WATERLOO -- Efforts to spawn a major downtown housing development on the east banks of the Cedar River took several giant steps forward this week.

City Council members voted unanimously Monday to approve a development agreement with Cedar Valley Restoration and Development, which calls for the construction of 40 or more apartments, condominiums and row houses in the one and a half blocks between Sycamore Street, the Cedar River, the Union Pacific Railroad tracks and East Eighth Street.

Council members also opened demolition bids for the existing buildings on the site, authorized the design of a relocated sanitary sewer interceptor through the area and approved the buyout of another half block adjacent to the development from homeowners Ed and Wanda Hedges. The additional land is expected to be marketed to housing developers.

"I think this is a great example of a public-private partnership that can be successful," said David Deeds, president of CVRD, which is building row houses in the neighborhood.

"It's an opportunity to remake a part of our community that has been neglected … for a long, long time," Deeds added. "And it creates a great opportunity for people to experience an exciting urban environment in the city of Waterloo."

The proposed riverfront housing was part of a downtown master plan developed in cooperation with urban planning consultants Vandewalle & Associates, of Madison, Wis., and ties into the city's Vision Iowa project, which includes a downtown riverwalk loop, rubber bladder dam and a riverfront pedestrian plaza with an amphitheater.

State and federal brownfields grants helped the city acquire several businesses in the housing project area. Summers Enterprises, of Masonville, was the apparent low bidder for the demolition of those structures at just under $130,000.

Deeds plans to retain a 1910-era brick warehouse on the site, which will be renovated into six to eight upper-end apartments. Condominiums with river views and row houses must be constructed at a pace of at least six units annually, boosting property values by $1 million for each six-unit segment.

Council members also approved a $110,000 contract with Earth Tech Inc. to relocate a sanitary sewer line currently on the river side of the flood dike onto the dry side. The current line needs to be repaired, and the city wants to complete construction before Deeds begins erecting homes.

The development agreement, which has been in the works for six months following CVRD's selection as the developer, includes a complicated mix of incentives and contractual matters:

-- CVRD gets the land for $1 following the demolition work in return for completing six units annually and raising the taxable value of the block from $600,000 to more than $6 million. The company also receives the first right of refusal on additional housing development the city hopes will continue downstream in the future.

-- The project gets 10 years of tax rebates, with 20 percent of those rebates going to buyers of condos and row houses on the site for five years. The remaining tax rebates will be split between CVRD for site work involved with the development and the city for streetscaping projects it is required to complete along Sycamore. A portion of the tax breaks will be used to buy additional property for downstream expansion.

-- CVRD will voluntarily create a Self Supported Municipal Improvement District covering the development, which will create an additional property tax levy designated to be used by the homeowners association there for continued site improvements or other needs.

-- The giant elm tree adjacent to the former Flaherty's Lounge must remain on site.

-- A design management team, consisting of various city department heads, a council member and representatives of Main Street Waterloo and the Waterloo Development Corp., will be formed to review CVRD's architectural and development plans to ensure compatibility with other downtown redevelopment efforts.

Resident Steve Mager took issue with the makeup of the design team.

"None of those people are architects or urban planners," said Mager. He said such folks are necessary to give the project the "panache" it needs to be successful.

But Community Planning and Development Director Don Temeyer said Deeds had his own design team, including architects, to prepare the plans. He also noted Deeds is risking his own money on the project, not the city's, and should have control over how best to design and market the product.

"I consider this very entrepreneurial for David to step forward and build houses in this area," Temeyer said.

Resident Ryan Madison, who has been an advocate for tearing down blighted buildings and bringing more retail to the city's east side, questioned the wisdom of developing upper-scale housing in that area.

"Why are we developing more houses when there's already 10 or 12 vacant houses over there," said Madison, who said there was no retail outlets or jobs for buyers of the condos.

Deeds disagreed with Madison, noting there were several stores in the downtown area, numerous employers and increasing recreational opportunities.

Deeds expects to have the rental building rehabilitated and ready for tenants by the end of 2006.

In a related move, the council unanimously approved the purchase of the half block between East Eighth, Lafayette and Sycamore streets from the Hedges for $118,000, plus $22,500 in replacement housing assistance and $30,000 in incidentals and moving expenses. The land is expected to be cleared for future development, most likely in the form of houses.

Contact Tim Jamison at (319) 291-1577 or at tim.jamison@wcfcourier.com.