Iowa City Council votes against 14-story downtown project

Developers say they are unsure how to proceed with a downtown redevelopment project after an Iowa City Council vote this week.

On Monday, the council voted against a request from developer Kevin Monson for a $72,000 investment and a letter of support to the Iowa Economic Development Authority Board needed to apply for the state's annual Workforce Housing Tax Credits program.

The tax credits would have been used to develop a proposed 14-story building at 7 S. Linn St, the former site of the Van Patten House that was destroyed by a fire in 2011. The proposal included office and retail space on the first two floors and 72 workforce housing units on Floors 3-14 marketed to young professionals. The proposal also sought to waive city requirements for on-site parking.

Monson, president of Neumann Monson Architects and a managing partner of Monarch LLC, which proposed the development, said Thursday he is not sure how his team will proceed with revising its plans.

"I don't have a solution at this point," Monson said.

The council denied the request by a 4-3 margin, with members Susan Mims, Terry Dickens and Kingsley Botchway voting in favor. Concerns of council members who voted against the measure included a lack of affordable housing and the proposed on-site parking exemption.

"There are details here that need to be explored more thoroughly," Mayor Jim Throgmorton said Thursday. "The main thing I was drawing attention to was the absence of any affordable housing. Those units are going to be reasonably expensive."

Monson and development partner Joe Clark said during the meeting that rent for lower-level studio apartments would start at $795, and would be $1,200 to $1,250 for the lower one-bedroom apartments. Those rents would "slightly escalate" near the top of the building, Monson said.

Interim City Manager Geoff Fruin clarified during the meeting that the workforce housing tax credit program does not cap rents for housing units, but instead regulates construction costs for the apartments at $200,000 each. The program offers developers tax credits of up to 10 percent of the construction costs for housing units that do not exceed an average $200,000 per-unit construction cost.

Monson needed an investment of $1,000 per workforce housing unit and a resolution of support from the city to apply for the tax credit program. Applications are considered on a first-come, first-served basis. An IEDA spokeswoman said the next round of funding for the credits — $20 million in total — will be available July 1.

Throgmorton said he also was concerned with the proposed waiver of on-site parking in the downtown area for affordable housing and workforce housing units that receive the tax credits.

Given the size of the lot, Monson said he was not able to provide on-site parking and sought a waiver for 36 on-site parking spaces. City code allows developers to forgo on-site parking at a fee of about $25,000 per required parking space, the estimated cost to the city for providing space in parking structures, and would have amounted to $900,000 for the proposed project.

To forgo on-site parking, developers must bring their projects to the Board of Adjustment for approval. Board determinations are based on whether new development is "designed in a manner that is sensitive and complementary to adjacent properties designated as Iowa City landmarks," or those listed on the National Register of Historic Places. The building that houses the Yacht Club, which is next to the proposed development site, is designated as a historic landmark.

If the board approves the project, developers then have the option to pay the fee. Fruin said Friday that Monson still has the opportunity to take the project before the Board of Adjustment.

A June 1 memo to Fruin indicates that code language could be drafted that would eliminate parking requirements for affordable housing and workforce housing developments that receive tax credits. A similar exemption is in an inclusionary zoning ordinance set to come before the council for consideration on June 21.

"If we had approved that project as proposed, including waiving the parking fee, that would open the door to a pretty substantial amount of high-rise development without parking in the downtown area," Throgmorton said. "To combine those two aspects, the $900,000 subsidy without any affordable housing, given how important affordable housing clearly is in our city right now, it did not seem like a wise vote at that moment."

Throgmorton said he was willing to defer a decision on the request until a future meeting, but that didn't correspond to the developer's timeline.

"The workforce housing tax credits are an annual program. With a revised proposal, (Monson) can ask the council at a future date to support workforce housing tax credits," Throgmorton said.

Reach Andy Davis at 319-887-5404 or at aldavis@press-citizen.com, and follow him on Twitter as @BylineAndyDavis.