to Nicholas Johnson's Coralville Rain Forest Web Site
Brian Sharp, "Abandoned Retail Markets Rebound," Iowa City Press-Citizen, May 13, 2005
Brian Sharp, "Spike in Mall Value to Benefit Area; Coral Ridge Owners Protest Assessment," Iowa City Press-Citizen, May 13, 2005
Adam Pracht, "New Coralville Development Already Filling Up," Iowa City Press-Citizen, May 13, 2005
Adam Pracht, "More Retail in Store for Coralville; Two Commercial Areas Going Up," Iowa City Press-Citizen, May 14, 2005
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Experts spoke of a retail shift, a rapid acceleration of change. But in those initial years, massive empty storefronts blighted the face of local retail. The loss of Sears only worsened the scene at a nearly empty Sycamore Mall in southeast Iowa City. Meanwhile, downtown bid farewell to J.C. Penney Co. Inc. and Old Capitol Town Center slipped further into a decline, resulting in foreclosure and bankruptcy proceedings.
Sycamore Mall, which sold for $4.5 million five years ago, is 90 percent full today and valued at $12.7 million. Meanwhile, Old Capitol's assessed value rose for the first time since Coral Ridge opened.
The shift, it seems, is nearly complete.
"I don't think we can ever stop and sit back and say, 'Well, the work is done,'" said Jim Griffin, president of the Iowa City Area Chamber of Commerce. "Over time, (the retail market) is cyclical, the economy and trends ... will impact things and it will sometimes peak and valley."
Empty storefronts remain, but most are filled. Pepperwood Plaza in southeast Iowa City lost Best Buy to Coral Ridge. This week, local owners Southgate Development Co. cleared a needed hurdle to receive tax rebates and proceed with more than $6 million in renovations. The center had a 35 percent vacancy rate in 2002 but should be 95 percent full in June.
"Is there a real focus area right now? There may not be," Griffin said of retail areas that need fixing.
The Iowa City Assessor's Office bumped each mall's value by 26 percent. Commercial property values increased 10 percent to 15 percent citywide this year, officials said. The Iowa City Board of Review began hearing property owners' protests this week.
"(The market) has improved dramatically," said Teresa Morrow, a vice president for Southgate. "I think we're seeing a lot more activity than we've seen for some time. Six months to a year ago, we started seeing just kind of an increase in commercial overall, not just retail."
Protests brought by Southgate and the owners of Old Capitol and Sycamore Mall were among the 201 petitions filed with the assessor's office, which is responsible for about 20,000 properties. Board members tentatively reduced assessments for the malls Tuesday while agreeing to increase the valuation for Pepperwood Plaza.
"You've got to remember, Younkers is gone," Old Capitol general manager Kevin Digmann said, referring to the one-time anchor that left in January. He argued the valuation should hold steady. "When you lose 25 percent of your occupancy with one tenant ... we're going at risk quite a bit doing what we're doing."
More value means more taxes, an expense that would be passed to tenants at a time when the mall's vacancy rate is 65 percent, he said. Digmann also oversees Sycamore Mall and questioned what was a $3 million up-tick in value when building permits issued for the property last year totaled $213,262. That compares with $1.19 million in permits issued for Old Capitol, records show.
At Pepperwood Plaza, owners had pledged to improve the site's value by 15 percent the first year to get tax rebates as part of a financing deal with the city. The initial valuation came up short.
"If it didn't hit, then the whole deal is off," Assistant City Planner Steve Nasby said.
The board action, though still open for revision, added another $700,000 and put Southgate well beyond the benchmark. Southgate's Morrow said assessors had not accounted for a drop in vacancy since Jan. 1. Had values not risen enough, she said, Southgate likely would have sought to amend the financing deal.
"These are local folks, these are local developers and business that have put their money into this community," Griffin said of the retail recovery, noting the change to local ownership of Old Capitol, Sycamore, Pepperwood and other retail centers. "These are local people who knew what needed to be done."
Mall owners are protesting the increase that will force them to shell out another $1.46 million of property taxes starting next year. The reassessment is the first on the mall interior and theaters since its 1998 opening.
"Ultimately, you'd hope that you would be able to look at (new projects and lower taxes)," Coralville City Administrator Kelly Hayworth said about the additional money coming to city coffers in three years.
"My guess is people won't see a huge decrease in their property taxes, but what we'll be able to do is continue to increase services without raising their tax rate," he said. "Having that much more commercial development results in more demand on police ... and for some time, we've looked at whether we need another fire station."
The mall has evolved into an economic powerhouse, helping generate additional development that continues to attract new business and jobs to the area. Reality, as it turns out, is quickly outpacing city leaders' plans. Consider:
• Combined with spin-off development, including Lowe's, Super Wal-Mart and Kohl's, the mall area was valued at $256 million before the reassessment, generating $5.95 million in new property taxes each year.
• Those dollars are being captured to pay for redevelopment elsewhere in town to include a Marriott hotel and conference center. The special tax district that includes the mall is scheduled to continue rerouting tax dollars until 2018.
• In the next few years, however, city officials predict an additional $100 million in development thanks, in some part, to the mall. Included in new construction near the mall to begin this summer are two retail/commercial centers, one south of Highway 6, the other north of Interstate 80. Each is estimated at four times the size of Coral Valley Market, a nearly completed project that is home to Outback Steakhouse, Boston's The Gourmet Pizza and, soon, a Caribou Coffee with a drive-through.
"And we do not need all $100 million of that (new taxable value) to service the debt, or the things the city plans to do," city financial consultant Tim Oswald said. He added that the mall revaluation is another unplanned excess.
Oswald is now recommending that the city of Coralville begin letting the excess tax dollars flow to local schools and governments, instead of saving up to more quickly repay the debt. He wants to hold off a little while yet, however, as the city has several short-term loans it still must roll into long-term bonds.
"I think it is fiscal year '08 (which begins in July 2007) and thereafter that we will be in the financial situation we need to be in," he said.
By July 2008, he said, an estimated $2.2 million in unplanned tax revenue could be released -- translating to $836,000 in additional money for the city of Coralville. The bulk of the remaining money would be divided between the Clear Creek Amana and Iowa City school districts. The county could see more than $300,000 in new money, officials estimate.
The $836,000 for Coralville equals the current library budget, Hayworth said. The payout, once the tax district expires, is projected to be about five times that amount.
"We had kind of leveled out until this year, and now there's a new round of major commercial development," Hayworth said. "We wouldn't have expected those projects to all start moving forward at the same time. ... This should be another plateau, because it will take the market awhile to absorb all that before you can see additional growth."
Stacey Lingel, 43, is a lifelong resident of Iowa City-Coralville and has watched the area transform.
"I think town has really grown up a lot, not just since the mall but the administration here," the Coralville resident said, also noting the town new aquatic center. "Ten years ago, I wouldn't have thought it would be like this, that it would be this big. I like the changes."
Iowa City schools Superintendent Lane Plugge said the increased property value could result in the district reducing its tax levies.
County budget coordinator Jeff Horne, meanwhile, said the initial boost would be helpful "but it's not going to have a major impact on our budget."
The county has maxed out its tax asking and sees inflationary increases of $300,000 to $400,000 in property tax revenue largely eaten up by salaries each year. Meanwhile, expenses to transport and house jail prisoners elsewhere because of crowding has risen to an estimated $600,000 a year.
The value of the mall itself, not including outlying buildings such as Pier One Imports and Chili's Grill & Bar, now stands at $146.79 million.
Coral Ridge owner General Growth Properties' protests are among 112 petitions filed with the Johnson County Assessor's Office. There are about 20,000 properties under the county purview.
County Assessor Bill Greazel said the delay in putting a new value to Coral Ridge stems from its unique size as a regional mall. He said officials needed to judge if Coral Ridge could sustain itself, and to see how it fared in the market when the time came to renegotiate leases.
While some of the anchor store values have been updated in recent years, the main part of the mall --the "in-line stores" -- had not. That value spiked from $57 million to $96 million. The theaters, meanwhile, climbed from $2.46 million to $6 million, records show.
In an e-mail, General Growth spokesman David Swinkle said, "We owe it to our retailers and shareholders to ensure all steps are taken to come to a fair and reasonable value on the property."
He declined further comment until a later date.
Greazel said determining and defending the value of the mall and surrounding high-dollar properties, including the Super Wal-Mart and Kohl's shopping center, is so complicated his office hires outside experts to do the work.
"There are only about six people in the country who know how to do a mall like that," Greazel said.
That help came from Pennsylvania this year. Previously, the county hired an assessor out of New Jersey. The city of Coralville pitches in $72,000 a year to cover the bill.
The project will be located northeast of Interstate 80 and Highway 965.
Jason Harder, project manager, the joint project of the North Ridge Group and Anderson Investments in North Liberty would include four standalone restaurants, a hotel, an office building and a 130,000-square-foot “power strip” — a strip mall with bigger tenants.
Harder said about one-third of the slots are filled, but declined to release names until contracts are final.
Harder said the slots filled up by word of mouth alone, which was evidence of the demand for this type of development.
“I don’t see things slowing down in this area,” he said. “It’s a great location and it’s going to be a great location for a long period of time.”
Coralville Building Official Jim Kessler said the development was one of the most diverse the city was looking at.
“The more varied uses you have at a property, the more people are going to come by that area,” he said.
Harder said the project should add about $20 million of assessed value onto the tax rolls.
The Cedar Development will be northeast of Interstate 80 and Highway 965.
Jason Harder, project manager, said the joint project of the North Ridge Group and Anderson Investments in North Liberty would include four stand-alone restaurants, a hotel, an office building and a 130,000-square-foot "power strip" -- a strip mall with bigger tenants. That's more than the size of two football fields and four times the size of another recent strip mall, the Coral Valley Market south of the Coral Ridge Mall.
Harder said about one third of the slots in the development are filled, but he declined to release names until contracts were finalized.
Harder said those slots filled up solely by word of mouth and was evidence of the demand for this type of development.
"I don't see things slowing down in this area," he said. "It's a great location and it's going to be a great location for a long period of time."
Jim Kessler of Coralville's building department said the development was one of the most diverse the city was looking at.
"The more varied uses you have at a property, the more people are going to come by that area," he said.
Harder said the project should add about $20 million of assessed value onto the tax rolls.
Construction should begin this fall, Harder said, and the goal is to finish the development by spring 2006.
The project also will involve the demolition of the Ramada Inn hotel in July, which the developers have bought. The project needed an entrance that met department of transportation standards for the minimum distance a commercial driveway could be from an interstate exit. The Ramada Inn was in the best path.
Chuck West, acting general manager of the Ramada, said the hotel will close Sunday and the hotel is in the process of notifying people with reservations.
He said the about 20 employees have been offered other work within Iowa Inn, LLC, of Columbia, Mo., but all of the company's other properties are in Illinois and Missouri.
West said he's told several of the employees. Most have taken it well although some had sentimental feelings, he said.
"So far it's been positive," he said. "Iowa City has a lot of developments in store for other hotels."
And the Cedar development isn't the only commercial area Coralville has in store.
Developer Darryl High said he was planning to create a retail development south of Highway 6 near the Coral Ridge Mall. The area, to be called Coral Galleria, will feature 150,000 to 200,000 square feet of space -- also at least four times the size of the Coral Valley Market.
There already are some commitments, High said, but he wasn't ready to release the names. Construction should begin this summer.
"Personally, I think the Coral Ridge/Coralville market has become a proven retail destination," he said. "There's demand, and when there's demand the people get together and figure out a way to satisfy it."
Kessler said he expects the market is robust enough to support the new developments. He mentioned seeing the Coral Valley Marking parking lot full Thursday night and a nearly full lot at the Coral Ridge Mall.
"There just seems to be a large demand and use of that type of development there," he said.