Parties in the Von Maur deal continued their arguments Wednesday

BY BETH BRATSOS | MARCH 22, 2012 6:30 AM

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The use of tax-increment financing during the purchase of land for the relocation of the Von Maur department store was at the center of more than three hours of testimony in the Johnson County Courthouse Wednesday.

The discussion was part of the second day of hearings in a lawsuit seeking an injunction to block Von Maur's move from the Sycamore Mall in Iowa City to the Iowa River Landing in Coralville.

Sixth Judicial District Judge Marsha Bergan said she plans to issue a ruling on the lawsuit early next week after attorneys submit written closing arguments by Friday.

Robert Hatala, an attorney for the plaintiffs, has argued parts of an incentive package worth nearly $16 million that the City of Coralville offered Von Maur and its independent contractor were illegal.

On Wednesday, Hatala questioned Peter Fisher, a research director at the Iowa Policy Project, who explained the effects of Coralville's use of TIF. Fisher had previously told The Daily Iowan the project represented a "blatant example" of government's misuse of TIF.

Fisher testified taxpayers will benefit very little from the relocation of Von Maur to Coralville and said he doesn't think the transfer constitutes economic development, the intended use for TIF.

"The net job gain here is likely to be minimal … [and] the offsetting on that will be the loss of jobs at Von Maur at Sycamore Mall … [and] any other businesses that are no longer viable at Sycamore Mall because of the loss of an anchor. This is not a wise use of public funds," Fisher said. "Something has to give. And that is likely to be sales of competing stores."

But David Tank, an attorney for Coralville, argued Fisher failed to evaluate the overall economic effect of the Von Maur project because he calculated the costs and negative effects without quantifying the economic benefits.

Tank said the transfer had potential to attract "unique opportunities and businesses" to the Iowa River Landing. He also noted the Coralville City Council has the authority to award money for the development because it will add diversity and generate new opportunities for the Iowa economy, including tourism.

Despite Tank's assertion about interest in the area as a result of Von Maur's proposed move, Coralville City Administrator Kelly Hayworth said he could only confirm a few tenants interested in the area.

Still, Hayworth said, other developments have, in fact, expressed interest.

"We have other developments that are occurring that are relying on Von Maur," he said.

But Hatala said Hayworth's statements were based on hearsay.

Gerry Ambrose, a real-estate agent with Ambrose and Boyd Realtors, who filed the original petition in the lawsuit, also testified at Wednesday's hearing. He said he owns numerous properties in Coralville, including three in the Coralville area TIF district, which has caused his tax money to go toward the Von Maur deal and be used to build competition for his properties.

Ambrose said the package of incentives in the deal "baffles him" and he thinks the city got "zealous and made a bad deal." He said he became particularly nervous when Coralville announced the amount of retail and office space it intended to own and lease in the Iowa River Landing.

"[The injunction] is a chance for the city to walk away and not lose face," he said.

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