WATERLOO -- It is perhaps appropriate that a business specializing in home makeovers should be part of a major makeover for two adjacent downtown Waterloo properties.

The first stage of renovations to that two-building, $1.2-million project is now finished.

The renovation of the Haffa Building, part of a project that includes the adjacent Fowler Mercantile building at East Fourth and Lafayette streets, is substantially completed, property owner Chuck Orr said.

It includes a lower level for Classic Kitchen & Bath, an interior design business for new and existing homes. It has moved from Commercial Street and is open for business in the new location. It also includes Evan Kaiulani Fine Art and Framing, which opened in October. The building's upper levels have been converted to artists' loft apartments.

The next phase is about to begin.

"We'll start construction work on the Fowler Building the first week in February," Orr said, beginning with the interior. Exterior work will begin in the spring. The entire project is scheduled to be completed by year's end.

"We made a commitment to downtown to see it hit a new level," said Orr. His family in 1995-96 also renovated buildings about a block away in the 600 block of Commercial Street, where they live.

"I think there are people who have stuck with downtown," including Mike and Joni Hollen with the CU restaurant, and bar owner and former City Council member Buck Clark. "And the support of the City Council and the new mayor (Tim Hurley) have made a difference in the spirit of downtown. And Main Street Waterloo continues to be a big supporter." Orr said. "I think we've got the ball rolling."

"I'm so glad to be downtown, part of this renovation project," said Classic Kitchen & Bath owner Melissa McKean. "The revitalization of downtown is really exciting to me. I see great possibilities. I made a huge investment here because I believe in it."

McKean acquired, renamed and occupied what was Trost Design at West Sixth and Commercial for about 2 1/2 years. She began renovating the ground-floor Haffa space in May for a move. Business has doubled since McKean bought it, and now she has tripled her store space. She's also established relationships with her neighbors. Kitchen demonstrations and classes are planned at the front of the store with the help of CU restaurant staff. In a setup similar to a television cooking show, class participants will sit around a semicircular table while the chef demonstrates or conducts class. She also hopes to conduct cooking classes and demonstrations for kids.

The company serves customers in a 60-mile radius, including many from Cedar Falls, where much home construction is occurring.

The economy, particularly the home sales market, has much to do with McKean's continued growth, she said.

The business draws many customers to downtown because it is a specialty, "destination" shop, she said.

McKean's business has developed a synergy with Evan Kaiulani, a frame shop that also exhibits local artists. The shop currently features works by local artist Paco Rosic.

Co-owner Philippa Siddens likes the location with its proximity to the upstairs artists' lofts and the opportunity to work with the residents.

"We heard about the Fowler project, and we think an art community or art district down here is a wonderful idea to bring business back to downtown and make downtown worth coming to," said Siddens. She is a partner in the business with her husband, University of Northern Iowa communication arts professor Paul Siddens, and working partner Aaron Harn.

The idea was to have an "upscale" gallery and "give new artists a place to show and be established," Philippa Siddens said.

All six of the artists' loft apartments in the Haffa building's upper level are full, said Dan Orr, Chuck Orr's son. More applications are coming in.

More loft apartments are planned on the Fowler building's third level, as well as professional artists' studios on the second floor.

"We encompass all the arts," Dan Orr said. "It's visual artists, musicians and writers. It's really worked well."

Chuck Orr is hoping to market lower level commercial space in the Fowler building, the former location of the now-closed Tequila Club, to prospective tenants. An upscale coffee shop is one possibility.

The entire project has been financed through a combination of tax credits, loan guarantees and property tax rebates.

Most recently, state historic tax credits have been secured for the Fowler portion of the project. The developers are awaiting word of federal tax credits as well.

In December 2004, Main Street Waterloo secured a $40,000 state grant for a facade renovation of the Fowler building. Orr has secured tax credits from the National Trust for Historic Preservation for the Haffa building.

To help Orr secure those credits, the Waterloo City Council in June 2004 approved a development agreement with Orr for the Haffa building, offering a partial loan guarantee and property tax rebates. The city guaranteed $100,000 of a $500,000 private loan for the Haffa Building project. It also granted a seven-year, 100 percent property tax rebate for any value added over and above the Jan. 1, 2004, assessed value of $64,220. Orr guaranteed a minimum assessed value of $260,000 after those seven years through 2018.

Orr is working with Community National Bank of Waterloo for his private financing. The project also has been supported by the Iowa Department of Economic Development, Main Street Iowa and U.S. Sen. Tom Harkin.

It is believed to be the largest single building project downtown since Waterloo Industries built its $7 million corporate office building in 1999 on the old Paramount Theatre site and adjacent properties.

The Fowler Building housed Larry's Clothes, and the Haffa space was home to New York Fashion, businesses which had operated downtown 30 and 60 years, respectively.

More information on the project may be obtained on the Internet at www.fowlerproject.com.

Contact Pat Kinney at (319) 291-1484 or Pat.Kinney@wcfcourier.com