Iowa City advances rezoning for future multifamily complex

Note: The reporter of this article has no relation to Tracy Barkalow, who is mentioned in the story.

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A controversial development project in Iowa City has taken a tentative step forward. At its May 6 council meeting, the Iowa City council passed the first of three considerations to rezone approximately 5.49 acres between North Dodge and North Governor Streets. The zoning change will help clear the way for Goosetown Apartments, a project by local developer TSB Holdings, LLC – owned by Tracy Barkalow – that includes two 42-unit multifamily complexes proposed for 911 Governor Street, just north of Happy Hollow Park. Development plans indicate the complex would span 236 feet – approximately the length of a city block – and would reach three stories, housing a mix of one-and two-bedroom units offered at market rates. Though the development would address a housing need in the city, it has raised concerns among some residents. In March, the city council was presented with a petition signed by 52 residents protesting the rezoning proposal, citing safety issues, neighborhood aesthetics, the property's legal history as well as incompatibility with the city’s Comprehensive Plan. “The area is hostile to pedestrians,” the petition read, in part, pointing out that the sidewalk covers only a portion of the street’s west side in front of the proposed development, which would compel building residents to cross a highly-trafficked road to reach the nearby grocery store. “The vehicle entrance/exit to the development is at an area of poor visibility on North Governor Street, at the bottom of a nearly blind dip and curve,” the petition added. Prior to its formal meeting, the council held a joint session with the city’s Planning and Zoning Commission to discuss concerns and hear feedback regarding the property. At its Feb. 19 meeting, the commission voted 6-1 recommending rezoning approval. The majority of the commission supported the project, citing the city’s urgent need for housing and the site’s strategic location near transit, parks, and commercial areas. “I think this is a great opportunity to take land that's now mostly been blight and turn it into housing which Iowa City very much needs,” P&Z Chair Scott Quellhorst said. “I can't think of too many better places to do it. This is close to a grocery store, mass transit, (and) two arterial streets in downtown (Iowa City).” Several concerns were raised, however, particularly around traffic safety, building scale, and neighborhood compatibility. “It’s not about the traffic – it’s the way it’s directed,” said commissioner Billie Townsend, who lives close to the area and cast the lone dissenting vote. “Just this weekend we were coming over Governor (Street) and there’s a car coming in the wrong direction and speeding.”

History of ongoing litigation

The developer has been at loggerheads with the city for years regarding development of the property, with a history of litigation that was resolved in 2018 by the Iowa Supreme Court, which ruled that TSB Holdings retained the right to develop the property as allowed by a 1978 zoning designation. The 1978 zoning designation – R3B – lacks the design, environmental and neighborhood compatibility standards found in today’s zoning standards. Under the R3B classification, building heights can reach 45 feet, compared to the current 35-foot limit, and parking areas are not required to be screened from neighboring properties or placed behind buildings. Mr. Barkalow plans to demolish two single-family homes and a vacant office building along North Governor Street to accommodate the apartment complex, while retaining two duplexes and two multifamily residences along Dodge Street. To adhere to current zoning standards, one of the duplexes would be converted to a single-family home. In an email dated May 2, Mr. Barkalow offered to sell the property to the city, which is listed for sale at $9 million under the address 902-906 Dodge St. Mr. Barkalow cited Iowa City’s housing shortage and suggested the property could be used for affordable housing, while resolving “the long-complicated zoning and legal matters relating to these properties.” The letter indicated that TSB Holdings was resolved to sell the property “no matter what the outcome of the rezoning inclusive of all existing properties anyway” and that the city could avoid future legal issues if it took possession. The rental properties are full until July 2026 and would initially mitigate the amount of debt should the city take possession, the letter stated, and announced that TSB Holdings is exiting the residential rental investment business. “This purchase would not be a financial burden on the City of Iowa (City) as the existing cash flow from the existing rental properties would support the debt from day one and show a profit to the benefit of the City of Iowa City,” the letter read.

Council moves forward with first consideration

In a 7-1 vote – meeting the six-vote threshold required due to a protest petition – the city council approved the first of three readings to rezone the property, citing a growing need for housing and the ability to nullify the R3B designation. “I'm fearful that we're going to let perfect be the enemy of good here,” an Iowa City resident said, addressing the council during the public comment period. “We could really use 84 units of any size, of any price range in the city, and I hope that this is approved in some form with some degree of density.” Council members also directed city staff to explore the possibility of connecting the proposed development to Happy Hollow Park via a trail or sidewalk system. To finalize the rezoning ordinance, the council must still approve two additional readings. The council did not discuss Mr. Barkalow’s proposal to sell the property to the city.