Iowa City, Coralville, North Liberty consider anti-piracy pact

Bad blood stems from Coralville spending millions to lure Von Maur from Iowa City

Workers from PCI prepare the Iowa River Landing site for future development Tuesday, Nov. 2, 2010 in Coralville. (Brian
Workers from PCI prepare the Iowa River Landing site for future development Tuesday, Nov. 2, 2010 in Coralville. (Brian Ray/ SourceMedia Group News)

IOWA CITY – The bad blood resulting from Coralville spending millions of dollars to lure a department store from Iowa City may lead to more cooperation between area cities.

It also could lead to the cities having a say over each others use of financial incentives to attract businesses.

Officials from Iowa City, Coralville and North Liberty are discussing the idea of a non-competition agreement and anti-piracy compact concerning the relocation of a business between the towns.

That scenario currently is playing out after Coralville in fall 2011 gave Von Maur millions of dollars to build a department store at its Iowa River Landing district. That store is to open later this year, and Von Maur will close its Iowa City location.

The agreement also comes as some business and government leaders are pushing for more cooperation on economic development in the Cedar Rapids-Iowa City corridor.

Iowa City Manager Tom Markus said the Iowa City-Coralville-North Liberty proposal follows that philosophy and hopefully would spur cities to spend more time looking outside the region to attract new employers.

“I don’t see a whole lot of benefit in just moving the pieces around the Monopoly board,” he said Thursday.

Markus blasted Coralville when the Von Maur agreement was announced, saying Coralville acted out of greed and desperation. Coralville City Administrator Kelly Hayworth responded by saying each community needed to do what’s best for itself.

On Thursday, Hayworth said that although the agreement is in the early stages, the idea is “great” and could prevent situations that cause hard feeling like what occurred in 2011.

“Obviously, the more communication you have, the better that’s going to be and hopefully you can alleviate some of those issues,” he said.

The agreement the cities have discussed says communities would refrain from actively pursuing businesses to relocate from one of them to another. It also calls for communities to tell each other when a business is considering moving.

It also says the community in which a business currently is located must give its consent for the other community to offer incentives. Using the Von Maur situation as an example, that means Iowa City would have had to sign off on the tax increment financing deal offered by Coralville.

That is similar to “anti-piracy” language the Legislature added to the state’s tax increment financing law last year following outrage over the Coralville-Von Maur deal, but Hayworth and North Liberty City Administrator Ryan Heiar said the local component is something that still needs more research.

“That’s a concern, that’s an issue that needs to be addressed,” Heiar said.

Regional agreements are not uncommon. The Iowa City-Coralville-North Liberty one is modeled after a pact between Clear Lake, Mason City and Cerro Gordo County in northern Iowa and another in Cuyahoga County, Ohio, although the incentive language was added by Iowa City.

Marion and Hiawatha recently agreed not to go after each other’s businesses.Nancy Quellhorst, president and CEO of the Iowa City Area Chamber of Commerce, said an agreement would promote a unified economic development strategy and encourage existing businesses to consider expansion rather than moving across jurisdictions.

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