Iowa City to consider purchasing ‘critical’ downtown property on S. Linn Street

IOWA CITY — The city of Iowa City is considering the $4.5 million purchase of a vacant downtown property, which formerly housed a U.S. Bank drive-through, after a developer’s plans for student housing there will not move forward.

The Iowa City Council is scheduled to vote Tuesday on an agreement to acquire the property at 21 S. Linn St. The funds would come out of the city’s general fund reserves.

“The strategic acquisition of this site allows the City to take a lead role in the redevelopment of this critical property,” City Manager Geoff Fruin said in a memo to the council. Purchasing the property would allow the city to ensure the redevelopment adds to the stability and vibrancy of downtown, he said.

If approved, the city would begin planning for the site’s development this fall and continue next year.

Chicago-based CA Ventures — which developed RISE at Riverfront Crossings, a luxury student apartment building — had wanted to build a 13-story mixed-use building with commercial space and student housing on the Linn Street site. The property was purchased in October 2021 from First National Bank for $3.8 million.

Shortly after purchasing the property, the bank was demolished and the surrounding surface parking lot was removed in anticipation of the project. CA Ventures’ site plan for the project was approved by the city in August 2022, which is the last step before applying for a building permit.

Earlier this year, the city began getting informal inquires on the property from other developers, Fruin said. Staff confirmed with CA Ventures that the group no longer intends to develop the site and is looking to sell the property.

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The informal inquires were focused on “similar student-oriented housing opportunities,” with some looking at expanding the development through acquiring neighboring properties to the west on Washington Street, Fruin said.

City staff believes it is “highly likely” any future buyer would target student-oriented housing given the current market conditions, Fruin said.

With Iowa City acquiring the property, the city “can work to identify uses that the market may not be producing but that would add to the long-term stability and vibrancy of Downtown Iowa City,” Fruin said.

Acquiring the property will allow the city to facilitate redevelopment “in the best long-term interests of the community,” Fruin added.

Fruin said the city has a strong track record in facilitating private redevelopment that “provides long-term economic stability, introduces new uses and enhances the public realm.” Examples he listed included the Chauncey, RISE at Riverfront Crossings and the land that is now home to hotelVetro and Bread Garden Market.

“In each of these cases, the City successfully identified redevelopment goals and worked with the private sector on the development of projects that have added considerable long-term value to the overall community,” Fruin said.

Redevelopment planning efforts would begin later this year and include establishing high-level goals. A request for proposals would be created next year as a next step to identify potential partnerships. The planning phase could last a year or more, Fruin said.

During the planning phase, the city will use the site for construction staging for the Dubuque Street reconstruction and Senior Center exterior rehabilitation projects.

The land is currently valued at just under $2 million, according to the Iowa City Assessor’s website. The purchase price of $4.6 million reflects a 20 percent increase over the 2021 purchase price and takes into account the demolition and parking removal, Fruin said.

If approved, the city anticipates closing on the property by the end of August.

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