HomeMy WebLinkAbout1973-03-29 Correspondence�.A • ry • CMC CENTER, 410 E WASHINGTON ST.
IOWA CITYOWA 52240 _
319 -354 -IBM .
PAY S. WELLA CRY MANAGER
•IOWA CITY.10}'/A'
MAYOR
C L 41m BRANCH
CWLMEII
POO E P I CONNELL
EOOAR C IECM ..
LORIN HCXEP50N
J. PAINCK WHITE
March 29, 1973
Guy J. Birch
Area Director
Department of Housing and Urban Development
7100 West Center Road
Omaha, Nebraska 68106
Attention: Hayward Sparks
Deputy Director
Operations Division
Subject: Status of Project Iowa R-14
City -University Project I, Iowa R-14
Iowa City, Iowa52240
The following letter and enclosures are being sent inresponse
to letters from your office dated January 19, February 26, and
a meeting between staff members from your office and:LPA'per
-
sonnel which took place in Omaha on March 23, 1973. Ile wish at
this point to express our gratitude for the time you have spent
with us and also express our appreciation for the "utmost cooper-
ation";to resolve all outstanding issues on R-14 which you
promised in your letter of March 21.
The correspondence mentioned above, and ours in return, suffered
perhaps from a lack of specificity. If indeed HUD was concerned
about the City's apparent inability to issue revenue bonds and
to construct parking facilities, we can certainly, appreciate
your requestfor "possible alternatives to the present course of
action." In spite of a recent district court law suit regarding
the issuance of revenue bonds for the construction of a-
parking
facility, our commitment to constructing parking facilities through
various means of revenue available to us has never changed. We
hope that the enclosed information will demonstrate clearly what
our
in
course of action is, and that we can complete the project with -
the limits set by the present federal grant.
Approximately 20 months ago, we became aware that the appraised
value of properties to be acquired would exceed the amount approved
in the latest Project Expenditures Budget. Recognizing that we
are a mandated, project, we immediately took steps to review our
acquisition plan.We have reduced the scope of our acquisition ac-
tivities so that we now can complete acquisition within the limits
set by the latest approved budget. The,reduction in acquisition
amounted to approximately $1.5 million and the parcels which we
have chosen to delete have been made known to you through various
letters and maps. We view this action on our part as an expression
of good faith in responding to the mandate which accompanied our
contract for Loan and Grant.
In December of 1971, we completed a'review of the Project Improve-
ments activities within our project.' Because of continually rising
costs, we, estimated that Project' -Improvements would exceed the
budgeted amount of $1,354,122 by`approximately $1 million. This
fact, along with our reasons -supporting -the estimated increase; in
costs, was submitted to the HUD office in early 1972. It was:mutu-
i_; ally agreed at:that.time that; the apparent overrun in this line
item notwithstanding, we should proceed until such time as an,amend-
ment to the contract for Loan and Grant was more "crucial," i.e.,
we were proceeding under the old rules and regulations. We are now
acutely aware that there will be no amendatory funds. We propose
to resolve this dilemma by 'changing most of the cost of Project
Improvements from an Item I cost to an `Item II.cost. Enclosures
submitted' herewith will show the source and applications of funds
and the City's capacity to pay for the improvements through various
sources of revenue. Changes in the cost of Project Improvements
are reflected.in both the revised Project Expenditures Budget and
I' the Project Cost Estimate and Financing Plan.'
In addition to the anticipated budget overruns referred to above,
i there has been a great deal of concern expressed over the LPA's
commitment and capacity to provide the local share of project costs.
Parking facilities and a bridge constitute the bulk of the City's
share of the project cost. It is of course true that if we are
not to construct a bridge or parking facilities, we should indicate
some alternate method of producing the, local share of project costs.
In'the'above-referenced meeting, we conversed with you about the
high improbability of a Court -Melrose bridge ever being constructed.
At the time of the original application for Loan and Grant for this
project, it made sound planning sense to construct a bridge in this
location.' However, between the time of original application and the
! final approval of the application, a 7 -lane facility was constructed
Guy J.: Birch 3 March 29, 1973
Hayward Sparks
Omaha, Nebraska
one block north of Court Street. The construction of this facility
negates the necessity for the proposed Court -Melrose Bridge. Con-
sequently, we proposed to eliminate it as a supporting facility
in the Project Cost Estimate and Financing Plan.
With regard to the parking facilities within City -University
Project I, it is our intention to present the following basic
issues:
1. The absolute necessity of parking facilities within
this or any Central Business District project,
2. The commitment made by the City Council of'J owa City to
an overall parking policy for the Central Business District,
3. The City's ability to facilities through
various ources' of revenue.
Toward the end of establishing these points, we have included as
enclosures to the supporting Schedule'4 to the Project Cost Estimate
and -Financing Plan, -,the following',exhibits:
1. An opinion of counsel as to the ability of the City to
construct parking facilitiesandthe means, by which we can
finance them,
2. The source and application of funds to finance parking
facilities,
3: A report from the consulting firm of Barton-Aschman
which establishes and justifies the need for parking facili-
ties within downtown Iowa City,
4. The official parking policy of the City of Iowa City
adopted by the local governing body,
S. The official statement prepared by the LPA's municipal
finance consultant regarding the $2 million revenue bond
issue in 1972.
We wish to state emphatically again that we view parking as a
sine qua non to redevelopment of the Central Business District. Put
simply =- no parking, no project. It is our judgement, however,
that to proceed precipitously in constructing aparking ,facility at
this time, in a location which may turn out to be a'disaster 'in
terms of the overall redevelopment of downtown Iowa City, would
not be in the best interests of the successful completion of the
Project. As we related to you in our meeting of March 23, we have
Guy J. 'Birch -4 March 29, 1973
Hayward Sparks
Ii Omaha, Nebraska
been contacting major redevelopers throughout the midwest and have
elicited a great deal of interest in the redevelopment of all
pro-
ject lands at onetime. We plan to advertise all of the project
land for sale, on a"staged take down basis, no sooner than June 1
i and no later than, August 1, 1973. In our instructions to bidders,,
we will insure that they are 'aware that the City is, and wishes to
! remain, in the parking business'. With a confidence born of our
' contacts with redevelopers; we feel that we will have a majority
of the disposition parcels under contract by the end of this
calen-dar year.
Summarizing the above, we are proposing to delete the -Court -Melrose
Bridge from the Financing Plan and to substitute project improve-
ments as an Item II cost. This; procedure is significant only if
one realizes that only half of the total cost of the bridge was
allowed as a non-cash local grant-in=aid. That is to say, while
only $1.6 million was used -in the Financing Plan, the City was
!
still, committed to raising .$3.2 million for the construction of
�. the bridge. The same situation prevailed with the; parking facili-
ties. :Thus while the approved Financing Plan showed $5,17.9,037
,(including Section 112 credits) as the .total non-cash'. local grant-
in-aid, the City was committed to raising $7,996,892. Deleting
A the bridge (which will not.do damage to.the physical plan) and sub-
stituting the project improvements therefore reduces the_City's
total commitment to'$6,958,992. In addition 'to these proposed
fiscal,changes we .will proceed ,to,modify the Urban Renewal Plan to
! remove certain parcels from the acquisition plan.
With the, mandate to adhere to a.fiscal'policy which will insure
i" administration of<the 'project without' exceeding the present capit
al grant, and with the assurance from you that amendatory funds
are not and will not be available, it our understanding that
we are thus allowed more flexibility in modifications (not formal
changes) to the physical plan. The flexibility we refer 'to'`is'in
the areas of ,location and size of parking facilities, vacation', of
streets, etc. It is understanding after having talked with
personnel from your office that our final physical plan will be
determined only after we have received an acceptable bid for the
total disposition package.
The City of Iowa City, the federal government, and especially the
Department of Housing and Urban Development have already expended
a great deal of time, effort and money in carrying out this pro-
ject. After many years, the impact of this project and its mag-
nitude is beginning to have its positive effects on this univer-
sity community.`, We who are charged with the administration of the
community are cognizant of our responsibilities and commitments
The Mayor and members of the City Council have been aware since 1972
that costs for certain urban renewal activities would exceed the
amounts contained `in the latest federally -approved budget. In fact,
many of the cost estimates in the contractural agreement are based
on 1966 information.S pecifica lly, the estimated cost of acquisition
-
of real estate and the cost of making project improvements re-
building water and sewer lines, pavingstreets, etc.; - is approximately;'
$2 million more than the amounts contained in the budget approved by
the Department of Housin
g and Urban Development in July of 1970. The
Cit administration dministration communicated this information to the Area Office
of HUD in 1971 and 1972. The response from the federal officials
was to proceed with the project until such time as the cash flow
Position of the project warranted filing for an amendment to, increase
the federal capitol grant. This was the procedure typically used in
conventional urban renewal projects for the past decade. Additional
funds were granted by HUD only at the time they were needed.
In December of 1972, the City Council felt that it wasnan amendatory
application. Their concern was transmitted to the HUD Office in
Omaha. For various reasons, including the transfer from Omaha of key
Page 2
City -University Project I
HUD personnel who were familiar with the project, a meeting
was not arranged until last Friday, March 23. At that meeting
the City was informed that the rules had changed, that amendatory
applications no longer existed, and that additional federal money
for conventional urban renewal projects had been terminated. The
City was told, quite emphatically, that we would have to complete
the project within the present capitol grant of $9.1 million, and,
demonstrate to, HUD our ability to do so by March 31, 1973.
With a determination born-of'the City Council's commitment to
the revitalization of the Central Business District and in response '
to the tremendous enthusiasm which this project has generated among
so many of our citizens to this point, we set out to do just that -
to demonstrate that we need not rely, totally :on the federal dollar
to 'achieve the kind of downtown which we. as Iowa Citians need and
deserve. We have made revisions in our plans, physical as well as
fiscal, that will allow us to continue and to'.complete the rebuilding
of downtown in an aesthetically pleasing and economically sound manner...
The Council has directed the City Manager to reduce the acquisition
program by $1.5 million by deleting certain parcels from the list of
those to be acquired. Specifically these parcels are the Paul Helen
Building, the Hawkeye Bank parking lot, Things, Things, and Things,
Darling Bender Real Estate Offices, the Clinton Street parking lot,
and various other parcels in blocks 93, 94, and 103. All of these
parcels can be deleted from acquisition without doing even minor damage
to the original redevelopment plan. Further, we are deleting the
Court -Melrose bridge as a part of the urban renewal plan. Monies set
Page 3
City -University Project I'
aside for the bridge will be directed to making the necessary
project improvements. Again, the deletion of the Court -Melrose
bridge will not impair the accomplishment of the redevelopment
objectives. These revisions, a reduction of parcels to be acquired
and the "exchange" of funds from bridge_ construction to project
improvements will allow us to complete the project within the present
federal grant of $9.1 million without increasing our local share of
project costs. Federal officials were in Iowa City yesterday and
indicated their agreement with the revised strategy. We have success-
fully allayed their fears and demonstrated to them that the_project r
is sound economically.
Finally, I wish to address myself to the citizens of Iowa City.
As I said to you.on February 20 of this year, redevelopment will "not
be easy.,. The events of the past.week have certainly proven that.
This is`jsut one more obstacle in a long line of obstacles which we
have faced and overcome. There will be others we are sure. But
we cannot and will not turn back. Again, I urge each of you to be
patient, to be understanding and to work together with the City Council
in remaking the heart of our City an "undertaking unequalled in the
annals of Iowa City history.
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