The Iowa City city councilors said they hope to spur expansion in the Towncrest Urban Renewal Area after they approved the first major development in the district.

The City Council approved construction of a one-story medical office building Tuesday on a 6-1 vote.

MDK Development LLC proposed a 14,850-square-foot facility that will offer three spaces for medical, office, or retail use, along with 80 parking spaces. The 102 William St. ACT building and Sinclair Gas Station at 2611 Muscatine Ave. will be demolished to make way for the roughly $5 million development.

Kevin Digmann, the MDK manager, said the project will help advance the area’s redevelopment.

"This project would be a great start to the city’s overall plan for redevelopment of the Towncrest area," he said.

Councilor Connie Champion said the building will help spur investment in the urban-renewal plan.

"It is a major development, and it will jump-start development in the area," she said during the work session.

Mayor Matt Hayek agreed.

"I think it is a fantastic opportunity to jump-start the development that we have been talking about doing for years," he said.

The council approved an allocation of $950,000 for pre-development and demolition expenses.

Towncrest URA Gap Financing for Catalyst projects will contribute $300,000 to the project, according to a letter to the City Council Economic Development Committee. A Predevelopment Design and Environmental Assistance grant will cover $25,000, with the remainder coming from Tax Increment Financing.

The total estimated assessed value of the property will increase from roughly $886,000 to approximately $2.127 million, according to city documents.

Tracy Hightshoe, the city’s community development planner, said the area is composed mostly of buildings built in the 1950s and 1960s.

"It is developed, but they are mostly older buildings," she said. "There has been a lack of reinvestment as some people have moved to outlying areas."

The last major development in the area was Walgreens drug store, Hightshoe said.

Planners are hoping to develop the area with a mix of facilities, including medical, commercial, retail, residential, and senior-citizen housing.

"We are hoping it spurs more investment in the area," Hightshoe said.

The proposal passed on a 6-1 vote, with Councilor Jim Throgmorton having the only dissenting vote.

Throgmorton was concerned that the public has not had a sufficient opportunity to comment on proposal before a change in TIF laws effective July 1.

But Champion said the project should move forward as planned.

"I want to get this going as soon as possible," she said. "I want to move this forward."