Iowa City chooses developer for vacant downtown lot

Three months after hearing development proposals for 21 S. Linn St., Iowa City has made its choice. The city council is moving forward with Grand Rail Development’s proposal, which envisions a six-story, mixed-use building at the downtown lot. The council had also been considering a 12-story building proposal from Salida Partners and Iceberg Development. The decision was solidified during the council’s May 6 work session, when city manager Geoff Fruin announced the Salida Partners and Iceberg Development team withdrew its application. Economic uncertainty, changes in tax credit availability, and challenges associated with mixed-use design factored into the decision, the team indicated in an April 29 letter to the council. “This decision was not prompted by any single issue but rather by a combination of key recent changes and concerns that have emerged over the past several months,” the withdrawal letter read. “Given recent changes to the rules of affordable housing and the economics of the marketplace, we are no longer confident that this project is a viable long-term project. Therefore, it would not be productive, for either our team or the City, to continue as a participant in this RFP process,” it continued.

Lot vacant since 2021

The site at 21 S. Linn St. has been vacant since 2021, when CA Ventures, a Chicago-based developer, demolished the former U.S. Bank building shortly after acquiring the property to make way for student high-rise housing, which never materialized.

Iowa City purchased the property in 2023 for $4.5 million, intending to facilitate a contextual mixed-use redevelopment through a public-private partnership. Under Grand Rail’s proposal, the lot would be transformed into a six-story, multi-use building paying homage to the original city hall by incorporating architectural elements that complement the surrounding older buildings. The ground floor would feature 6,300-square-feet of dedicated entertainment space, managed by The Englert, with an eye to possibly divvying up the area for micro retail and other commercial options. Other key aspects of the proposal include:

• ACT offices on level two
• The Stories Project and possibly office space for the city of Iowa City, on levels four through six
• Twenty residential units on upper levels, with four to eight designated as affordable housing.

Grand Rail estimates the project at $40 million and is proposing $3 million to purchase the lot. In a clarification letter submitted April 29, the developer expressed a willingness to add two stories “in response to the City’s request to accommodate initiatives important to the City,” with the caveat that the price would reflect the change, should the city choose to go that route. “For me, the height issue is whatever gets us the best combination of viability and affordable housing…it’s more of what we get in those stories (that) matters a lot more to me than the number of stories themselves,” council member Shawn Harmsen said. The council’s next steps would be to solidify the purchase agreement, a process that will take several months, Mr. Fruin said.