Is downtown Iowa City ready to reinvent itself again?

IOWA CITY - Tom Markus wants more people to experience downtown Iowa City as he does.

Since starting as city manager in December, Markus and his wife have lived in Vogel House, a stylish apartment building at Linn Street and Iowa Avenue. They walk to the grocery store, restaurants and shops. His office in City Hall is a couple of blocks away.

“We can go more than a week without getting into a vehicle,” Markus said.

Iowa City's downtown may be the envy of communities statewide, but city officials, business leaders and developers believe the area is at a crossroads.

That feeling has in part been lingering since the late 1990s, when Coral Ridge Mall opened in Coralville, diminishing downtown Iowa City's status as a retail hub. More recently, Iowa City's 21-only law went into effect last year, banning people younger than 21 from bars at night.

Karen Kubby, the owner of Beadology Iowa, 220 E. Washington St., said the flavor of downtown changed because of Coral Ridge Mall, with more bars moving in. In fact, the number of liquor licenses downtown went from 30 in 1999 to 46 a decade later.

“We're in another one of those big moments, it seems to me,” she said at a recent Iowa City Area Chamber of Commerce meeting.

Downtown stakeholders are looking to residential, office and retail opportunities as the foundations of a makeover.

The potential is there, according to an independent market study of downtown Iowa City in 2007. It concluded downtown had the potential over the next decade to attract 283,000 square feet of new retail and restaurant space, 3,640 housing and rental units and 353,200 square feet of office space.

Markus came to Iowa City from Birmingham, Mich., which has what people there consider to be the Detroit metro area's premier downtown. He believes the future of downtown Iowa City is in buildings standing 10 stories or taller with retail, office and residential space.

Housing plans

The key is residential, Markus said, particularly attracting non-students.

The University of Iowa's main campus is across the street from downtown, and 30,000 students live nearby. City officials have long wanted to attract an older, more permanent population downtown to further support surrounding businesses.

Plaza Towers, a 14-story building with commercial space and upscale housing on the Pedestrian Mall, is a model for this. The city plans to incorporate housing aimed at young professionals in a mixed-use parking facility at the corner of Linn and Court streets. And another high-rise is slated for the intersection of Clinton and Burlington streets.

The latter two projects are south of the traditional downtown boundary of Burlington Street. But city officials want to blur that line, and they have big plans for a public-private redevelopment of the area - known as the Riverfront Crossings district - into a dense, pedestrian-friendly neighborhood that would complement downtown.

Also part of the plan is Iowa City-to-Chicago passenger rail, with the depot a few blocks south of downtown. Gov. Terry Branstad has balked at the potential cost, but local governments, including Iowa City, are considering chipping in.

Office advocate

Projects already are being planned for the area. That high-rise at Clinton and Burlington streets is commonly called Hieronymus Square. It may be 12 stories tall with commercial space, offices and housing. It also would include the UI's School of Music.

Kevin Digmann of Hieronymus Square Associates believes office space is the key to the downtown's future. He also manages Old Capitol Town Center, which used to be primarily a retail center but in the past few years has seen the UI take over the majority of the space.

Digmann said the nearly 1,000 UI employees who work in Old Capitol give a boost to downtown restaurants and stores, although the UI does not pay property taxes.

“Residential is great, but if you really want to add more people, I think office is a huge component of that,” he said.

The high-rise plan now calls for about 60,000 square feet of office space. The project's history is a reminder that while people may have big plans for downtown, nothing is guaranteed.

Hieronymus Square was first proposed in 2006, minus the UI's involvement. Soon after, another group, 301 Holdings, announced its plan for a 13-story mixed-use building on the same block.

Then the economy tanked and both projects stalled. They were given new life when the UI decided to relocate its flooded School of Music to the area south of downtown. The developers then combined their projects.

Casey Cook of Cook Appraisal in Iowa City is a fan of the high-rise but said the economics of such projects can make it hard for them to be financially feasible. They are expensive to construct and have to be nice to justify the cost, he said. Then the property taxes are high, particularly on the commercial space.

“It's hard for it to pencil out,” he said.

Business clusters

Meta Home, a home furnishing store, is exactly the kind of business city and business leaders want downtown. But after a decade there, owner Leigh Bradford recently moved the store to Fifth Street in Coralville.

She said Meta Home didn't really fit with the other downtown businesses, many of them clothing shops, restaurants and bars. She would have preferred more furniture stores.

Clustering similar businesses is something the downtown study also suggested. And offering another example that the re-envisioning of downtown will be easier said than done, the study said putting a complementary business next to Meta Home was “a perfect opportunity to build on Meta as an anchor.” That isn't going to happen now.

Asked what variables need to be in place for a retailer to be successful downtown, Bradford said more affordable rents.

“I've lived here for 18 years, and I saw so many nice little retail stores just fold up and go away,” she said.

The 2007 downtown study found that office and retail space rented for between $12 and $30 per square foot. At $20 a square foot, a 2,000-square-foot space would cost $3,333 a month.

Opponents of the 21-only law warned that only bars could afford to rent the larger spaces downtown. But Jeff Davidson, the city's planning and community development director, believes the closing of a few bars, which already has happened, could reduce rents slightly. Cook agreed.

Recruiting retail chains

The buzz of late has been whether to recruit national retail chains to increase traffic downtown.

Catherine Champion, owner of clothing stores Catherine's, 7 S. Dubuque St., and Catherine's Cheap & Chic, 105 S. Dubuque St., said she'd welcome the competition.

“I think it makes me sharper, it brings a different traffic pattern downtown and who knows, we may get new people (shoppers),” she said.

Champion also is the president of the Downtown Association, a non-profit organization that promotes the area. An effort is under way to gain support for a special tax district to pay for a downtown manager to market the area and recruit businesses.

Nancy Quellhorst, president and CEO of the Iowa City Area Chamber of Commerce, said the 21-only debate brought downtown Iowa City to the attention of outside retailers and developers. Some of them have visited and remarked on the potential they see for more retail, she said.

Quellhorst, an ardent backer of passenger rail, said development professionals have said redeveloping the area south of downtown and the addition of moderately priced residential and office space could re-create downtown.

While Iowa City is lucky to have a vibrant downtown now, she said, “This could elevate us to compete in a completely different arena.”