Judge puts North Liberty, credit union land deal on hold

A Johnson County judge Wednesday put a temporary hold on North Liberty's plans to buy land for a new University of Iowa Community Credit Union building.

Judge Robert Sosalla said the people challenging the deal raised enough valid questions that he was granting a temporary injunction, according to a copy of the order.

SourceMedia Group did not cover the hearing and the courthouse was closed Thursday. A copy of the judge's order was provided by Vernon Squires, a Cedar Rapids attorney representing North Liberty residents and land owners opposed to the land sale.

The land deal has been a source of controversy in North Liberty in recent works.

Two weeks ago, the City Council OK'd the purchase of 64 acres of land near Interstate 380 for $11.3 million, to be funded by urban renewal bonds from the city. The city proposed selling 24 acres, through the 380 Development Group, for $1 to the credit union, which would build a $20 million, 100,000-square-foot office.

The development group would then mortgage the remaining 40 acres to the credit union as security for the repayment of the bonds, according to Sosalla's order.

Squires said his clients take issue with how the deal has unfolded and want to slow it down so it can be considered more thoroughly. They also contend 380 Development Group is a sham corporation set up by the city to transfer the land to the credit union for less than fair market value.

They also believe the city's intention to rezone the land goes against the city's comprehensive plan, he said.

The city denied those charges and said the 380 Development Group is an independent corporation that the city did not create or control and is acting only as an economic development partner with the city, according to Sosalla's order.

The judge ruled that the issuance of the bonds may result in higher taxes to satisfy the city's bond obligation and that the status of the 380 Development Group warrants a full hearing.

A hearing on whether to continue or lift the temporary injunction will be held Jan. 4.