Iowa City selects development team for Downtown Linn Street lot

IOWA CITY — Iowa City is moving forward with plans for a mixed-use six-story building by Grand Rail Development on the vacant lot at 21 S. Linn Street, a property the city bought for $4.5 million in 2023 in an effort to “add some long term stability and vibrancy to downtown Iowa City.”

The city council had been deciding between two proposals: Grand Rail Development’s six-story proposal and a 12-story proposal from Salida Partners and Iceberg Development.

Salida Partners and Iceberg Development withdrew their proposal over concerns about being able to secure Low Income Housing Tax Credits and general concerns about economic uncertainty.

“I felt like we had two really interesting and potentially very exciting proposals before us, with the Iceberg and Salida and the Grand Rail, and my take on that was going to be tough to choose between the two of them … I don't see a reason not to move forward, since one of the two proposals that I thought was already exciting to me still is there,” council member Shawn Harmsen said during a work session Tuesday.

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Grand Rail Development proposal

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

The development team has said it is open to adding two floors to the plan and 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.

City council members have indicated they would like to see micro retail spaces — somewhere in the ballpark of 500 square feet each — on the ground level to provide opportunities for small businesses to have a downtown retail storefront.

The team also is open to including the “Stories Project” museum, a concept for an interactive museum that celebrates storytelling, in the building.

Two upper floors would offer 20 residential units — 16 at market rental rate and four reserved for affordable housing. The Housing Fellowship 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. 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, which is required under the city’s updated tax increment financing incentive policy.

Iceberg Development and Salida Partners withdraw proposal

Iceberg and Salida Partners’ 12-story proposal also offered a mix of retail, residential and an entertainment venue.

“As we have consistently expressed, our team is committed to pursuing projects only when we are confident in their long-term viability and, in this case, a purposeful community benefit. Given recent changes to the rules of affordable housing and the economics of the marketplace, we are no longer confident that this project is a viable long-term project,” representatives of Iceberg Development and Salida Partners wrote in a letter to city staff.

The proposal was anchored by affordable housing units for people over 55 for which the developers hoped to secure Low Income Housing Tax Credits. The proposal also called for a mix of market rate and affordable non age restricted units.

The development team, in a letter to city staff, wrote that securing the tax credits, as well as coordination between the city and regional Housing and Urban Development would not be feasible.

“Our vision to integrate both senior and nonsenior units within a single building requires significant coordinated efforts between the City, the regional HUD office, and the national HUD office. Given current federal policy preferences and political climate, we do not believe this level of coordination is realistically achievable during the time frame required for this project,” the letter said.

Next steps

Now that a development team has been selected, Grand Rail will work with city staff to negotiate the exact terms and scale of the development. When a plan is nearly finalized, it will be brought back before city council.

“ … When you look at the scale of the building, the general architecture, the mix of uses, all of those things would be consistent, knowing that some may change a little bit, but you're not going to see a drastically different project come back and we wouldn't plan additional council work session time to really talk about it until we had those details worked out,” City Manager Geoff Fruin said at a council work session.

Fruin said the negotiation process between the development team and city staff could take a few months to complete.

“ … This isn't a binding agreement on a certain project, so this provides us a chance to move forward and work with the team, which I'm happy to do … I'm just excited to see that land not just be fenced off, barren land anymore and I think the public would like to see that too,” council member Oliver Weilein said.

Comments: megan.woolard@thegazette.com

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