Committee supports project to convert former Iowa City bar to retail, office space

A private project to convert a longtime downtown Iowa City bar into retail and office space edged closer Tuesday to getting financial support from the city.

The City Council's Economic Development Committee voted 3-0 to recommend that the full council award a $250,000 grant toward the $2 million project proposed by developer Marc Moen.

Committee members Regenia Bailey, Susan Mims and Mayor Matt Hayek called it an exciting project that could spur other retail and office development downtown. That's been a priority for city officials for years, and especially with the expected changes downtown following last year's implementation of a law than bans people younger than 21 from bars at night.

“The ripple effect, your leadership on these things will bring others in,” Bailey told Moen.

Moen's plan calls for taking the former home of Vito's, 118 E. College St., and attracting a national retailer for the 5,247-square-foot first floor of the building. He also wants to put high-end office space on the 3,814-square-foot second floor.

Vito's has been at the location since the late 1970s, according to the city, but recently closed.

Moen has declined to say what retailers he is talking with but stressed that he wants downtown to continue to be dominated by locally owned stores. Many downtown business owners and city officials are interested in the idea of attracting a national chain to bring more people downtown.

Moen, who is known for downtown projects like Plaza Towers and Vogel House, said people need to understand that it may be a few years before a retailer moves in. For example, it took at least two years from the start of negotiations for Starbucks to move into the building he owns at 228 S. Clinton St.

“That's a long haul,” he said of working with national chains.

In the meantime, he's considering allowing artists to use the first floor to display their work, something he said has been done successfully in larger towns.

The building will need a lot of work first. Moen and Jeff Davidson, the city's planning and community development director, said it is in terrible shape, with wires exposed, water leaks, a broken sewer line and more.

Moen said the second floor, which he intends to convert into office space, has been vacant for at least 30 years. He'd like to expand the office project with space in an adjacent building, but a long-term lease there may complicate those efforts.

The $250,000 from the city would go toward adding an elevator and replacing the roof and the heating, ventilation and air conditioning units, Davidson said. The grant would come in the form of tax increment financing.

The city assessor estimated the redeveloped property will generate $31,250 more annually in property taxes than it does now, which over eight years adds up to $250,000. That $31,250 increment would go back to the project for that time, and in the meantime the city, county and school district would continue to collect the same amount of taxes they do now.

In exchange, Moen has promised not to put a bar, restaurant or housing in the space. City officials have been interested in limiting the number of bars downtown, and because of zoning code, if the Vito's site is converted to a non-bar use, it's highly unlikely it could ever become a bar again.

The full council is expected to vote on the grant at its May 3 meeting. It seems likely to easily win approval given that it's the type of project city and downtown leaders have been hoping for and the three members on the Economic Development Committee have already expressed their eager support.

“I applaud you for being one of the first in” on this type of project, Hayek told Moen.