City goes ahead with TIF-financed Moen building despite petition

BY ALY BROWN | JULY 11, 2012 6:30 AM

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The atmosphere was tense during Tuesday evening's Iowa City City Council meeting as the council approved tax-increment financing funds for a 14-story mixed-use commercial building, despite a petition with more than 800 signatures calling for a public vote on the decision.

City Councilor Rick Dobyns maintained that the mixed-use development will be a positive economic move for Iowa City.

"It was a good project a couple of months ago, and it is still a good project," he said.

The Central Park LLC project will use tax-increment financing, an economic-development tool that utilizes future gains to finance current projects that, in turn, will generate the revenue needed for that project.

The city will provide no more than $2.8 million to developer Marc Moen to construct the 14-story building, which Moen has repeatedly said he cannot complete without city assistance.

The city councilors initially voted on April 3 to approve the TIF funding for the building.

Moen addressed a public misconception that the original 12-story proposal could be completed independent of the city at the formal meeting.

"There is no way we are building a 12-story or 14-story or any other building on that site without TIF financing," he said.

Moen's building will be constructed at the site of Wells Fargo, 114 S. Dubuque St.

The council could have chosen to hand out general-obligation bonds to finance the $2.5 million TIF grant, to abandon those initial plans and fund with TIF directly, or to give into the petition and hold a special election for the public to weigh in on the funding.

Kevin O'Malley, the city finance director, said there is some public misconception regarding whether the city is financing Moen's construction with grants or loans.

O'Malley said Moen's Plaza Towers, housing hotelVetro and condominiums, were also funded with TIF financing. The city granted funds for the building upfront, and as the district grew, applied tax revenue was used to pay off the bonds.

O'Malley said the Moen Building is being funded in a similar fashion to the developer's Plaza Towers, but tax revenue will be generated by the building instead of the district to leave room for similar developments downtown.

"What we are doing here with Central Park LLC is to keep it all on that building," he said. "We could legally use the whole district, but we are also looking at other applicants like Marc Moen."

But several members of the public were incensed at what they said was an absence of democratic process after their petition to vote on the project was denied.

Carol deProsse, a petition organizer, said the petition recorded 862 signatures of eligible voters, well over the 697 needed.

"It is about citizens voting, the very basis of the democratic process," she said.

Iowa City resident Colin Gordon said he did not see a substantial public benefit for the construction.

"With a such a substantial public subsidy, we should see substantial public benefit," he said. "I don't see that here."

Councilor Connie Champion said she values both the petition and project, but some residents may not see the long-term tax benefits of the building.

"In 20 or 25 years, it is a positive thing for Iowa City, even if some people don't like it right now," she said. "I'm thinking about the future."

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