The Gazette  

As the Cedar River is expected to reach a crest of 18.6 feet Monday into Tuesday, the National Weather Service will be updating the forecast and current readings every hour. You can monitor these levels with this map.

Business

Coralville development exploding

Encouraged by government incentives, project value doubles this year

Orlando Roldan uses a sledgehammer to move a piece of plywood tight against another as he and his crew work on laying roof decking as construction continues on the mixed use development 808 on 5th in Coralville on Wednesday, Dec. 7, 2016. (Jim Slosiarek/The Gazette)
Orlando Roldan uses a sledgehammer to move a piece of plywood tight against another as he and his crew work on laying roof decking as construction continues on the mixed use development 808 on 5th in Coralville on Wednesday, Dec. 7, 2016. (Jim Slosiarek/The Gazette)
/

CORALVILLE — Known for its heavy use of government incentives to stimulate growth, Coralville this year has seen the value of new developments and remodelings more than double since last year.

By the end of November, developers and investors were expected to spend more than $145 million on new or remodeled structures — both commercial and residential — according to city data. In the same 11-month period last year, projects were valued at under $70 million.

A city building report tallies the total cost of a project as soon as a building permit is awarded. While data shows the last two years have seen increases, this year’s numbers are dramatic.

“They seemed to have a forward-thinking vision and I think that attracts developers,” said Gary Watts, president of the Watts Group, which has done a number of recent residential developments such as The Landing and Old Town.

Coralville cornerstones such as the Coral Ridge Mall, Iowa River Landing and the future Iowa Arena project helped set the stage for development in the city, which also benefits from a Johnson County economy that Iowa State University economist Dave Swenson said is dynamic and expanding.

The $70 million arena and sports complex, to which the state agreed to devote $12 million worth of new sales and excise taxes, has not yet been factored into any of the building valuations.

Blaine Thomas, owner of Blue Sky Developers, which created the 808 on 5th apartment project, credits a clear, comprehensive plan and a willingness to work with developers for much of the recent growth.

ARTICLE CONTINUES BELOW ADVERTISEMENT

Last July, the City Council pledged $1,000 for each of the new 100 units of affordable housing in Thomas’ new 608 Fifth St. building. The city pledge cleared the way for Thomas to apply for Workforce Housing Tax Credits from the Iowa Economic Development Authority.

“It’s pretty obvious Coralville contributed,” Thomas said. “They will have their debt paid back in about four years now and then their investment will pay more than the ground could have ever generated.”

COMMERCIAL DEVELOPMENT

Coralville is famous or infamous, depending on who you talk to, for use of tax increment financing — or TIF — to spur commercial growth.

The city has almost 43 percent of its tax base tied up in TIF, according to an Iowa Department of Management report in July. At $676 million, Coralville ranks second highest in the state, behind Des Moines, in total assessed property value tied up in TIF districts.

“Leverage is a very good thing and the people at the helm in Coralville, they know how to use it,” said Thomas, who doesn’t believe the city is “overleveraged” when it comes to helping out developers.

TIF works by allowing cities to reinvest property tax growth within designated districts, which then can be used to encourage development.

“Coralville has a legitimate reputation in partnering well with development,” Coralville Mayor John Lundell said, adding that the use of TIF by the city was always intentional. “If there is ever a success story for TIF in Iowa, I think it’s a Coralville story.”

But there also are downsides to using TIF — such as diverting that tax growth away from schools and other public services for years.

ARTICLE CONTINUES BELOW ADVERTISEMENT

Thank you for signing up for our e-newsletter!

You should start receiving the e-newsletters within a couple days.

“Coralville does stand out tremendously,” said Swenson, the economist. “Most communities don’t appropriate Coralville’s level of use at all.”

The question remains, Swenson said, whether Coralville’s growth would’ve taken place without its heavy use of TIF. He said he believes the county’s economy, and particularly investments in the nearby University of Iowa, would have encouraged growth in Coralville anyway.

Peter Fisher, research director for the Iowa Policy Project, said the city could have taken a different tack for encouraging development — using traditional city debt, which the state limits.

The original idea of TIF, Fisher said, was “bootstraps financing” to help out projects that would pay for themselves later on. But now cities conceivably could encourage projects that don’t necessarily have much of a market.

“Yes, there is a point at which there is such a thing as too much use of TIF,” he said. “TIF used for projects that really pay for themselves, I think that was the original idea.”

A major area of commercial expansion for Coralville is hotels. Lundell said four hotels are under construction and he knew of at least one more planned.

Drury Inn and Suites announced last year that it planned to build in the Iowa River Landing. a project spurred by TIF.

RESIDENTIAL DEVELOPMENT

Lundell said the city also is seeing a growth of multifamily units, including senior housing.

ARTICLE CONTINUES BELOW ADVERTISEMENT

The November building report shows 14 multifamily structures began construction this year, compared with three by the same time last year. Developers will invest almost $59 million on these projects this year, up markedly from about $3.5 million last year.

“The thing we’re seeing is more and more gradate students moving in and more graduates staying,” Lundell said. “Workforce housing helps control the rents for those entry-level workers.”

Workforce housing benefits from the IEDA don’t necessarily put rent or income requirements on units. But they do keep the construction cost per unit at $200,000 or less with the idea of keeping rents down.

From a developer’s standpoint, Watts said, people are leasing and buying residential spaces in the city because they want to be a part of Coralville for amenities such as new schools, restaurants and bus routes.

“It’s just a great place to live. It’s a small-town atmosphere but right next to, of course, Iowa City,” Watts said. “They spend a lot of time to make sure that it fits the area and looks good.”

For Lundell, another achievement for the city is seeing as growth in senior housing. November’s building report includes a roughly $31.7 million, 170-unit senior housing, assisted living and memory care facility planned for Bridgewater, a 100-acre subdivision west of First Avenue and north of Interstate 80.

“That pleases me because that means there’s living from young to old,” Lundell said. “That’s healthy, for a city to have a good mix.”

BY THE NUMBERS

The value of permitted construction projects in Coralville this year is more than double the value in either of the two years before.

$145,311,491.38 — Through Nov. 30, 2016

$72,419,189.89 — All of 2015

$71,441,229.41 — All of 2014

Source: City of Coralville

l Comments: (319) 339-3172; maddy.arnold@thegazette.com

Give us feedback

We value your trust and work hard to provide fair, accurate coverage. If you have found an error or omission in our reporting, tell us here.

Or if you have a story idea we should look into? Tell us here.

Give us feedback

We value your trust and work hard to provide fair, accurate coverage. If you have found an error or omission in our reporting, tell us here.

Or if you have a story idea we should look into? Tell us here.