By John Thomas
For over two years, Iowa City residents have vigorously debated the cost/benefit of high-rise development. Opponents have argued that high-rises only belong in the Downtown or portions of Riverfront Crossings, where impacts on adjacent and nearby properties will be insignificant. The use of tax-increment financing (TIF) is another concern. Why must taxpayers support these projects rather than the development paying for itself?
Supporters have argued that high-rises are an efficient use of land. By dramatically increasing density, supporters claim high-rises will energize the downtown, and give it pizzazz.
What has not entered the debate is the matter of Iowa City’s capacity for generating growth and with that growth, financial value. Over the next 25-30 years, how much financial value can be created in the Downtown/Riverfront Crossings District? How will high-rises affect the creation and urban form of that financial value? Finally, who benefits when the City grants permission to build them?
How Much Growth Can Iowa City Support, and What Urban Form Should It Take?
City Council adopted the Downtown/Riverfront Crossings Master Plan in January 2013. It estimated the development yield for the study area to be approximately 5.1 million square feet. Note that this is a relatively fixed amount of growth. As projects are built, their development yield is subtracted from that number.
The Master Plan also applied what is known as a form-based code to ensure that development generated a range of livable neighborhoods. Development is carefully distributed over the study area based on a building height gradient. The Downtown/South Downtown area would see the tallest buildings, averaging about 5 to 6-stories. In general, areas away from the core would gradually taper off in building height, averaging 2.5 stories at the periphery.
Overall, the vast majority of development in the Master Plan is low- to mid-rise buildings, 2 to 9-stories in height (for reference, the Jefferson Building is 8-stories). The plan calls for six buildings over 9-stories: 3 in the Downtown/South Downtown, and 3 in the Park sub-district further south.
The Iowa City community broadly embraced the Downtown/Riverfront Crossings Master Plan. The Plan reflects a reasonable level of expected growth over the entire redevelopment area, without endangering Iowa City’s existing character. The form-based urban design concept made some sense out of the existing conditions south of Burlington Street.
The Effects of Permitting High-Rises
The long-term development capacity of the study area was carefully accommodated by the low- to mid-rise building heights established in the Master Plan. In that sense, projected growth determined building heights. If a project goes well over those heights, development is over-concentrated at that location. This causes a distortion of the Master Plan’s density gradient, and reduces development potential throughout the District. If high-rise development takes place outside the Downtown/Riverfront Crossings area (e.g., east of Gilbert Street), the potential for growth, and its proper distribution, is reduced even further.
Thus, high-rises, by over-concentrating development, risk undermining the Master Plan’s vision of appropriately scaled building heights and distributed growth over the entire study area. Moreover, high-rises do not increase the overall amount of growth. They just concentrate it in one area.
In addition to distorting the Master Plan’s form-based design, inflated land values also occur when building heights exceed a city’s growth potential. Inflated land values can result in sporadic as well as uneven growth. For example, property owners where high-rises are permitted are more likely to delay any development at all until a high-rise project comes along to maximize their profit. Such speculation can disturb and delay the pattern of well-distributed growth over a larger area.
The uneven, sporadic effects to the Master Plan’s urban design concept caused by high-rises are further complicated when tax-increment financing (TIF) is used to finance them. The market analysis performed by the Iowa City’s development consultant indicates that, in most cases, the revenues generated by high-rise projects in Iowa City are unable to cover their construction costs. In other words, Iowa City’s real estate market is currently insufficiently priced to pay high-rise rents, and taxpayers make up the difference. Iowa City’s real estate market has its limits, which we can accept and build upon incrementally as the Master Plan envisions. Or, we can accelerate growth on a limited number of properties through tax subsidies, thereby reducing development potential elsewhere.
Who Benefits from High-Rises?
In the final analysis, the potential benefits of high-rises primarily belong to the developers with sufficient capital to finance them. When TIF is required, those developers get financial support from Iowa City’s taxpayers. Assuming tenants see reduced rents, they benefit while the tax-increment is in effect. That’s if everything goes according to plan, and markets remain stable.
What can Iowa Citians do? We can insist that Iowa City follow the intent of the Master Plan. Otherwise, we will end up with a random patchwork of over-developed sites we helped pay for. More importantly, the vision of the Downtown/Riverfront Crossings Master Plan supported by the community will never see the light of day.
John Thomas is a former member of the Iowa City Planning and Zoning Commission and is currently running for District C on the Iowa City Council.