Developer: River Landing incentives will be worth it

CEDAR RAPIDS — The developer partnering with the city of Coralville on its Iowa River Landing offered a 'long overdue' defense of the project Wednesday against critics who say it will use millions of public dollars to lure a Von Maur department store from Iowa City.

The $100 million first phase at Iowa River Landing has become a focal point of legislative discussions over the use of tax increment financing. A TIF effectively freezes the property taxes on a site at pre-development levels and diverts the new taxes, or increment, into a fund often used to pay for infrastructure costs.

'I would submit to you that Coralville has been very smart about how and where they use TIF, and the results, I would argue, speak to that,' said Paul Buss, president of San Diego-based OliverMcMillan, during a meeting with The Gazette Editorial Board. He used words like 'visionary' and 'dead-on right' to describe the city's approach.

Under the development agreement Coralville approved with Davenport-based Von Maur, it will pay the construction costs for the entire store and provide land worth more than $1.5 million for $10. One outside expert estimated the total deal, including other development costs, to be worth up to $16 million.

Buss placed the incentive package at the 'middle to high end of the road' relative to other similarly funded deals around the country. He said TIF or other sizable public incentives are almost always needed to spark such developments.

'It's fairly middle-of-the-road, but we got what we could,' the developer said. 'We negotiated and we negotiated hard. They originally asked for more, but we cut it back.'

The incentives totaled considerably less than an offer OliverMcMillan made at a $150 million development in Lindenhurst, Ill., Buss said, and that offer was rejected by Von Maur.

As for accusations that Coralville is 'stealing' Von Maur from Iowa City, Buss said, 'I think the blame to Coralville is a little off. Von Maur wanted to be freeway-oriented. They were going to move at some point.'

He said Von Maur had considerable worth to the River Landing project and the benefits it will provide will exceed the incentives.

Buss didn't dismiss the possibility, though, that Von Maur would close its Sycamore Mall location in Iowa City after it opens at Iowa River Landing. He said company officials with whom he spoke Wednesday morning hadn't yet decided.

Other tenants

Buss also emphasized that the projects announced to date are well under half of the area of the development. Undisclosed other users under negotiation for Iowa River Landing 'will be gravy' and should pay back the TIF-funded development costs sooner than the projected 2038 date, he indicated.

Buss said OliverMcMillan originally wanted to get some housing into the development, but the challenging market was a deterrent. He said student housing would still be a possibility, though.

OliverMcMillan remains interested in the idea of adding a 'City of Literature' attraction to the project, he said. It would be an educational entertainment attraction highlighting the literary talent honed at the University of Iowa Writers' Workshop.

A specialty movie theater chain that offers a 'living room-like' setting to attract date-night couples is also an attractive idea for the development, Buss said, but film distribution rules could be problematic.