated the idea of the AgTech Venture Capital Center in Davenport, and the consultant employed a similar concept in helping develop Waterloo's Vision Iowa application.
Vandewalle has said he envisions a boom similar to what happened in California in the 1980s and '90s, a "silicon prairie."
Although Vandewalle & Associates has consulted with two communities competing for a chunk of the same Vision Iowa pot (and employing a similar ag-tech concept), Huber said each city will play a different role in this new economy. While Davenport's application focuses on creating a finance center for the green economy ("We were a finance center to agriculture," Vandewalle has said), Waterloo wants to become a manufacturing and processing hub. "You're dealing with an entire economy," Huber said, and there are opportunities for other communities to focus on different facets.
Davenport's Vision Iowa proposal would help build "the business-development infrastructure" needed for new businesses in the agricultural-technology field, Huber said.
If both Davenport and Waterloo get their agricultural-technology projects funded, Huber said, the two communities could have a "real complementary relationship."
Ruhl and Pilcher think Davenport can capitalize on this impending new economy. Ruhl said a group from Davenport will have a meeting with a foreign bank April 24 in London. "We've discussed their intent of starting a [venture-capital fund] for $100 million," Ruhl said. Aside from ironing out a few details, the only thing holding the deal back is uncertainty about Vision Iowa funding, he said.
The first phase of the AgTech Venture Capital Center would be a two-story building constructed by Kaizen for $4.6 million. The company would own one floor and operate it as a "business development center" in which new companies could connect with lenders and others in the ag-tech business to arrange financing. Companies providing those business-startup services or venture capital would lease space from Kaizen.
The other floor would be purchased by the DavenportOne Foundation for $2.0 million and be leased to young businesses at below-market rates. Businesses would also have access to shared personnel, such as accountants and attorneys. Ruhl envisions this setup as an incubator for young businesses. A new not-for-profit board associated with DavenportOne would be established to manage this portion of the project, according to the city's Vision Iowa application.
A second phase of the AgTech Venture Capital Center - but not part of the city's Vision Iowa application - would be a 150,000-square-foot office tower that would be built by Kaizen on top of the planned city parking garage. Ruhl said that businesses using space in the first phase of the center might "graduate" to the second-phase office tower as they became larger and self-sufficient.
Huber said he didn't know yet how much federal, state, and corporate interest there is in the AgTech Venture Capital Center. He said the center has a development plan listing people and companies that will be contacted about potential involvement, but it doesn't have commitments. "We're at a very early stage here," he said. "This is more of a research project right now."
The same might be said about another DavenportOne Foundation-Kaizen project. Also under the River Renaissance proposal, Kaizen would renovate the Redstone building. The company would sell some of space as commercial condominiums and sell the rest to the DavenportOne Foundation.
The two entities would not be working together as closely as in the AgTech Venture Capital Center, however. Kaizen would sell the third and fourth floors of the building for office condos, while a new River Music History Foundation would be established by DavenportOne The new foundation would purchase the basement and first two floors of the building for the River Music History Center for $4.3 million.
Kaizen's net investment in the Redstone building will be $3.8 million.
Kaizen will also build the Rhythm Courtyard and sell it at cost ($2.25 million) to the River Music History Foundation.
The River Music History Foundation would create exhibit and performance spaces (totaling 17,360 square feet) on the second floor and mezzanine while using the lower level and first floor for a restaurant, two bars, and retail space. Huber said the DavenportOne Foundation will seek operators or subcontractors for the retail and club spaces, and that those relationships could cover operational expenses for the River Music History Foundation.
A major issue will be how much involvement the local music community will have in the development of the River Music History Center. Huber said there's been one outreach meeting with local jazz and blues organizations, but decisions on questions such as the center's focus and board will wait until it's known whether Vision Iowa funds are coming.
Huber added that he was not concerned that the vagueness of some elements in the application might hurt Davenport's chances of receiving Vision Iowa funds. "I don't think we're at the front or back of the class in terms of the maturity of the components," he said.
Risk
Most of the organizations with a financial stake in River Renaissance are not-for-profit or government groups. Two exceptions are the Rhythm City Casino and Kaizen Company of America. And Kaizen will be the only company with its investment intermingling with Vision Iowa money in the same project.
Although they're working closely with the city, the Kaizen partners said they're not getting special treatment with the AgTech Venture Capital Center.
The city has not agreed to pay any increased costs that result from ensuring the parking garage can structurally support the second-phase office tower of the AgTech Venture Capital Center, Ruhl said. Pilcher added that design changes to the parking garage would add less than 5 percent to the cost of construction.
And any parking spaces from the city-built garages (either for the ag-tech center or the Redstone project) will have to be leased at full market value because of restrictions put in the development agreements for the garages, said Dee Bruemmer, the city's director of public works.
"There will be no discussion of free parking," Ruhl said.
Breummer added that one parking ramp could meet the parking needs of the AgTech Venture Capital Center as well as those of currently vacant office space as it is leased. Allocation of spaces in the ramp near the River Music History Center has not been determined, she said.
Kaizen is in the strange position of being involved in the components of the Vision Iowa application with the most question marks.
The company will be spending $12.7 million on the Redstone and AgTech structures, but it will be getting $6.3 million - nearly half - from the DavenportOne Foundation, which will be using exclusively Vision Iowa funds to purchase the property
That significantly reduces the risk undertaken by Kaizen. Aside from the reduced monetary risk, half the space in both the River Music History Center and the AgTech Venture Capital Center is already spoken for because of the DavenportOne parts of the projects, and that makes it easier to attract other tenants.
But Kaizen's risk is still more than $6 million for purchase, construction, and renovation. "There hasn't been that much private money invested in the downtown in years, if ever," Ruhl said.
"If we were doing this for return, we'd put our $12 million right here in this neighborhood," Ruhl said, pointing out a window at Biaggi's on Utica Ridge Road And 53rd Street. "It's highly speculative considering what we could do. ... [But] we believe it is time to invest our capital and our commitment ... in downtown."
Ruhl added that it would cost Kaizen $900,000 a year to hold its portion of the Redstone and AgTech properties if they remain vacant, and that the company has already invested $150,000 in the two projects.
"We'd be willing to trade places with anybody," Pilcher said. "Nobody else has stepped out to take those risks."
Without Vision Iowa money, though, Kaizen will walk away. Ruhl said Kaizen has an agreement to purchase the Redstone building from the Putnam Foundation, but that pact is contingent on Vision Iowa money coming through. "We have an out if we need it," he said.
Pilcher said redevelopment of the Redstone could still happen without state money involved, but its history doesn't suggest it's going to happen quickly. He said projects generally need to be two-thirds pre-leased before they can move forward, and that would be nearly impossible with the 64,000-square-foot Redstone property.
"We've believed it's a very viable property," said Pilcher, who's been trying to put together a deal on the building for several years. The key was finding a tenant - such as the River Music History Center - to reduce the amount that would need to be pre-leased to a more reasonable level. "It needs an anchor," Pilcher said. Yet even though the Kaizen projects are the most tenuous, hinging fully on the state's willingness to help out through Vision Iowa, other parts of the River Renaissance plan aren't sure things.
The Museum of Art Foundation, the entity charged with acquiring the property and building the Figge Arts Center, has only purchased one piece of land for the museum and has not come to terms with five others. "Not every owner even wants to talk to us," said Bruemmer, who serves on foundation board.
The Museum of Art Foundation board continues to negotiate with property owners, but if that fails, Bruemmer said the museum will ask the Davenport City Council on May 2 to take over negotiations. The city has the authority to condemn the property and force its sale, and Bruemmer said owners might be more willing to negotiate with that threat looming. Wilkinson said she noticed some "movement" among property owners when the foundation board announced that it planned to turn negotiations over to the city.
But the Museum of Art Foundation is running out of time. To meet a targeted spring 2004 opening date, construction needs to start this year. "Their schedule is to acquire the property in the summer and move on," Bruemmer said.
The Kaizen, Museum of Art Foundation, and Bettendorf situations show that what Davenport proposed to the Vision Iowa board might not come off as planned. There are too many variables to assume that anything is going to happen, with or without Vision Iowa money.
Yet Huber said he was confident that the core of the River Renaissance plan will become reality, no matter what. "Many things, most things, hopefully all things will still happen," he said.
Last week's part of this story, discussing the challenges faced by the Vision Iowa board in considering projects statewide, is available on our Web site.
