Iowa City committee recommends $14.2 million for high-rise project

IOWA CITY — The developer of a proposed 15-story building in downtown Iowa City received support from City Council members Monday for a request for $14.2 million in public money for the project.

The City Council's Economic Development Committee voted 3-0 to recommend the full seven-member council approve the financial package for the Moen Group's project, known as the Chauncey.

Mayor Matt Hayek, a committee member, said if the city takes a 'passive approach' to the city's goal of redeveloping downtown, it will get results that don't move the community forward.

'This is an opportunity to set the bar and continue what I think has been a string of impressive projects for the city in the downtown area,' he said.

For the $49 million project to become a reality, the City Council still must approve a development agreement, which would include the financial package, rezone the public property and vacate an ally.

It's not yet known when those will come before the council, but on Tuesday night, the council is to vote on a plan that would start the process of allowing the city to put money toward the Chauncey and other projects.

It's been known for more than a year and a half that the city would be asked to help fund the Chauncey.

The City Council in January 2013 picked Marc Moen as the preferred developer for the city-owned site, at College and Gilbert streets on the eastern edge of downtown, over several other proposals. The sides have been negotiating since then.

The plan at that time called for a 20-story building and anticipated a need for $13.45 million in city financial assistance.

The size of the building, its location and the amount of the public money requested led to opposition from some community members. A legal challenge has been filed to try to stop a building of that height from going up at the location.

Rockne Cole, a plaintiff in the lawsuit, said he appreciates the effort to reduce the size of the project, but he maintains that it still does not meet the city's own planning document, which calls for a transition from the downtown to the neighboring residential area.

He also objects to the use of public money for a private project.

'I think this is in essence a tax subsidy for the one percent, and the one percent does not need government assistance for housing,' he said.

Moen said Monday that reducing the height of the building addresses the concerns about its size, although it would still be the tallest building in Iowa City. It dropped to 15 stories by cutting one floor of office space and four floors of residential space, he said.

He also said they tried to keep all of the components that were part of the original proposal. The Chauncey is to have a movie theater, bowling alley, high-end office space, a hotel and eight floors of residential units.

'We are as committed to this project as we always were, and I think it will really move the city forward,' Moen said.

The $14.2 million in city money would come in the form of $12.1 million in tax increment financing and $2.1 million for taking what Moen would pay for the property and putting it back into the project.

The city estimates the Chauncey would have a taxable value of at least $24 million on a property that produces no tax revenue now. It also would generate an undetermined amount of hotel/motel tax each year.

Without the city assistance, Moen has said, the Chauncey could not happen.

The city used the National Development Council, a non-profit organization based in New York City, to analyze the project, and it came up with the $14.2 million figure.

The city still is calculating the length of time it would take to pay back the money, but Finance Director Dennis Bockenstedt said he anticipates a 20-to-25-year term.

The three City Council members that make up the Economic Development Committee — Hayek, Susan Mims and Michelle Payne — said using an outside expert helped assure them that the financial assistance was truly needed.

Iowa City has been critical of other communities' use of tax increment financing, particularly Coralville. But committee members and city staffers said Tuesday they support sensible uses of what is often called TIF, and said it is one of the few economic development tools the state has made available to local governments.

'I think Iowa City has used it in a very responsible manner,' said Susan Mims, chairwoman of the council committee.

Moen said he hopes to start construction next year. It would take two years to have the residential components ready and another six months for the commercial space, he said.