Iowa City’s Pedestrian Mall will undergo redevelopment, with a $56 million development gaining financial assistance from the city.

The Iowa City City Council voted unanimously on Tuesday to award $12.25 million in tax increment financing rebates for the development. Led by the Tailwind Group, the development will be on the 100 block of East College Street, including the building where the Union bar was located.

Spaces in the College, Crescent, and Dooley Block buildings will be renovated to create a new home for the Riverside Theatre, a diverse mix of day and night commercial activity, and newly renovated storefronts for local small businesses.

City of Iowa City Economic Development Director Wendy Ford said at Tuesday’s city council meeting this project will provide a variety of benefits to this specific area of the Ped Mall, including providing historic preservation to some of Iowa City’s treasured commercial architecture.

Ford said with the project costing $56.4 million to complete, the developers have secured the maximum debt they can have for this project, that being $35.8 million. She said this will leave a required equity of $11.6 million, and a $9 million financial gap to be filled by a private loan.

The tax increment financing, which is assistance given in anticipation of future property tax revenue, will be used to pay the private loan gap. The city was willing to grant before the city council’s support to the developer, she said, due to the many public benefits brought by the project.

Iowa City Downtown District Executive Director Nancy Bird said she supports this redevelopment project, after COVID-19 financial struggles faced by the Iowa City community have made economic development and revitalization increasingly important.

“This project will go a long way to support our economic recovery from COVID-19,” Bird said. “It’s a positive economic impact across the community. I know there’s a lot of controversy around TIF, but for those who really understand, it can be a great catalyst for getting projects built, but also spreading out that impact.”

The Tailwind Group first shared the initial proposal for this development in August 2019, Ford said. In addition to renovating the College, Crescent, and Dooley buildings that are currently in the Ped Mall, she said Tailwind is seeking to construct a new 11-story LEED Gold-certified housing unit, as well.

According to the U.S. Green Building Council (USGBC) Leadership in Energy and Environmental Design (LEED) is the most popular green building rating system in the world, providing a framework for energy efficient and cost efficient practices in buildings – LEED certification is a globally recognized symbol of sustainability achievement and leadership.

“Developers saw the attractive combination of a LEED Gold certified building, and the preservation of existing buildings to ensure that future generations enjoy the historic nature of this block, while providing highly energy efficient new housing in the city center,” Ford said.

The new housing unit being constructed is made possible due to the renovations proposed to the Crescent and Dooley block buildings, she said, which will have the back portion of the buildings removed, making way for an outdoor courtyard and the new housing unit.

Vice President of the Tailwind Group Brandon Smith said this new housing unit will include a mixture of one-bedroom, two-bedroom, and three-bedroom apartments – the smallest starting at 540 square feet, and the largest at 1,015 square feet.

With the construction of this housing unit, Ford said the Tailwind Group was forced to consider the city’s policies regarding affordable housing costs. Rather than incorporating mixed income housing into the unit, she said the group settled on paying the ‘fee in lieu’ of providing the units, which will provide the city $1.8 million for its affordable housing fund.

Councilors John Thomas and Pauline Taylor and Mayor Pro Tem Mazahir Salih said they would rather see permanent affordable housing built in the downtown district, which the over $1.8 million in fees going towards the affordable housing fund will contribute to.

Some area residents present at the council meeting raised concern over this during the public hearing portion. Coralville resident Nicolas Theisen said the Tailwind Group is paying this as a way to avoid including mixed income housing within the new, proposed unit.

“The developers are paying the fee in lieu basically so as not to build affordable housing units,” Theisen said. “The reason why the fee in lieu, despite whatever the magnitude of the actual dollar amount is, is because it keeps pushing the time when those affordable housing units will be available to people. The developers, in other words, the people who seek to profit off of housing in Iowa City, they always get theirs first, but the people who actually have to deal with the conditions that those developers create, well, we always have to wait.”

Editor’s Note: A previous version of this story said the project on the Ped Mall had been approved by the city council. The TIF agreement, not the project itself, is what the council voted on.