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Judge denies Von Maur injunction

BY BETH BRATSOS | MARCH 27, 2012 6:30 AM

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Attorneys in a lawsuit over the move of the Von Maur department store from Iowa City to Coralville are unsure about the case's future after a judge denied an injunction Monday.

Sixth District Judge Marsha Bergan squashed a preliminary injunction because she said officials could not prove the city of Coralville violated Iowa Code in its attempt to lure Von Maur to the Iowa River Landing.

On March 1, eight local business owners and 18 businesses filed a lawsuit requesting an injunction to temporarily stop the move of the Von Maur department store from Sycamore Mall to Coralville.

According to the lawsuit, the plaintiffs sought the injunction on claims that transactions between Coralville and its independent contractor, Oliver McMillan, were illegal. The incentive package worth nearly $16 million that Coralville city officials offered both Oliver McMillian and Von Maur was the main topic of debate during six hours of testimony in the Johnson County Courthouse last week.

Defendants also filed a request to dismiss the case March 19, and attorney for the plaintiffs, Matt Adam, said the party filed a resistance to the motion the next day.

Adam said following the denied injunction, it is difficult to determine how the matter will proceed.

"No decision is made yet … We are considering all options at this point," he said.

Gerry Ambrose, who filed the initial petition, said the group is unhappy with the decision and will continue to keep an eye on the actions of Coralville officials.

"It is a sad day for us. We are really disappointed," he said. "Hopefully, some of the things that Coralville City Council is doing has been exposed."

Ambrose said the plaintiff group will meet Wednesday to decide how to proceed.

Although plaintiffs were previously cited as claiming Coralville used Oliver McMillan as an agent to do what the city could not legally to itself, findings in the 17-page ruling include "city councils have wide discretion in carrying out urban-renewal laws" and a court has "little power to interfere" with the City Council's discretion in this regard. The Iowa River Landing is an established urban-renewal area.

Coralville City Administrator Kelly Hayworth said the city will move forward with the Von Maur property development.

"The next item that we need to do is accept the bids for the rest of the infrastructure on the Von Maur lot that would include storm sewers, parking lot, etc.," he wrote in an email. "They were very good bids, and our time for accepting them was running out."

Hayworth said once bids are accepted and improvements are completed, Von Maur could begin construction. A Homewood Suites hotel and Backpocket Brewery are under construction in the area and will be completed this summer. The city is also working on other projects that can officials hope will begin late summer, he said.

The ruling also states the plaintiffs' claim that the transactions relating to the property were gifts, including the granting of the property to Von Maur Inc. for $10, did not provide sufficient evidence likely to win their case. The party receiving the property is required to meet other commitments and obligations, such as operating as a non-discount store for 15 years, the ruling said.

Peter Fisher, a research director at the Iowa Policy Project, said he thinks neighboring cities will increasingly be pitted against one another and that situations similar to Von Maur deal may become commonplace.

"I think it will happen more and more regardless because cities are going to feel they need to counter these competitive subsidies with subsidies of their own," he said.

Fisher said he thinks more cities will get into the over-use of tax-incentive financing, which is detrimental to the economy.

"I think [what is] annoying people in this case [is] they haven't taken advantage of a growing market … instead they're taking an anchor store from somewhere in the area and moving it elsewhere. It doesn't contribute to the economy as a whole."

A ruling on the defendants' request to dismiss the case will be issued Friday if no objection is made, according to online court documents.

Adam said a ruling to dismiss the case can be appealed, and they are currently "looking at all moving parts and trying to digest it all."


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