Study shows UI’s ‘hidden’ economic impact in I.C.

IOWA CITY - University of Iowa students and visitors have a $513 million “hidden economic impact” on the area each year, a study released Thursday found.

It's hidden, the report said, because those numbers don't show up in U.S. census data. That's important because many retailers and restaurants use data based on the census to decide where to locate, according to the report.

The city of Iowa City and the UI commissioned the study, for $55,000, from Virginia-based Divaris Real Estate in hopes of getting that kind of information to bring more retailers to downtown Iowa City.

“The report will be an excellent tool to recruit businesses,” said Nancy Quellhorst, president and CEO of the Iowa City Area Chamber of Commerce.

The 123-page study, which the City Council will review Tuesday, also considers the Riverfront Crossings District south of downtown slated for a major redevelopment. (To view the report, click here.)

The city and business representatives have been discussing the changing nature of downtown for years, and since last year's 21-only bar law took effect, the focus has been on adding more retail, owner-occupied housing and office space.

The study, conducted by Divaris' John Millar and Anne Millar Wright, found that 11,000 of the UI's 30,000 students were counted in the census as households with little or no income. Iowa City encouraged students to mark Iowa City as their home in the census, but most students have low incomes when counted separately from their parents' households.

Divaris got students' hometown ZIP codes from the UI and determined that the average household income in their hometowns is $81,600 annually and that the UI student body generated $105 million last year in shopping potential.

The report also projected that people visiting the UI for things like sporting and cultural events create $408 million annually in potential expenditures.

Together, that's $513 million not found in the census.

“That's the kind of information that we really wanted to be able to have in our back packet” to pitch to businesses, said Wendy Ford, Iowa City's economic development coordinator.

Analyzing the retail marketplace in a 20-mile radius, the report found there is an opportunity for 308,669 square feet of additional retail.

Coral Ridge Mall, which opened in 1998, is the major retail hub in the area. Downtown Iowa City is known more for locally owned and specialty stores.

Iowa City officials and even some downtown business owners have suggested bringing a couple of national chains downtown to attract more people. Developer Marc Moen recently bought the former Vito's bar with that goal.

“We need to get more of a critical mass of stores that will bring people downtown,” said Jeff Davidson, Iowa City's director of planning and community development.

Millar and Millar Wright agreed that while the focus of downtown should remain local, some national retailers should be added. They also said one of the uses of Riverfront Crossings should be to give national retailers an alternate venue to Coralville.

Divaris identified Boulder, Colo., and Charlottesville, Va., as the “two best analogue cities for Iowa City.” Each has districts similar to downtown Iowa City with local shops but with several national retailers and restaurants too, according to the report.

A survey that was part of the Divaris study drew criticism from some people in part for questions they interpreted as pushing for national chains at the expense of locally owned shops.

Mike Draper is the owner of Raygun clothing store, with shops in downtown Iowa City and Des Moines' East Village. He's skeptical that more people will come to downtown Iowa City because they see a national store or restaurant they recognize.

“I think every neighborhood should really assess who their demographic is and work to please that demographic more than trying to be a neighborhood that appeals to everybody,” he said.