A Major Redevelopment Project Near Downtown Iowa City

On August 31, 2012, the City of Iowa City issued a Request for Proposals (RFP) for the redevelopment of the northeast corner of the College and Gilbert Street intersection. Located immediately to the east of the city’s downtown, the site is mostly owned by the City. It had previously been occupied by a bus depot, auto repair shop, and sporting goods store, but it is essentially empty at the present time. The site also includes a piece of land owned by MidAmerican Energy and occupied by one of its electric substations. The substation would be relocated.

City staff received nine proposals in response to the RFP. A review committee narrowed the list to five finalists. Those five finalists gave presentations to the City Council (of which I am a member) at its November 26 work session. The five proposals varied significantly in terms of height (from 5 to 20 stories), mass, architectural design, uses, and cost (ranging from $29 to $54 million). All five requested public subsidies, especially in the form of Tax Increment Financing (TIF), ranging from $3.91 to $13.45 million.

The staff initially recommended that we Councilors identify a preferred development (and possibly our second and third preferences) at our December 18 meeting. To help us evaluate the competing proposals, they provided us with six criteria (which were included in the original RFP). Reduced to their essence, these criteria basically favored proposals that would best: (1) increase the taxable valuation of property and (2) transform downtown by attracting more office workers, residents (drawn from a variety of age groups and income levels), and visitors. The staff further indicated that other factors in the best interest of the City could also be considered.

At our December 18 Council meeting, we choose not to select a single preferred development. We chose, instead, to narrow the list to three proposals, and to instruct the city staff to prepare a matrix that would help us choose among them. We will review that matrix at our January 8 meeting.

We did the right thing in not leaping to a single preferred development at the December 18 meeting. Our decision about this project will send a very strong signal to the public and private developers about the kind of future we envision and desire for Iowa City and its downtown. Because our choice is so important, it is very important that we proceed thoughtfully, at a pace that demonstrates we have sufficiently considered the public’s hopes and concerns as well as the facts of the situation.

During the meeting, I tried to articulate my views as clearly as I can. I repeat them here so that any interested person can have easy access to them.

First, to choose wisely, we need to keep the baseline alternative in mind. By “baseline alternative,” I mean that which would probably be built on the site if the City simply sold the land to a private developer for redevelopment consistent with CB-5 zoning. This would probably be a 4 or 5 story building, with commercial space on the first floor and student housing on the top 3 or 4 floors. Staff estimates such a building would generate approximately $389,000 in annual property tax revenues. Roughly forty percent of these taxes would go to the City, 40 percent to the Iowa City Community School District, and 20 percent to Johnson County. No public subsidy would be required. Such buildings have, however, proven extremely controversial over the past few years.

If we keep this baseline alternative in mind, we will be better able to answer the most important question we face: which of the alternative projects would add the most value to the “baseline alternative,” and will the added value justify the requested subsidy and foregone property tax revenues? This, of course, returns us to the core question: what do we really value?

Second, we have to think carefully about what we really value. The staff gave us a reasonable and appropriate set of criteria, but their criteria emphasize economic consequences and—as demonstrated during a public hearing we held on December 3—omit other factors that are of considerable value to many Iowa Citians. We should, therefore, consider two additional criteria:

  • The architecture and urban design of the preferred project should be of very high quality. We should not subsidize construction of a structure that could be built in AnyCity, USA. Instead, the preferred project should reflect and enhance the unique character of our downtown.
  • The preferred project should demonstrably contribute to the downtown’s and the city’s long-term sustainability. Many speakers emphasized this point during our public hearing. Moreover, all five of the developers highlighted the importance of this criterion during the public hearing.

I elaborated on each of these points during the work session we held immediately prior to our formal meeting:

  • It is especially important that the preferred building’s design be compatible with and enhance our downtown’s unique sense of place, and that the scale (height and mass) of the building be appropriate for a transitional zone between downtown and the residential neighborhood to its east. Being located in a transitional zone, the site calls for a building that would be in the range of 5 to 13 stories tall. Purely in terms of urban design, it would be best to locate the building at the north end of the block, at the southeast corner of Washington and Gilbert Sts. Regardless of the building’s height or location on Gilbert Street, the developers need to consider more carefully the relationship between their building and other buildings and public spaces nearby. (This should include an analysis of the building’s shadow on nearby buildings and public spaces.)
  • The preferred building should help transform Chauncey Swan Park (located immediately north of the development site) into a gem that strengthens community ties in this city. Accordingly the proposals should explicitly demonstrate how they would enhance the park, and how their rooftop gardens and terraces would be integrated with it.
  • We have a great opportunity to make a strong statement about our city’s commitment to a sustainable future. We should, therefore, require the revised proposals to achieve at least LEED Gold certification plus a specified degree of energy efficiency (perhaps using 60% less energy that currently required by code).
  • I support the idea of subsidizing “workforce housing” at this site, but I am not willing to subsidize construction of luxury penthouses and other condos in which the vast majority of our city’s residents cannot afford to live. How can we be sure, though, that the workforce units will be occupied by legitimate members of the downtown workforce, both now and in the future? Moreover, I think a specified percentage (perhaps 15%) should be affordable to lower income workforce households (60% of median household income) and/or elderly or disabled people on fixed incomes.
  • I am attracted to the possibility of including one or two small film theaters (perhaps Film Scene) into the chosen project, but I do not see the merit in subsidizing construction of a boutique hotel. Nor am I persuaded that we should subsidize a few bowling lanes. At a minimum, we should find out whether the University of Iowa is already planning to install bowling lanes in the nearby Iowa Memorial Union.
  • I see very good reasons to support projects that will generate substantial property tax revenues for the city, and hence pay for the public services that Iowa Citians expect, but it is not at all clear that the promise of additional revenues 15+ years in the future can—unless the non-monetary benefits are very large—justify deflecting property taxes away from the County and the School District, and committing such a large amount of government obligation bonds in the present. On this point, it should be noted that—according to data provided by the staff—at the end of Year 15 the three surviving proposals will have generated between  $2.44 and $5.84 million less in property taxes than the “baseline” alternative.

Whichever development we select, it should be one that will symbolize and manifest our city’s commitment to a sustainable future, a future that displays continuity with the past while also responding creatively to the challenges of the future. If the revised proposals do not demonstrate substantial monetary and clearly articulated non-monetary benefits that we value highly, I believe we would be better off selling the property to a private developer without any public subsidy.

 

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