'Infill' development offers financial benefits, challenges

As Corridor communities and developers work to reduce the cost of new nonresidential buildings and their carbon footprint, infill development is gaining more attention.

Infill development is considered new construction on obsolete or underused land in a community where utilities, roads and services like police and fire protection are already provided. The development strategy has been employed successfully in a number of Iowa communities, including Cedar Rapids and Iowa City as well as Cedar Falls, Davenport, Des Moines, Dubuque and Waterlo0.

Christine Butterfield, Cedar Rapids director of community development, said the Cedar Rapids City Council began looking at the city's costs to extend utilities and services for "green field" development and the potential benefits of  infill development before the change of city government in June 2005. Butterfield said the 2008 flood and subsequent economic downturn has encouraged more infill development.

"The council was participating in a broader national discussion about infill development," Butterfield said. "Many communities were already looking at infill development, anticipating the overall economic decline. Looking at it from a land use perspective as well as from an economic development perspective, using existing sites with existing infrastructure makes sense."

Butterfield cited two projects announced recently in Cedar Rapids are good examples of infill development.

Intermec Corp. is planning a $10.5 million, 78,000-square-foot building at 601 Third St. SE. The two-story building, which will house about 250 employees and host many of the Everett, Wash.-based company's engineering functions, will be located on the site of a former concrete plant.

Raining Rose,  a producer of natural body care products, is building a $13 million, 122,000-square-foot, two-story headquarters and manufacturing facility at 3015 First Ave. SE. The project, which will retain 97 jobs and create 15 new positions, will be located on the site of a former LaPlante-Choate/Allis Chalmers heavy equipment manufacturing facility.

"The Raining Rose site definitely had a higher or better use that was compatible with the existing neighborhood and also provides access from a major corridor like First Avenue," Butterfield said. "When the city council wants to provide incentives for such a project, we assign a case manager to ensure that as the company proceeds with the land development process, there are no hiccups, it is a smooth process and the deadlines are clear."

Additional examples of Cedar Rapids infill development include the new $160 million U.S. Federal Courthouse at Eighth Avenue and First Street SE, the Cedar Rapids Events Center, the Physicians' Clinic of Iowa Medical Campus and 221 Town Centre, constructed on the site of the former Montrose Hotel at 221 Third Avenue SE.

Jeff Davidson, director of planning and community development in Iowa City, cited the $27 million, 14-story Plaza Towers building at 221 E. College St. on the Pedestrian Mall as an example of successful infill development. Developer Marc Moen's mixed-use project, constructed with city financial participation on the last urban renewal parcel in downtown Iowa City, nets the city almost $1 million annually in property tax revenue.

"Marc Moen will tell you that Plaza Towers would not have happened without the city's assistance," Davidson said. "We participated in about 25 percent of that project and it's been a heck of a deal for everybody. The city invested $7.3 million and the assessed valuations of the condominiums were so high that it was completely repaid in slightly more than eight years."

Davidson said infill development is nothing new in Iowa City.

"There  always has been a great deal of infill development in this community as older office and commercial buildings were replaced with new structures," Davidson said. "What is driving it today is the notion that cities simply cannot afford what they were once able to do. We are blessed here that we still have a modest rate of growth and tremendous potential.

"The bottom line is that we cannot afford sanitary sewer extensions, water line extensions, new fire stations and additional police officers. With infill development, you are able to save those enormous costs and use the funds to continue existing city services."

Davidson said infill development remains a possibility in downtown Iowa City.

"If you have two older buildings that are bringing in a combined $30,000 a year in property taxes and you're planning to demolish them and erect a mixed use building that will bring in $300,000 in property taxes, we definitely would be interested," he said. "If you took a quick walking tour around the downtown area, you would see a number of infill opportunities."

Although developers are able to save the cost of constructing utilities when redeveloping an infill site, there are some drawbacks.

"If you are plowing new ground, you can design the access points where they make the most sense," said Scott Byers, developer of Marketplace on 1st and Lindale Crossings, retail developments on opposite corners of First Avenue and Highway 100 near Lindale Mall.

"With infill development, you inherit the existing access and eggress or traffic infrastructure that is expensive to change and may not be ideal for your development," Byers said. "The fact that you have utilities extended to your site with infill development is more of a positive, but you also may have to reroute them, which creates additional expense.

"When you start with a blank canvass, it's easier to paint the Mona Lisa than if someone else has already started the painting and you have to put the smile on it."

Gerry Ambrose, a Coralville commercial and residential developer, said infill development projects like Edgewood Market at Edgewood Road and Wilson Avenue SW and Edgewood Station on the perimeter of Westdale Mall have to make sense from an economic perspective.

"We assembled a lot of properties for Edgewood Market that seemed to be underutilitized," Ambrose said. "If a couple of the homeowners had wanted too much money, they would still own them. We would have walked away from them unless we would have received some city assistance."

Ambrose, who is developing a retail center between 29th and 33rd avenues SW off Wiley Boulevard SW that will be anchored by a Kohl's department store, said he had to pay for a $16,000 traffic study that included the traffic count at Edgewood Road and 33rd Avenue SW.

"When we were developing Edgewood Station, the city wanted a traffic study that would have included whether a traffic light was needed at the entrance to Panera Bread, Bank Iowa and Wendy's," Ambrose said. "We were developing a small shopping center and a bank where there had previously been a grocery store (Econofoods), a beauty salon and a laundramat. There's already a traffic light at that entrance to Westdale Mall on Edgewood Road.

"Cedar Rapids is the only community in the Corridor where I've had to pay thousands of dollars for a traffic study. And if someone else wants to use that traffic study for their project, I won't receive any compensation."

Davidson said probably the biggest obstacle to infill development is the political process.

"Everybody is invested in what is there currently, and everyone is scared to death about what is planned because it's speculative," he said. "They're worried that it will negatively impact their property values. That's simply what you have to navigate your way through to get approval for an infill development project.

"A 'green field' project is much easier to get approved, but it's much more costly. Developers have to decide whether they want to navigate their way through the blood-letting of the political process or just pay the higher costs of a green field project."