Iowa City to discuss millions for private projects

IOWA CITY - The Iowa City Council is being asked to take action that would free the city to potentially put millions of dollars of public money toward several private projects.

That type of financial assistance has drawn protests from some community members in recent years. In fact, Iowa City officials have been critical of neighboring Coralville's use of similar incentives.

'In general, I just don't understand why the public has to finance private projects. I mean, that's what banks are for,” said Johnson County Supervisor Rod Sullivan.

The Iowa City Council is scheduled to vote on July 15 on a resolution that would start a process to allow for certain building projects to receive public financing.

The action would let the city hold a meeting with other tax-collecting entities and another meeting at which the public could comment on a proposed amendment to include the projects in an urban renewal plan, thus allowing the city to give them tax breaks.

The projects include a 15-story building known as The Chauncey on the eastern edge of downtown, town houses on the corner of Harrison and Dubuque streets and a hotel on the south side of downtown.

Separately, the City Council's three-person Economic Development Committee on Monday is to review a request from The Chauncey developer Marc Moen for $14.2 million in incentives.

It includes $12.1 million in what is known as tax increment financing. In tax increment financing, or TIF, the increase in the taxes generated by a project go back to the developer for a period of time.

The other $2.1 million would be the amount Moen would pay for the city-owned property and the rights to what's underneath it and putting the money back into the project, said Jeff Davidson, Iowa City's economic development administrator.

Negotiations are ongoing with the other projects, and there are no specific TIF requests yet, said Wendy Ford, Iowa City's economic development coordinator.

TIF has been a contentious issue in the community since Coralville used incentives valued at up to $16 million in 2011 to bring a Von Maur store to its Iowa River Landing District. That led to the closure of Iowa City's Von Maur in Sycamore Mall.

Iowa City leaders were among the harshest critics of the deal. They also raised questions this year following a Gazette report that Coralville received more than $1 million a year in lieu of taxes from the tax-exempt University of Iowa Health Care for a medical clinic in Iowa River Landing.

Also, Moen was part of a group of area developers and business people who sent Coralville leaders a letter in 2011 objecting to using taxpayer money on new retail and office space in Iowa River Landing.

Iowa City Manager Tom Markus said someone can make the argument Iowa City is being inconsistent or even hypocritical with its TIF deals, but he said the city must use the economic development tool to compete.

'And that's a byproduct of the liberal use of that tool across the state, not just our neighbors,” he said.

Coralville Mayor John Lundell declined to comment, saying he didn't think it was appropriate for him to talk about Iowa City's use of TIF.

Markus and Davidson said Iowa City has strict guidelines when determining whether to put public money into a private project and sets firm end dates for TIF deals.

Terrence Neuzil, chairman of the Johnson County Board of Supervisors, cited those factors in praising Iowa City's TIF use.

'A lot of people are going to have differing opinions on TIF, but my view is ...

Iowa City has done a very responsible job of approaching TIF,” he said.

As part of Iowa City's negotiations with Moen, the city sought an analysis from the National Development Council, a New York City-based not-for-profit, to determine whether public assistance was needed for the project.

The organization came back with the $14.2 million figure.

'We only want to fund a project that is not going to otherwise happen,” Davidson said.

The $49 million project would have a taxable value of at least $24 million, according to the city. The property does not generate tax revenue now.

The Chauncey is to have a movie theater, bowling alley, high-end office space, a hotel and eight floors of residential units.

The project has its backers but also critics of its size and the request for public funding. A lawsuit filed last year by opponents seeks to stop the rezoning needed for the building to go up.

Of the other projects, the hotel would be on South Clinton Street on part of a property that has seen several different proposals in recent years that have not come to fruition.

The townhomes on Harrison Street are part of a project by MidWestOne Bank. The idea last year was for 24 townhomes in a structure that includes a city-owned parking ramp.