6 stories or 12? Iowa City Council to weigh downtown building proposals next month

IOWA CITY -- The Iowa City Council wants more public input and clarification from potential developers before it chooses between two development proposals for the city-owned downtown lot at 21 S. Linn St. as early as next month.

The city bought the property, which used to be the site of a U.S. Bank drive-thru, for $4.5 million in 2023 after a student housing project fell through. The council’s goal was to take a lead role in influencing downtown development.

Initially there were three development proposals for the property at 21 S. Linn St., but two of the teams, Salida Partners and Iceberg Development, now are working together on a proposal for a 12-story mass timber structure with large glass panels. The other developer, Grand Rail Development, proposes a six- to eight-story building with steel and a brick facade.

Both proposals include a 200- to 300-person capacity entertainment venue on the ground floor to be managed by the nearby Englert Theatre, as well as space for a “Stories Project” museum — a concept for an interactive museum that celebrates storytelling — as well as a mix of affordable and market-rate housing and office space.

“At this point in time, I think we have the level of detail and understanding that you should expect at this stage in the process, and then as we move to a sale agreement or a development agreement, those details will become much more fine-tuned in alignment with your goals,” City Manager Geoff Fruin told council members at a work session Tuesday.

Last year, the city conducted public input sessions and surveyed the community to gather public opinion on what should be done with the lot. The results of more than 6,000 responses from about 1,800 respondents showed residents most wanted to see the property used for green space, affordable housing, market-like retail spaces or mixed-use development.

Based on those responses, the city issued a request for proposals for the property.

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Grand Rail Development proposal

Grand Rail Development’s proposal, which developers say could cost about $40 million, calls for a six-floor building with a brick facade to match the surrounding architecture and pay homage to Iowa City Hall, which was once located at the lot.

However, the development team has said it is open to adding two floors and open to changing the layout and uses within the building.

Under the six-story proposal, the first floor would provide 6,300 square feet of entertainment space, managed by the Englert, though the development team also is open to dividing the space among potential restaurant or retail options.

The team also is open to including the “Stories Project” museum in the building.

Two upper floors would offer 20 residential units — 16 at market rent and four reserved for affordable housing. The Housing Fellowship, a nonprofit housing management organization that provides affordable rentals in Johnson County, has submitted a letter indicating it is interested in owning and managing the units.

The development team has said any additional residential floors also would include two units for affordable housing.

The remaining three floors would be reserved for market-rate office space. OPN Architects and ACT have expressed interest in the space. The development team also is willing to work with the city on acquiring office space for its own operations.

The development team has proposed a $3 million land purchase price, and its proposal does not include a request for tax increment financing incentives. The development team, though, has indicated it would still strive to reach LEED Silver standards for energy efficiency.

The city estimates the six-story option would have a taxable valuation of around $15.6 million.

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Iceberg development proposal

The combined development team’s new proposal, estimated at $41.7 million, contains elements of each of the original projects.

The first floor of the 12-story building would include an entertainment venue managed by the Englert and a number of micro-retail spaces, each about 500 square feet.

The second floor would include part of the “Stories Project” Museum and a coworking space with a bar and cafe. The third floor would be used exclusively for the “Stories Project.”

The fourth floor is for office space for ACT, which the college and career readiness service says it’s interested in, while the fifth would include 16 studio lofts possibly for use by the Iowa International Writers’ Program and the Englert’s touring acts.

Floors six through eight would provide 33 units of affordable housing for people over 55 who earn less than 60 percent of the area median income. The developers said they intend to use low-income housing tax credits from the state, guaranteeing a minimum 30-year, low-income affordability period.

Floor nine would provide 12 single-bedroom units of non-age-restricted affordable housing. All affordable units would be managed by the Housing Fellowship.

The remaining three floors would be a mix of market-rate housing, with one floor exclusively for people over 55.

The developers are proposing a $2 million land purchase and tax increment financing help over a 15-year period, which the city estimates could equate to around $9 million. To be eligible for TIF incentives from Iowa City, the project would have to meet LEED Silver standards for energy efficiency.

However, city staff previously has expressed concerns over the use of low-income tax credits as construction could be delayed. The development team would not be able to apply for the Iowa Finance Authority’s competitive tax credit program until the 2026 round of funding, since the 2025 deadline has passed. There also is no guarantee the credit would be awarded.

Next steps

The City Council plans to continue the conversation about the Linn Street property at its next meeting May 6.

Before that meeting, the council is seeking clarification from both development teams on other uses for the spaces marked for an entertainment venue and “Stories Project” museum and how the teams will ensure longtime affordability access.

The council also would like finalized numbers from the Grand Rail Development team should its proposal become eight stories as opposed to six.

At this point neither city staff nor any member of the council has indicated a preference toward either proposal. Council members Josh Moe and Megan Alter have abstained from participating in conversations around the development due to a conflict of interest.

Comments: megan.woolard@thegazette.com

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