Officials to re-think original project that called for new student housing

After plans for a potential student housing development fizzled, Iowa City has pledged to purchase the vacant lot at 21 S. Linn St. for $4.55 million.

The city plans to encourage development that best aligns with the current downtown district.

CA Ventures purchased the property from U.S. Bank in 2021 for $3.8 million, demolishing the bank building and adjacent parking lot with plans to build additional student-centered housing.

The city council unanimously approved the purchase of the S. Linn Street lot by a 6-0 vote at Tuesday's meeting. The city does hold the right to terminate the agreement in the next two weeks.

Property endures twists and turns

Iowa City rejected the developer's original proposals.

Officials said that plans for a 13-story high-rise mixed-use property with a commercial-use ground floor and more than 200 student-marketed living units above did not mesh well with the nearby downtown space.

Eventually, the city approved a site plan in August 2022, but CA Ventures hadn't applied for a building permit. According to a city report, CA said they no longer intended to develop the site and would rather sell. Other developers then began to inquire, also hoping to develop student housing.

A staff report at Tuesday's Iowa City City Council meeting said the city’s acquisition of 21 S. Linn St. would not include student housing.

"Current market conditions,” the report says, would mean that future buyers would target a housing complex. Instead, the city would like to take on ownership in its search for a developer that will help add to “the long-term stability and vibrancy of Downtown Iowa City.”

Staff not setting a timeline, but city has experience with redevelopment in past

Iowa City staff plan to adhere to contractors that will maintain “the historic character and diversity of the city’s offerings," the staff report said.

“This is definitely a long-term effort,” city manager Geoff Fruin told the council on Tuesday. The council would likely assess the property's future within the next year.

Iowa City previously approved student housing at 435 S. Linn now occupied by RISE at Riverfront Crossings. The city has also assisted on projects like the redevelopment of the Chauncey as well as the lot across from the public library that houses Bread Garden Market and other businesses.

These redevelopments align with the “long-term value” of a community. Similar redevelopment of the Chauncey building took nearly a decade, Fruin said.

The city will pull funds from its general funds to pay CA Ventures. The final selling point is roughly 20% greater than in 2021 when CA Ventures bought the land from U.S. Bank, which staff said is within range of recent property value increases.

Council unanimous in support of acquisition

Multiple councilors touted a chance for a public forum to decide the property's future.

“The community aspect is really critical,” Councilor Laura Bergus said. “It’s helpful to know from the very beginning that the process will have many, many opportunities for people to come and let us know what they think and [what] to prioritize.”

Councilor Andrew Dunn said the acquisition would be good for several reasons, including community-focused development. He also said the purchase was a low-risk investment because even if the land does not end up being developed because of a lack of interest in the city’s desires from developers, a lack of money for similar projects, or any other reason, the city could resell the property.

Nighttime mayor Joe Reilly spoke on behalf of the Iowa City Downtown District on Tuesday, saying that the city’s acquisition and future sale of the 21 S. Linn St. to the right developer would not only consider community needs but also the market desires.

“A future council will be able to incentivize development that strikes a balance with the allowable density of downtown while contributing to the streetscape’s character,” Reilly said. “This also creates an opportunity to identify developments that more closely align with the retail, residential and community space needs in downtown.”

Cady Gerlach, executive director of the local community coalition Better Together 2030, said acquiring the property would help ensure that the city is fostering stability and vibrancy in the area.

“This purchase will allow the city to take a lead role in the redevelopment of this critical property,” Gerlach said.

Ryan Hansen covers local government and crime for the Press-Citizen. He can be reached at [email protected] or on Twitter @ryanhansen01.

This article originally appeared on Iowa City Press-Citizen: Iowa City purchasing site of former U.S. Bank building