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Judge delays North Liberty land deal

BY HAYLEY BRUCE | NOVEMBER 11, 2010 7:20 AM

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A 6th District judge ruled in favor of 20-plus plaintiffs requesting a temporary injuction against the city of North Liberty and 380 Development Group on Monday.

The decision comes after the plaintiffs — consisting of six landowners, 14 North Liberty citizens, and a group called the Concerned Taxpayers of North Liberty — challenged the town's conduct in advancing an $11.3 million development plan with the University of Iowa Community Credit Union.

North Liberty originally purchased 64 acres of land from North Liberty LLC for $11.3 million. The 380 Development Group was then supposed to sell 24 acres of the land to the credit union for $1.

The city and 380 had not made plans for the remaining 40 acres.

The nonprofit 380 Development Group was used because Iowa law prevents the city from selling the land to a for-profit corporation.

The real-estate transaction was scheduled to be completed Friday, and plaintiffs and their counsel believed an injuction was their last opportunity to halt the deal in question.

"The big problem we were facing is that if the deal closed on Friday as scheduled, then the horse is already out of the barn," said Vernon Squires, the plaintiffs' lawyer. "And the plaintiffs would not have had the ability to accomplish what they wanted to accomplish."

According to court documents, the plaintiffs claimed the city violated its own comprehensive plan in carrying out the project.

The lawsuit also said the city did not follow Iowa Code, which requires an intermediary company to pass the land on.

The plaintiffs claimed the 380 Development group is a sham and was created to allow the city to transfer the land for a price lower than its fair-market value.

Court documents said even if the company — which acted as an urban-renewal agency— was real, it failed to meet those requirements under Iowa Code.

"There are a lot of things in the Iowa Code that spell out very specifically how you go about developing an urban-renewal area and how you go about setting up funding for that," said Karen Fesler, whose husband is one of the plaintiffs.

According to court documents, the city said its urban-renewal project was not in conflict with its comprehensive plan.

The city also denied the 380 Development Group is a fake corporation and said the group is not an urban-renewal agency but an economic-development partner with North Liberty.

Three North Liberty city councilors declined to comment. The others and the mayor could not be reached for comment.

"The plaintiffs wanted to make sure the city is doing the right thing for the city, as well as the residents of the city and the property owners of the city," Squires said.

"The plaintiffs certainly believe in development and urban renewal, but the plaintiffs claimed in the lawsuit that the laws were not followed," he said. "So the injuction gives everyone a little bit of breathing space to make sure everyone's following the law."

Squires said the injuction is designed to preserve the status quo and allow a more thorough examination to ensure the city complied with Iowa Code.

There is a hearing scheduled for Jan. 4, 2011, to decide the future of the injunction.


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