Linn/Court development stalls after legal concerns

IOWA CITY - Plans to develop a plot of Iowa City land have hit a snag following legal concerns raised by one of the aspiring developers not chosen as a finalist for the site.

The Iowa City Council postponed Tuesday's work session discussion on the three finalists vying to develop city-owned property near Linn and Court streets.

The city's decision follows correspondence received Tuesday from representatives and an attorney associated with Prairie Sun Building Services, an Iowa City company that submitted the Court Linn Terrace design proposal for the site, claiming that its denied proposal was the only project that met all the criteria laid out in the city's request for proposals.

Iowa City Attorney Eleanor Dilkes said the situation is unusual and the city's legal staff will review the claims before the council formally discusses or moves forward on the development.

'I don't recall a similar situation,” Dilkes said.

The proposal by Prairie Sun Building Services included a roughly $65.7 million project that included a 10-story tower with commercial units and residential workforce housing as well as a 15-story tower with additional commercial and housing space. The project included a $17.8 million gap in finances.

An email to council from Prairie Sun Building Services officials states that the city's committee, which chose the three finalists, used a matrix document with several incorrect statements about the proposal including the project's housing offerings, financing evaluation and the company's breadth of experience.

Another letter, sent to the council from attorney Michael Hayes, with Des Moines-based firm Belin McCormick, said Prairie Sun Building Services was the only company to abide by the city's request-for-proposal guidelines.

'Sun Prairie Building Services, L.L.C. requests that the City Council reject all of the other non-complying proposals and direct the City to negotiate a final contract for development of this site Wil. L. Cn Prairie Building Services, L. L. C,” the letter states.

A special committee of City Council members and staff unanimously approved recommending the three finalists, said Jeff Davidson, Iowa City's economic development administrator.

'I wanted to make sure we had a good, solid unanimity on that and we did,” he said.

The three finalists being considered are:

l CA Ventures proposes a roughly $87.7 million project that wo - ld include three high-rise towers - a 117-room hotel with 3,500 square feet of retail space and two residential towers with a total of 304 multifamily student units and three floors of underground parking. CA Ventures, based out of Chicago, has offered to buy the property for $5 million and is not seeking any financial aid from the city.

l HUB at Iowa City's proposal includes a 15-story tower with 430 units for more than 900 students, 20,000 square feet of office space and on-site parking. The Chicago-based firm has offered to pay $4.5 million for the property and is not seeking financial assistance.

l Minnesota-based Sherman Associates proposes a roughly $66.9 million project that would include five floors of residential housing for young professionals, a rooftop deck, swimming pool and theater room. The project also would include a six-floor national-brand hotel with 146 rooms and 23,000 square feet of office space. The company is not offering to pay for the property and is seeking up to $3 million in tax abatements and $8 million in tax increment finance assistance and tax credits.

While the council is scheduled to meet with representatives of the three finalists Nov. 6, Dilkes said that meeting is pending a better analysis of the claims made by Prairie Sun Building Services officials.

Iowa City staff earlier this summer requested proposals for the roughly 60,000 square feet of property where St. Patrick's Catholic Church's parish hall sat until the church, which was across the street, was destroyed by a tornado in April 2006 and the church and parish hall moved.

In 2008 Iowa City bought the land for $3.05 million with plans of building a parking facility on the site, but those efforts never came to fruition.