$28M foreclosure ruling sends The Chauncey, other properties to auction

A series of high-profile downtown Iowa City developments are slated for a sheriff sale following a court ruling in favor of GreenState Credit Union, which filed a foreclosure suit against developer Marc Moen and his associates for allegedly defaulting on approximately $28 million in loans. In a lawsuit filed Feb. 4 in the Iowa District Court for Johnson County, GreenState requested the court to authorize foreclosure proceedings on several prominent properties:

• The Chauncey, 404 E. College St. – referred to as “Chauncey Real Estate” in court documents
• Plaza Towers, 221 E. College St. – referred to as “Plaza Real Estate”
• Park@201, 201 E. Washington St. – referred to as “Central Park Real Estate”
• 118 E. College St. – referred to as "Moen-Jett Real Estate"
• The parking lot adjacent to the downtown Starbucks (102 E. Burlington St.) – referred to as "Parking Lot Real Estate"

The buildings, among Iowa City’s tallest, feature a mix of retail, commercial, and residential units and are recipients of tax increment financing. Additionally, the ruling allows the credit union to recover collateral from theGym – located in the Ped Mall and referred to in court documents as “The Iowa City Health Club LLC.” According to court filings, the collateral includes “inventory, chattel paper, accounts, equipment general intangibles, consumer goods and fixtures.” Named defendants include developer Marc Moen, business partner Robert ‘Bobby’ Jett, Monica Moen, Michael Moen, and several affiliated LLCs: The Chauncey LLC, Plaza Towers LLC, Central Park LLC and Iowa City Health Club LLC. Hills Bank and Trust Company was also listed as a defendant; court documents stated it holds a second-priority mortgage of $500,000 against Park@201. “Unfortunately, over a year of efforts to restructure the obligations have proven fruitless, so (GreenState) has been forced to institute this foreclosure action to enforce its mortgage, guaranty, and other rights,” a March 25 court document stated. GreenState claimed the group owed money stemming from six sets of loans spanning from 2016 to 2023, and filed a motion for summary judgment. “The purpose of a summary judgement is to enable a party to obtain judgement promptly and without the expense of a trial where there is no fact issue to try,” court documents stated. Mr. Moen previously served on the credit union’s board of directors from 2013 to 2023, according to a GreenState spokesperson, back when it is was known as University of Iowa Community Credit Union.

High-rises are TIF recipients

Because The Chauncey, Plaza Towers and Park@201 are mixed-use, foreclosure would not apply to the buildings’ entirety; only the non-owner-occupied units would be subject to resale, since individually-owned condominiums are exempt from the lender’s claim. These are units that are “no longer subject to (GreenState’s) claim,” court documents stated. The 15-story Chauncey – completed in 2019 for $57 million – houses FilmScene, Hotel Chauncey, fix! Coffee, SpareMe Bowl & Arcade, and 65 condominiums. According to a June 8, 2015 Iowa City Press-Citizen article, the funding model for the building included “a city investment of a $14.2 million economic development construction grant.” The article noted that the property, valued at $2.1 million, would be conveyed to the developer, with the remaining $12.1 million to be paid through TIF rebates over 25 years beginning in 2020, once the building is operational and generating revenue. It also stated that Mr. Moen planned to contribute $49 million toward the project’s development costs. According to court documents, 60 units and six parking spaces at The Chauncey would be subject to foreclosure. In addition to a location at The Chauncey, FilmScene has a second location at 118 E. College St., another commercial property listed in the foreclosure suit. The College Street location has a gross assessed value of $2,680,670, and the parking lot real estate at 102 E. Burlington -- adjacent to the downtown Starbucks on Clinton Street -- has a total assessed value of $1,299,800.

The Plaza Towers, a 14-story mixed-use development completed in 2005, features residential apartments, office space, hotelVetro, Bread Garden Market and Formosa Sushi. Court documents indicate that 73 units and 19 parking spaces associated with the building are subject to foreclosure. Park@201, also a 14-story structure, was completed in 2014. Court records show that just three units are included in the foreclosure action. According to the Iowa City Assessor’s Office, those units are owned by Central Park LLC. The project received a $2.5 million TIF agreement from the City of Iowa City in April 2012.

What is TIF?

Tax increment financing, or TIF, allows cities and counties to fund development projects using the growth in property tax revenue generated by rising property values within a designated area. A base property value is established, and as that value increases, the additional tax revenue – known as the increment – is redirected to the city or county that created the TIF district. Those funds must be used for improvements or projects within the district until the associated debt is repaid.

The foreclosure on these TIF properties is not expected to have any impact on the city, according to Iowa City officials. “Iowa City is not involved in any of the proceedings. We do not anticipate any impact as a result,” Iowa City manager Geoff Fruin wrote the CBJ in an email.

What’s Next

Court documents filed April 16 state that the foreclosed property will be sold at a sheriff’s auction, though a date was not provided. Mr. Moen and GreenState Credit Union declined to comment on the case.