By Pat Shaver
CORALVILLE–In about a year, the city of Coralville will own about 19,000 square feet of retail space in the Iowa River Landing district.
Last week, the city council approved a resolution to enter into a lease-purchase agreement for no more than $6 million for the purchase of the first floor retail space for “Building B” in the Iowa River Landing. Building B is a proposed mixeduse building to be constructed south of the future Von Maur department store and east of the new University of Iowa Hospitals and Clinics new outpatient clinic.
The agreement for the project is with Iowa River Landing District master developer Oliver McMillan and builder/developer Hodge Construction Co., dba IRL Properties LC. The 44,700-square-foot building will be two floors. The first floor space the city plans to buy is 19,300 square feet, said Kelly Hayworth, Coralville city administrator.
“What they (Hodge Construction Co.) are doing is they are going to purchase the land from the city, they will build the whole building, create a condo regime and sell back the first floor space to the city,” Mr. Hayworth said.
The price value of the land is being appraised, which will determine how much Hodge pays the city.
About 70 percent of the retail space on the first floor has committed tenants, Mr. Hayworth added. The three committed tenants include restaurant and apparel businesses. Mr. Hayworth wouldn’t give details on the companies but said they could be announced in the next two to three months when contracts are finalized.
The second floor office space will be owned and leased by the developer.
“We’ve reached a point where agreements and negotiations are complete, Hodge is ready to move forward to build the building,” Mr. Hayworth said. “With the medical office open and Von Maur to be done next summer, this is the right time to proceed forward.”
Crews will likely break ground in November. Construction will take about nine months, Mr. Hayworth said.
“We’ve had discussions over time and the council has been very clear that the ultimate intent is to dispose of the parcels in total so we have one entity controlling all of the retail space and it can operate as one unit,” Mr. Hayworth said, adding that it was a similar case with the Homewood Suites hotel. “The council has been very clear. I can see where there may be disagreements but I don’t think it’s a surprise to anyone since the council has been clear on their intent.”
“I’ve liked to think that over the years I’ve helped develop this city. Right now I’m not proud of Coralville.”
During the public hearing portion of the discussion at the city council meeting Oct. 9, local developers, realtors and citizens voiced their concerns.
Developer Gerry Ambrose said he has several office spaces that have sat on the market for eight months.
“If you build commercial space under offices, you compete against the taxpayers that helped you build this city,” Mr. Ambrose said. “I’ve liked to think that over the years I’ve helped develop this city. Right now I’m not proud of Coralville,” he said.
Chuck Skaugstad, Jr., a property owner and co-owner of The Mansion, an Iowa City interior design firm, agreed.
Mr. Skaugstad noted that the project wasn’t opened up for a request for proposals process, where developers would have been able to compete for the project.
“There’s a lack of transparency there,” Mr. Skaugstad said. “Coralville is announcing they will break ground on this next month. The developer doesn’t even know the cost or appraisal price, yet you’re breaking ground on it.”
The Iowa River Landing District is a 180-acre area being developed at the southeast corner of Interstate 80 and First Avenue, where the Coralville Marriott is located. The $73-million University of Iowa Hospitals and Clinics’ new outpatient facility officially opened this month.
A Von Maur store is also being constructed in the IRL.
“Their argument in regards to competition, in the case of the developers they are going to own that office space. Obviously they feel there’s a market or they wouldn’t be paying for and developing that space,” Mr. Hayworth said.
Mr. Hayworth said having a variety of sizes for office space will make the city more marketable for new business.
“I think there are smaller spaces around the community available, but any large spaces are next to impossible to find here,” Mr. Hayworth said. “It does put us at a competitive disadvantage not having available office space in those sizes.”
The council vote on the issue was not unanimous, however. Councilor Jill Dodds voted against the resolution at the meeting on Oct. 9. The rest of the council voted for approval.
“I spent quite a few hours over the last four days looking at the contracts and things and I’m not going to be able to support this resolution,” Ms. Dodds said during the meeting. “My belief is to allow private enterprise to be involved.”
“I don’t want to be a landlord for this,” she added. “I would prefer for new business to take this responsibility.”