Coralville office plans under fire

CORALVILLE - Coralville's Iowa River Landing District is again facing criticism, this time from an unlikely source: members of the business community.

A group of developers and business leaders met with City Administrator Kelly Hayworth and Mayor Jim Fausett last week to express their concerns that 40,000 square feet of office space planned for the city-owned Iowa River Landing is unnecessary and will compete with the private sector.

The group followed up with a strongly worded letter restating some of those claims and making demands of the city. A copy of the letter was supplied by the city to The Gazette in response to an open-records request.

The dispute is a rare rift between a city that is widely regarded as being friendly to the business and development communities.

It's also the latest clash over Iowa River Landing following the city's announcement in September that it would use $9.5 million in taxpayer money to build Von Maur a department store in the district. One expert has estimated the true value of the deal at $16 million.

Iowa River Landing is a 180-acre mixed-use development off Interstate 80 that is to include commercial, retail and office space.

It's the office space that has now caught the attention of some members of the business community.

Coralville plans to construct a building with 40,000 square feet of retail on the first floor and 40,000 square feet of office space on the second floor.

The letter sent Nov. 1 said Coralville should not create any new commercial development using taxpayer money at this time.

“There appears to be an ample supply of retail and office space currently available and taxpayer funded development works to undermine the values of existing properties and the ability of these properties to continue to pay property taxes,” the developers and business leaders wrote.

The letter was signed by developers Gerry Ambrose, Brad Houser, Jody Braverman, Tom Bender, Hunter Parks and Marc Moen; McDonald's franchisee Kevin O'Brien; commercial real estate agent Randy Miller; and interior design firm owner Chuck Skaugstad Jr.

The signers did not return messages, declined to comment or would not talk in detail for this story.

Seeking information

“We're just looking for information on it,” Braverman, president of Southgate Development Services in Iowa City, said of the office space.

Some complaints started after the announcement of the Von Maur deal, which involves tax increment financing funds. Ambrose told The Gazette last month that Coralville's use of TIF to attract retailers was like a child spending his trust fund. He also said the plan for 40,000 square feet of office space shocked developers.

In general, they believe there is already a glut of office space in the market and are worried about tenants being enticed from elsewhere in the community. And also that, with some of them owning property in the tax increment financing district that includes Iowa River Landing, their tax dollars are going toward possible competition.

In their letter, the group asked that the city: provide more information on the office space, not use incentives to build it unless there is a tenant willing to stay at least 15 years and allow interested developers to bid on the project.

They also requested that the city sell to a private entity the first-floor retail space included in an under-construction hotel, provide an analysis of the viability of Iowa River Landing and consider convening an advisory group of developers to “find fair and equitable ways to construct projects while eliminating competition by the City.”

City response

The City Council has already passed on the idea of an advisory group due to fairness concerns over who would and would not be on it.

Some city officials were taken aback by the tone of the letter.

City Council member Bill Hoeft fired back in an email saying some of the developers' concerns “felt more like demands.”

He said in the email and an interview that he didn't understand how they could say there is enough office and retail space when some of them have projects in the pipeline that include those uses.

He and other city officials also said that many of the people who signed the letter have been involved in projects that received taxpayer-supported incentives.

“A bit of hypocrisy on their part,” Hoeft said.

Council member John Weihe said the city has been planning the redevelopment of Iowa River Landing, a former blighted area, for decades, and the developers were essentially asking the city to slow down for their sakes.

“And that's not happening,” he said.

Weihe and Hayworth, the city administrator, said it is hard to find office space larger than 4,000 square feet in the area, and Hayworth said there are businesses interested in bigger spaces.

Hayworth also said the city does not want businesses already in the community to relocate to the Iowa River Landing's offices. The city has come under fire for the Von Maur deal in part because it likely means the store in Iowa City's Sycamore Mall will close.

Construction schedule

Hayworth said the city hopes to start construction on the retail/office building next spring. Discussions about incentives for the office space have just started and it's not clear how that may work or who could end up owning the space, he said.

The city will initially own the retail space in the district but wants to sell it to a single buyer so it can be managed with consistent hours and uses, like a mall, Hayworth said.

Hayworth said the concerns expressed in the letter shows the city needs to do a better job explaining what its intentions are in Iowa River Landing.

The Gazette's Dave DeWitte contributed to this story.

Coralville IRL Correspondence