Lawsuits over Coralville's Von Maur deal dropped

Group argued that incentives given to retailer were not allowed under state law

The city of Coralville and a group of developers and residents who sued over the city’s deal with Von Maur have agreed to drop their lawsuits against each other.

The citizens group a year ago sued the city and its developer of the Iowa River Landing district to try to stop the Von Maur project from going forward. Coralville then countersued.

A Johnson County judge last March denied the group’s request for an injunction to halt the project, and the store is under construction and set to open later this year.

The lawsuits continued, though, until now, with both sides agreeing to dismiss each claim with prejudice, meaning the plaintiff cannot sue again on the same grounds.

The Coralville City Council voted Tuesday night to approve the agreement. City Attorney Kevin Olson said it was a favorable outcome for the city and the Von Maur deal is not affected.

“The original agreement that we approved that was the subject of this lawsuit is in place,” he said.

Matt Adam, the Coralville attorney for the plaintiffs, confirmed Wednesday morning that his clients agreed to the settlement but said he could not answer further questions until later in the day.

Coralville in fall 2011 agreed to give Von Maur a $9.47 million grant to build a store in Iowa River Landing, which is southeast of the Interstate 80-First Avenue interchange. The city also provided other benefits it valued at $4.5 million.

The city agreed to give the district’s developer, San Diego-based Oliver McMillan, a $1.5 million economic development grant to buy the property for the store on the condition that the firm would then sell the land to Von Maur for $10.

The plaintiffs argued that deal violated state law preventing a city of disposing of property by gift, and said $1.5 million was not fair market value for the property. They also argued that the incentives given to Von Maur by Coralville ran contrary to a state law that says public funds should not be used to get a business to relocate within the state, unless the business is considering moving out of state or the relocation is related to an expansion that will generate "significant new job creation."

The city’s agreement with Von Maur was criticized by local and state officials and sparked a debate over tax increment financing, the economic development tool used to provide the financial incentives to the department store.

The plaintiffs were made up of eight individuals and 18 companies. Developers Gerry Ambrose, Hunter Parks and Kevin O’Brien, a local McDonald’s restaurant franchisee, where among the plaintiffs.

Olson said he expected the settlement agreement to be filed in Johnson County District Court this week.

Von Maur Settlement

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