Gov. Branstad's meeting with Coral Ridge Mall owner questioned

CORALVILLE - A meeting last month between Gov. Terry Branstad and the chief executive officer of the corporate owner of Coral Ridge Mall to discuss tax policy and tax increment financing is drawing criticism from Coralville leaders.

Tax increment financing in particular has been a point of contention between Chicago-based General Growth Properties and city officials in Coralville and has been a major topic of debate in the campaign for the Nov. 5 municipal election.

The governor's office would not say specifically whether Coralville came up at a Sept. 3 meeting in Des Moines, saying only that issues of interest to General Growth, including tax policy and tax increment financing, were discussed.

But the meeting has Coralville leaders questioning whether this is another instance of outside interests trying to bring change to the leadership of this town of 20,000 people.

“I guess you have to draw a conclusion, and for … them to be there meeting with the governor and the lieutenant governor would seem to be very unusual and extremely disappointing,” Coralville City Administrator Kelly Hayworth said.

Branstad, a Republican, met with Sandeep Mathrani, chief executive officer of General Growth Properties, and another representative of the company, according to the governor's office. Also present were Lt. Gov. Kim Reynolds, policy adviser Michael Bousselot and Marc Beltrame, an attorney with the Brown Winick law firm in Des Moines. That's the same firm where former Branstad chief of staff and General Growth attorney Doug Gross works.

The Gazette received a copy of the governor's electronic calendar notice for the meeting through a request made under Iowa's open-records law. The meeting occurred in Branstad's formal office.

Coralville's use of tax increment financing, its large debt and the city-owned Iowa River Landing development have been the source of intense debate for a couple of years, especially since the city used tax increment financing to bring a Von Maur department store to Iowa River Landing.

That debate has heated up with this fall's election, with eight candidates for three seats on the City Council and four people running for mayor. The race has drawn an unusual amount of outside attention, including from Gross and General Growth Properties.

If Branstad is taking an interest in business involving the city of Coralville and General Growth Properties, it would not be the first time.

Hayworth said this week that around the time the city announced its deal with Von Maur in fall 2011, he received a phone call from Branstad asking “if we could work with General Growth” on getting Von Maur into Coral Ridge Mall instead.

Hayworth said he told the governor the city already had an agreement with Von Maur. He said he has not heard from Branstad since then and has felt no pressure from the governor's office regarding Von Maur or this fall's city election.

The Gazette reported two years ago that General Growth Properties made a late bid in summer 2011 to bring Von Maur to Coral Ridge Mall. The city rejected the idea.

City Council member Mitch Gross said at the time that Doug Gross, no relation, threatened to make Coralville's use of tax increment financing a legislative issue. State lawmakers did take up the matter in early 2012.

Coralville officials also said General Growth had waffled on a chance to get Von Maur two years before that and also declined an opportunity to develop Iowa River Landing.

The Gazette reported last month that Gross sent Don McDowell, a former GOP staffer in the Iowa Senate and at the time an employee of Gross' law firm, to Coralville to work with Citizens for Responsible Growth and Taxation, a group of area business people and residents critical of Coralville's financial practices.

McDowell teamed with Jordan Willison, an employee of Coralville McDonald's restaurant franchisee Kevin O'Brien's, to recruit candidates and help with their campaigns. O'Brien is a leader of Citizens for Responsible Growth and Taxation and was a plaintiff in a lawsuit against the city that unsuccessfully tried to stop the Von Maur deal.

Three City Council candidates and a mayoral candidate who are calling for change in Coralville have acknowledged speaking with McDowell or Willison and in some cases receiving help from them.

O'Brien is listed as an expected attendee at the Sept. 3 meeting in the governor's office. But he said Friday he did not participate in the meeting and does not know how his name got on the governor's official calendar.

The governor's office confirmed O'Brien was not present. It said General Growth Properties called for the meeting and typically the names of those attending are provided by the meeting contact, which in this case was an assistant to Mathrani, the company's chief executive officer.

O'Brien said he has never spoken with Mathrani. He declined to say whether he has ever spoken with Branstad or any of the governor's staff about Coralville affairs.

“I don't know that that's anybody's business,” O'Brien said.

A General Growth spokesman declined to comment for this story.

State Sen. Bob Dvorsky, a Democrat from Coralville who is a strong backer of current city leaders, said he believes the Sept. 3 meeting was about Coralville and said it would be inappropriate for Branstad to get involved in the city's business.

As for why the governor would be interested, Dvorsky said, “Doug Gross is clearly his guy, and so if Doug Gross says something, the governor responds.”

The governor's office did not directly respond to a question about whether Branstad has taken a personal interest in the Nov. 5 Coralville election.

“The Governor and Lt. Governor meet with a number of businesses to hear their concerns and to encourage them to grow jobs in Iowa,” Matt Hinch, the administration's chief of staff, said in a statement.

Gross did not return a message seeking comment.

Coralville Mayor Jim Fausett, who is not seeking re-election, also suspected Branstad's meeting with Mathrani dealt with Coralville.

“I cannot believe that General Growth has any concern for Coralville's debt …. It has to be personal interest,” he said.

The funding for the city's deal with Von Maur came primarily through a tax increment financing district that includes Coral Ridge Mall.

In its appeal of its property assessment last year, the mall argued it was facing increased competition from a “new shopping center subsidized by governmental authorities.” It did not make a direct reference to Iowa River Landing, but Gross is quoted this week in Des Moines alternative newspaper Cityview saying Coralville was using tax increment financing “to subsidize competition with existing business.”

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