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HomeMy WebLinkAbout2014-11-06 CorrespondenceMarian Karr From: WELSHBOB @aol.com Sent: Wednesday, November 05, 2014 8:08 PM To: Council Subject: Development Proposal at Linn and Court Iowa City -City Council I have read the proposal for the Linn /Court Lofts. I have a long history in relation to senior housing. I am strongly in support of a University Based Retirement Community in downtown Iowa City. I strongly support the features outlined on page 39, such as: Apartment for Life, Universal Design and Smart Home Technology, and Research and Learning Relationships. I also strongly support senior housing in the north part of the River Crossings development which will enable seniors to have easy access to downtown and the university. The only part of the proposal that I find objectionable is the request for $14,144,000 TIF. I believe the Linn /Court Lofts would add to the diversity and vitality of downtown. I realize that there are reasonable objections to using TIF for residential developments, but I realize that the Council has by past actions already deemed them to be appropriate. Even so, I would hope CG Hanson could find other financial resources and not need to rely so heavily on TIF. If your process allows, I would hope that you would communicate to CG Hanson your interest in a University Based Retirement Community and ask CG Hanson, Inc. to explore other financial alternatives and, if they deem advisable, to submit an amended proposal within the next 30 days. Bob Welsh 84 Penfro Drive Iowa City, Iowa 52246 Marian Karr From: R. Michael Hayes <rmhayes @belinmccormick.com> Sent: Thursday, November 06, 2014 1:24 PM To: Marian Karr Cc: Mike Oliveira; Eleanor M. Dilkes; Tom Markus Subject: November 6, 2014 City Council Work Session Attachments: 11 -6 -14 City Council Letter (01994328x9D4A5).pdf Dear Ms. Karr: I enclose a letter to the Mayor and Members of the City Council on behalf of Prairie Sun Building Services, L.L.C. that I request be included in the packet for the City Council in connection with its Special Work Session meeting at 5:00 p.m. today. Thank you. R. Michael Hayes 666 Walnut Street, Suite 2000 Des Moines, Iowa 50309 -3989 Direct Dial: (515) 283 -4647 Cell: (515) 537 -6207 E -mail: rmhayes(dbelinmccormick.com BelinMc:Corauick Attorneys at Law Confidentiality Notice: The email and any attached documents contain information from the law firm of Belin McCormick, P.C., which may be confidential and /or legally privileged. These materials are intended only for the personal and confidential use of the addressee identified above. If you are not the intended recipient or an agent responsible for delivering these materials to the intended recipient, you are hereby notified that any review, disclosure, copying, distribution or the taking of any action in reliance on the contents of this transmitted information is strictly prohibited. If you have received this email in error, please immediately notify the sender of this message. Thank you. This email has been scanned for email related threats and delivered safely by Mimecast. For more information please visit http: / /www.mimecast.com BELINI kCORMICK ATTORNEYS AT LAW R. Michael Hayes Direct Dial: (515) 283 -4647 Direct Fax: (515) 558 -0647 E -mail: rmhayes @belinmccormick.com November 6, 2014 E -MAIL Honorable Mayor Matt Hayek and City Council Members of Iowa City, Iowa 410 E. Washington Street Iowa City, Iowa 52240 Re: Request for Proposals for the Court Street and Linn Street Redevelopment Site Dear Honorable Mayor and City Council Members: Our firm represents Prairie Sun Building Services, L.L.C. which submitted one of the six development proposals that the City received in response to its May 30, 2014 Request for Proposals for the Court Street/Linn Street Redevelopment Site. The City Committee that reviewed these proposals has recommended that the City authorize City staff to negotiate further with three of the developers who submitted proposals. All of these recommended proposals vary materially from and are inconsistent with the Downtown and Riverfront Crossings Master Plan adopted by the City in January 2013 (the "Master Plan"). They propose student housing or hotel uses or both, which are expressly not permitted uses for the Court Street/Linn Street site under the Master Plan. The City will have to amend the Master Plan after the fact to accept any of these proposals. The process used in this request for proposals did not clearly advise interested developers of what uses would be allowed for redevelopment of this site and did not place all developers on an equal footing. After reviewing the Request for Proposals and the Master Plan and attending the non - mandatory meeting for developers, Prairie Sun understood that student housing was not an allowable use. Prairie Sun spent thousands of dollars in preparing its conceptual architectural plans and its proposal that substantially conformed to the Master Plan and the goals of the Request for Proposals in all respects, but that did not include student housing as a primary use. Prairie Sun was advised by its prospective lenders that if it could develop student housing on this site that development could be privately financed without need for any city subsidy. If Prairie Sun had known that the City would allow student housing on this site, it would have submitted a different proposal. Given the interest in this site when the allowable uses were unclear, it is also likely that if other developers had understood that student housing and hotel uses would be allowed on this site, that the City would have received additional proposals. November 6, 2014 Page 2 The Iowa Code provides that a City may dispose of real property in an urban renewal area to private developers only under a reasonable competitive bidding procedure. The Iowa Supreme Court held that it violated this statute when a city waived compliance with bidding requirements after the bids were submitted and accepted a bid that did not comply with the bidding requirements. It stated: "Public policy underlies the requirements of competitive bidding. The purpose of the statute is that each bidder, actual or possible, shall be put upon the same footing. Interested purchasers should be given equal opportunity to bid on the land bearing the same restrictions. The municipal authorities should not be permitted to waive any substantial variance between the conditions under which the bids are invited and the proposals submitted. If any bidder is relieved from conforming to the conditions which impose some duty upon him, or from strict performance of the terms of the invitation to bid, such bidder is not contracting in fair competition with those bidders who propose to be bound by all conditions. An indispensable element of such sale is the existence of a definite common standard to which all competitive proposals alike relate." The City Attorney has stated the Iowa City process to date is not an offering of the Court Street/Linn Street site for redevelopment under the Iowa urban renewal statute, but is merely a preliminary process. It appears that the City proposes to negotiate a deal with the developer whose proposal it likes best and then amend the urban renewal plan and Master Plan to allow that proposal to proceed. Thereafter, the City will publish notice of an urban renewal offering under the Iowa urban renewal statute stating criteria on which it invites proposals, which criteria will be tailored to the proposal it desires to accept, and state it has received a proposal it intends to accept unless a competing proposal is submitted within a stated time. In this case, the existing Request for Proposals determined that a six week period was the appropriate time to allow for development of competitive proposals. After expiration of that offering period and' a public hearing, the City will formally accept a proposal for development of this site. However, this procedure undermines the requirement for a "reasonable competitive bidding process ". Even though there is substantial developer interest in this site now, it is very unlikely any developer will submit a competing proposal under this procedure, since it appears that the fix is in, that a competing proposal is unlikely to be given fair consideration, and the developer will only be wasting its money in an effort to compete. This process violates the spirit and letter of the Iowa urban renewal statute and the Iowa Supreme Court decision described above. If the City wishes to consider proposals for development of student housing or hotels on this site, then the City Council must reject all existing proposals for development of the Court Street/Linn Street site and start this offering process over. It should then clarify the allowable uses for which development will be allowed, amend the Master Plan and urban renewal plan as necessary to reflect those allowable uses, and clearly communicate these allowable uses and the criteria on which it will judge competitive proposals, before it again invites submission of proposals for development of this site. November 6, 2014 Page 3 Respectfully submitted, R. Michael Hayes For the Firm RMH BELINT0910 \0001 \11 -6-14 City Council Letter (0 1 99400 5- 2).DOC cc: Michael Oliveira, Marian Karr, Eleanor M. Dilkes, Tom Markus November 6, 2014 Mayor of Iowa City and Counsel Members 410 E. Washington Street {. Iowa City, Iowa 52240 i RE: Development is the wrong use for the Court Street /Linn Street site Dear Mr. Hayek and Counsel Members, After the 2006 tornado, in April 2008, the City acquired the former St Patrick Church site at 435 S. Linn Street, using $3,593,279 of parking system revenues, as a site for a city parking garage. This is the site for which the City recently requested proposals for private, non - parking garage redevelopment, as the Court St/Linn St Redevelopment Site. In January 2013, the City amended its comprehensive plan by adopting a Downtown and Riverfront Crossings Master Plan. The new development contemplated by this Master Plan in the Downtown and South Downtown Subdistricts of the planning area will generate an additional parking demand of 3,449 parking spaces and the Master Plan only contemplates that the private developers and the city together will provide 1930 of the needed parking spaces within these two subdistricts, leaving a shortfall of parking spaces needed to serve this expected demand of 1615 parking spaces. Furthermore, this Master Plan contemplated that the City would provide 1341 of those 1615 new parking spaces by constructing parking garages on the south side of Washington Street between Dubuque Street and Clinton Street, at 435 S. Linn Street, and on the south side of Court Street between Dubuque Street and Clinton Street, and would provide a surface parking lot on the west side of the alley between Harrison Street and Court Street. The Master Plan specifically provided that the 435 S. Linn Street property should be developed as a mixed use development including a 600 car parking garage, 112 residential units (which would need 197 of those parking spaces) and 8,000 square feet of commercial space. There is already a shortage of parking in the Downtown and South Downtown Subdistricts, as well as for uses in adjacent blocks, created by the existing development within these subdistricts and the adjacent blocks that is not presently served by onsite parking. The Master Plan does not address solving that existing parking demand. The Master Plan specifically stated: "In order to achieve the desired level of development within the South Downtown District, the City must address parking demand through a parking district approach. Instead of addressing parking on a project -by- project or site -by -site basis, which diminishes the urban nature of a particular area, parking must be provided on a district wide basis. This means utilizing parking structures, shared parking, and demand pricing to address demand. Two parking structures are shown in the South Downtown Plan, and would help address the high demand in the district." The City already owns the 435 S Linn Street site which could provide part of the solution to these parking needs and that would be the best use of this site. The three proposals that the City staff is recommending to the City Council for private development of 435 S. Linn Street would only exacerbate the parking problems in the area as they involve hotel and student housing uses not contemplated by the Master Plan in determining its parking needs, would not provide all needed parking for those uses on site, and would increase the parking shortages in the area. Private redevelopment of this site is the wrong use for this site and the City should reject all proposals and should instead pursue development of a parking structure on this site. Respectfully yours, /II C4-W1-,P1? Cleo McConnell Resident - of Iowa City, Iowa :-a - E. '%_. Rt� t November 6, 2014 Mayor of Iowa City and Counsel Members 410 E. Washington Street Iowa City, Iowa 52240 ° J RE: The City Council should reject the proposals for the Court S Sf -"e Velopment site. Dear Mr. Hayek and Counsel Members, On May 30, 2014, the Iowa City staff sent out a Request for Proposals for Private Redevelopment for the Court St/Linn St Redevelopment Site. This RFP stated that the goals for the project included: • An urban building generally consistent with the goals of the Downtown and Riverfront Crossings Master Plan. • A variety of uses will be considered, including hotel, residential, office and/or retail. • A minimum of 20,000 square feet of office space oriented towards research, business accelerator /incubation type users. • If residential uses are proposed, the following residential products are encouraged: units oriented to permanent residents; higher quality/higher amenity units; units affordable to `workforce housing" households (being households earning between 80% and 120% of Area Median Income); and affordable housing (being households earning less than 80% of Area Median Income). • An active first floor frontage to a depth of at least 30 feet. • The designs submitted were to be based upon the Form Based Code zoning standards that had not then be adopted or applied by rezoning to the Court St/Linn St site. The City received 6 proposals for redevelopment of the Court St/Linn St site. The city committee reviewing the proposals concluded that all 6 proposals met offering criteria and recommended three proposals for consideration by City Council. All of these recommended proposals vary materially from and are inconsistent with the Master Plan for development of Court St/Linn St site. The HUB at Iowa City proposal by Core Campus is to develop a 15 story building containing 430 student housing units with 818 beds, 20,215 square feet of office space and 497 parking spaces. This use is not consistent with the goals of the Downtown and Riverfront Crossing Master Plan. The Master Plan stated that student housing should only be located in the University Subdistrict, the northern part of the West Gateway Subdistrict and the portion of the South Downtown Subdistrict located between Burlington, Clinton, Court and Madison Streets. It further only contemplated development of 584 beds of student housing in the designated student housing area of the South Downtown Subdistrict and development of 589 other housing units throughout the remainder of the South Downtown Subdistrict. The Master Plan is also concerned that the proximity of student housing discourages development of other housing types nearby. While it alleges that its market also includes young professionals, it does not provide any information showing that any of the units are higher qualify/higher amenity units and its average square footage is 475 sf for a 1- bedroom unit, 800 sf for a 2- bedroom unit and 1075 sf for a 3- bedroom unit, and its schematic floor plans appear to show a similar size unit on all floors for each bedroom unit type, rather than varying units sizes. The CA Ventures proposal is to develop a 117 room hotel, 3,500 gross square feet of retail space, 293 student housing units containing 467 beds, and 272 parking spaces, in three towers above ground. Both the student housing and the hotel usage are inconsistent with the goals of the Downtown and Riverfront Crossing Master Plan for this site. The Master Plan contemplates hotel and motel uses only in the Park and West Gateway Subdistricts. Furthermore, the residential rent contained in this proposal is $1179 per bed per month, well above the existing rental rate for student housing in Iowa City. This proposal does not show any of the required office space, but states in writing that as a design alternative, it could add 20,000 square feet of office space on and between the two residential towers, but does not show how that would modify its design or financial analysis. Again, its average unit sizes are just over 550 sf for a 1- bedroom apartment and around 865 sf for a 2- bedroom apartment with most 2- bedroom apartments at 850 sf. These unit sizes are unlikely to attract non - student tenants. The Linn and Court Proposal by Sherman Associates is to develop a 146 room hotel, 23,000 square feet of flex office space, 91 market rate apartments with 107 beds at an average square footage of 799 sf per apartment and an average monthly rent of $1155 per bed per month. Again, the hotel use is inconsistent with the goals of the Downtown and Riverfront Crossing Master Plan for this site. The Des Moines Register also carried an article on October 5, 2014 in the Business Section detailing the issues Sherman Associates is having in timely performing its obligations under existing urban renewal projects in Des Moines, Iowa, included stalled or delayed projects, delinquent property tax payments and alleged construction defects. This developer's submission also listed a number of lawsuits that have arisen at its existing projects. Further, if student housing and hotel uses are permissible, it materially increases the ability for a developer to obtain private sector financing without need for City financial incentives. If other developers had known the City would approve student housing and hotel uses, even though they were inconsistent with the Master Plan for this area, then they well may have submitted different proposals than were submitted and other developers who did not submit may have been interested in submitting proposals. The fact that the request for proposals did not clearly communicate the criteria the City was going to use in selecting a developer and the issues discussed above with the recommended development proposals are reasons enough that the City should reject all existing proposals and reconsider the use of the Court St /Linn St site. If the City is willing to consider student housing and hotel uses on this site, then it should reject all of the proposals submitted this time, amend its Master Plan and Urban Renewal Plan accordingly, revise its request for proposals to unambiguously set forth the criteria on which all proposals will be judged, and only then resolicit new development proposals. RespectfiielY YV� vy... Cleo McConnell Resident of Iowa City, Iowa 7-%3 J . R E S T G E r t Y � 4.rT � 3., f 4. � F i -.� -- • ["::'.D November 6, 2014 - r Mayor of Iowa City and Council Members 410 E. Washington Street Iowa City, Iowa 52240 Dear Mr. Hayek and Council Members: 5 R The current request for proposals of the Court St /Linn St site is an example of the planning processes gone amok and fails to follow the statutory requirements for Iowa City to sell land located in an urban renewal project for redevelopment. On October 23, 2012, the City Council adopted the 10th Amendment to the City - University Project 1 Urban Renewal Plan to include the Riverfront Crossings area as part of the urban renewal project covering the downtown area. This 10th Amendment did not designate Court St /Linn St site as a disposition parcel for redevelopment and did not adopt specific land use provisions for this property. While the City Council has since adopted two additional amendments to the City - University Project I Urban Renewal Plan to provide for sale and redevelopment of other parcels in this Urban Renewal Area, including other land in the Riverfront Crossings Area, it has not amended to this urban renewal plan to provide for sale and redevelopment of the Court St /Linn St site. On January 22, 2013, the City Council adopted the Downtown and Riverfront Crossings Master Plan as an amended to the City's comprehensive plan to revise the allowable development in the area covered by that Master Plan. This plan was developed with significant public input gathered through a series of public workshops and focus group sessions over many months prior to its adoption. This Master Plan divided the Downtown and Riverfront Crossings area into 8 subdistricts with detailed development planning guidelines for each area. The Court St /Linn St site is part of the South Downtown District. This Master Plan stated a number of planning objectives that are applicable to redevelopment of the Court St /Lin St site: Student housing should occur only in the University Subdistrict, the northern part of the West Riverfront Subdistrict, and the portion of the South Downtown District bounded by Burlington Street, Clinton Street, Court Street and Madison Street. Hotel and motel uses should only occur in the Park and West Riverfront Subdistricts. There . is a need to develop additional housing products besides student housing throughout the area covered by the Master Plan. The amount and proximity of student housing adversely affects the development of other housing types. There is an identified need to develop higher- quality, higher- amenity housing aimed at young professionals and 329 E Court Street Suite 2 Iowa City, IA 52240 319.512.7616 admin @prestigeprop.com empty- nesters, housing targeted for workforce employees, and, as provided in a May 20, 2014 amendment to the Master Plan, affordable housing. • There is a need for additional office space. • There is a need to address parking on district wide basis, not just on a project -by- project or site -by -site basis, and the City needs to provide parking structures to meet that need. • New development in the Downtown and South Downtown Subdistricts will generate a demand for 3,449 additional. parking spaces, but the plan only has the private developers and city providing 1,930 additional parking spaces, with the City providing 1,341 of those spaces through 3 parking garages and a surface parking lot. • The Court St /Linn St site was specifically identified for development with a 600 car parking garage, 112 residential units and 8,000 square feet of commercial space. At the September 3, 2013 meeting of the Economic Development Committee of the City Council, City staff indicated it had talked with several developers about possible private development of the Court St /Linn St site and developers expressed interest in developing student housing or hotels on the site. Councilwoman, Payne stated that the Master Plan did not contemplate student housing at this location, but closer to the river. Councilwoman Mims stated that student housing would be the last thing they want to spark development of the area and that she is not interested in a project that is predominantly student - oriented. Councilwoman Payne concurred. City staff asked about hotel development and stated there is developer interest but not without incentives. Mayor Hayek stated he would not be interested in incenting student housing. Notwithstanding this discussion with the Economic Development Committee, the Downtown and Riverfront Crossings Master Plan has not been amended to provide for student housing or hotel uses in areas other than those originally designated under the Master Plan or to provide for other uses on the Court St /Linn St site. Further, although the City - University Project 1 Urban Renewal Plan has not been amended to show the Court St /Linn St site as a disposition parcel or to specify uses for that parcel and although the City Council did not authorize the City staff to request proposals for redevelopment of the Court St /Linn St site, on May 30, 2014, the City staff sent out a Request for Proposals for Private Redevelopment for the Court St /Linn St Redevelopment Site. This RFP stated that the goals for the project included: • An urban building generally consistent with the goals of the Downtown and Riverfront Crossings Master Plan. • A variety of uses will be considered, including hotel, residential, office and /or retail. • A minimum of 20,000 square feet of office space oriented towards research, business accelerator /incubation type users. • If residential uses are proposed, the following residential products are encouraged: units oriented to permanent residents; higher quality /higher amenity units; units affordable to `workforce housing" households (being households earning between 80% 4.11d 120% of Area Median Income); and affordable housing (being households earning less--than 80% of Area Median Income). _ O N • An active first floor frontage to a depth of at least 30 feet.§' 329 E Court Street Suite 2 Iowa City, IA 52240 — - - 319.512.7616 admin @prestigeprop.com r..;:. • The designs submitted were to be based upon the Form Based Code zoning standards that had not then be adopted or applied by rezoning to the Court St /Linn St site. The City received 6 proposals for redevelopment of the Court St /Linn St site. The city committee reviewing the proposals concluded that all 6 proposals met offering criteria and recommended three proposals for consideration by City Council. All of these recommended proposals vary materially from and are inconsistent with the Master Plan for development of Court St /Linn St site. One recommended proposal is for 430 student units containing 818 beds, 20,215 square feet of office space, and 497 parking spaces. A second recommended proposal is for a 117 room hotel, 3,500 square feet of retail space, 293 student housing units containing 467 beds, and 272 parking spaces. The third recommended proposal is for a 146 room hotel, 23,000 square feet of flex office space, 91 market rate apartments with 107 beds, at an average square footage of 799 sf per unit. The Iowa Code provides that a City may dispose of real property in an urban renewal area to private developers only under a reasonable competitive bidding procedure. The Iowa Supreme Court held that it violated this statute when a city waived compliance with bidding requirements after the bids were submitted and accepted a bid that did not comply with the bidding requirements. It stated: "Public policy underlies the requirements of competitive bidding. The purpose of the statute is that each bidder, actual or possible, shall be put upon the same footing. Interested purchasers should be given equal opportunity to bid on the land bearing the same restrictions. The municipal authorities should not be permitted to waive any substantial variance between the conditions under which the bids are invited and the proposals submitted. If any bidder is relieved from conforming to the conditions which impose some duty upon him, or from strict performance of the terms of the invitation to bid, such bidder is not contracting in fair competition with those bidders who propose to be bound by all conditions. An indispensable element of such sale is the existence of a definite common standard to which all competitive proposals alike relate." In this case Prairie Sun Building Services, LLC submitted a proposal that substantially conformed to the Master Plan in all respects, but did not include either student housing or hotels as it did not understand that those were allowable uses for this site under the Master Plan. We spent thousands of dollars preparing conceptual architectural plans and our proposal. If we had known that student housing was allowable we would have submitted a different proposal that did not require any city subsidies for development. Further, if it was clear that student housing and hotel uses were allowable, then the City may well have received more than 6 proposals. The City Attorney claims that the Iowa City process is not a true offering under the Iowa urban renewal statute, but is a preliminary solicitation of proposals. That the City will then negotiate a deal with the party submitting the proposal it likes best, then amend its comprehensive plan and urban renewal plans, and thereafter the City will publish an urban renewal offering under the. statute stating the criteria on which, it invites proposals, that it has received a proposal it intends to accept unless competing proposals are submitted within a stated time period, whWh likely will be too short to a time for others to develop a reasonably competitive propagl, aid then] only formally accept the selected proposal after this second offering period and a pubii_c h6ring. ferny of the original proposers desire to complete further, then they must spend s�stantial additional time and money to revise their proposals, knowing it is unlikely.the city will anti -Ny give other:; 329 E Court Street Suite 2 Iowa City, IA 52240 319.512.7616 { admin @prestigeprop.com proposals a fair consideration. This process used by Iowa City violates the letter and spirit of the Iowa urban renewal statute and the Iowa Supreme Court decision described above. The City Council should (1) reject all existing proposals, (2) determine whether this site should in fact be privately developed or should be developed as a parking garage as set forth in the Master Plan, (3) if they chose to have this site privately developed, clarify the development criteria on which they plan to judge competitive proposals, amend the comprehensive plan and urban renewal plan as necessary to reflect those competitive criteria, and clearly communicate those criteria in the request for proposals, (4) then publish notice again soliciting proposals for development of this site, (5) allow. sufficient time for interested developers to prepare a competitive proposal for the complexity of the project the City desires, and (6) thereafter after a public hearing select a proposal that meets all of the stated criteria. Our objective is to put some transparency into the process. Hopefully, you will do the right thing and consider the contents of this letter. Thank you in advance for your consideration. Mike Oliveira General Manager, Prestige Properties LLC. Family of Companies. e7 329 E Court Street Suite 2 Iowa City, IA 52240 319.512.7616 admin @prestigeprop.com