Op-ed: Yes, there is a housing crisis in Iowa City, and it includes downtown

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Downtown Iowa City — Zak Neumann/Little Village

By Nicholas Theisen, Iowa City

On June 16 of this year, the Iowa City Council passed a 17-point resolution “addressing the Black Lives Matter Movement and Systemic Racism,” to much fanfare. Buried within the rather chaotic discussion that produced this document was a back and forth concerning the Iowa Freedom Riders’ demands with regard to affordable housing.

Councilors Pauline Taylor and Susan Mims expressed some consternation as to why such a call for housing justice would be focused solely on the downtown or core neighborhoods. Why not have low-cost housing in all parts of the city? The answer should have been clear, to anyone paying attention to the demographic composition of the protesters: they’re students. Students want to live in close proximity to where they work and study.

Housing costs within walking distance of the University of Iowa have skyrocketed in just the past few years. According to data gathered by Cook Appraisal, the cost of renting a two-bedroom apartment in Zone 1, the approximate one-mile radius around the Pentacrest, went from an average $889/month in 2015 to $965/month in 2017, to $1,279/month in the most recent data set from 2019. That makes for a 33 percent increase in just two years and a 44 percent increase over the entire four-year period those data cover. Prior to 2015, rental costs had either remained static or seen modest decreases. Yet, oddly, this massive rise in housing costs is roughly contemporaneous with a period in which the city government sought to address affordable housing needs through a number of initiatives, including the creation of an Affordable Housing line item in the city’s budget and an Affordable Housing Action Plan (AHCP) adopted in 2016.

Both city staff and elected officials make repeated statements toward addressing the city’s housing crisis — and it is a crisis — but efforts so far have been woefully insufficient given the magnitude of the problem before them. According to Housing and Urban Development (HUD) data included in the city’s most recent five-year consolidated plan (City Steps), 8,090 rental households are cost burdened, meaning they pay more than 30 percent of their income in rent. Of those, 5,710 (i.e. 71 percent) are considered severely burdened, meaning they pay more than half their income in rent. The sheer size of that number, 28 percent of all households in the city, should make local officials want to take drastic action to stem the tide of rising costs that bear down on the city’s poorest residents.

To be sure, city and local nonprofit stakeholders are doing something; in fact, they are doing many somethings. However, it remains an open question as to whether those many somethings add up to a unified vision and sense of purpose in dealing with this crisis over the long term. There is reason to believe the answer to that question is “they don’t.”

From roughly 2016 to 2019, there was a constant refrain among both city staff and local housing advocates about the importance of landbanking, purchasing land now and setting it aside for future public housing projects. In his 2016 presentation on the AHCP, City Manager Geoff Fruinn noted that landbanking was one area in which the city would get the “most bang for your buck,” and others seemed to agree. Yet, when the action plan was revised in 2019, landbanking was removed as a policy priority, and the money set aside for that purpose was siphoned off for other projects. In the three years landbanking was considered to be a high priority, no land was ever banked.

The Chauncey on Gilbert Street in downtown Iowa City, September 2019. — Jason Smith/Little Village

Additionally, a full 70 percent of the municipal budget allocation for affordable housing is not even administered by the city but given to the Housing Trust Fund of Johnson County. Some of this money is set aside for Low Income Housing Tax Credits (LIHTC), and the rest is used for a variety of projects the Housing Trust funds. To be clear, each of these projects is meritorious in its own right, but they don’t necessarily point toward a single purpose. There is also the issue of scale. Housing projects have high upfront capital costs, so $1 million directed toward a single project with a clearly defined purpose will have far greater effect than $10,000 doled out to a hundred projects. What’s more, while a $1 million allocation sounds like quite a lot to a layperson, given the median home price in Iowa City, it is roughly equivalent to five single-family homes.

What the situation seems to demand is a unity of purpose and the political will to meet the magnitude of the crisis, yet when it comes time to draft policy, long-term priorities seem to change every year. What we have gotten from local officials is a disconnected bevy of technocratic fixes and a vacuum of coherent, consistent leadership. For even as the city government has loudly and widely proclaimed its commitment to affordable housing, it has done a number of things to set the cause back even further than where it started.

The reason why rental costs have increased so much is because, in the intervening years, a large number of high-end apartment complexes have been built and are currently under construction. All of these required some form of approval first from the Planning and Zoning Commission, then later City Council itself. Two of the largest developments, the RISE building on Linn Street and The Chauncey across from City Hall, were only made possible as a result of selling publicly owned land to private developers, which seems to contradict the previous importance placed on landbanking. As recently as February, council approved the largest high-end development in the city’s history: 820 units in two 15-story buildings to be constructed on Court Street. A number of local housing advocates even vocally supported the project, due to a promised multi-million-dollar contribution to the Affordable Housing Fund.

Here we see encapsulated the city’s trickle-down theory of housing justice. First, you give local developers whatever they want, even if “what they want” negatively impacts your low-income housing goals. Second, the developer promises some small fraction of the total value of the project as remediation: a handful of vaguely affordable units in RISE, the sale of a few units for public housing in The Chauncey, and a fee in lieu in the case of the Court Street development. Then, you start again from an even more difficult position, because giving the developers what they want has made the situation substantially worse than where you started years ago.

This is not particular to Iowa City. It is simply one facet of the neoliberal ideology that underlies all public/private partnerships, wherein costs are mostly socialized (i.e. thrown onto the community), while the benefits remain in private hands.

I say “socialized,” because both the developers and the local officials who underwrite their projects believe the people these housing developments will be marketed to, primarily students, can somehow bear the massive cost burdens about to be imposed upon them. Of course, landlords’ primary interest lies in deriving profit from their investments, so they don’t care, but it’s incredibly unsettling how city officials dismiss the evidence of extreme cost burden included in their own planning documents.


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Sketches of the proposed Court Street development submitted to Iowa City Council Economic Development Committee by Tailwinds Group.

In both the current and previous City Steps, it is noted that the majority of those in the severely cost-burdened category live in non-related households and are therefore likely students. It is also consistently assumed that these same students depend upon the financial resources of a parent or guardian to fund their time at the University. Some students likely do rely on such support, but given the magnitude of the student debt crisis in this country, it’s equally plausible that students are funding their ever-increasing housing costs with larger student loans. If you follow the logic here, that would mean the very same people who regularly tout their affordable housing bonafides also expect — or simply don’t know — that young people are mortgaging their futures to pay for a massive wealth transfer from the poorest to the richest in our community, in hopes that the scraps that fall from the table might benefit someone… someday. And students know precisely how they’re being cheated. As one correspondent on social media put it, “[t]his city is half University and there’s nowhere for low income students to live near campus. Not to mention the lack of bus routes in the areas students can afford to live…”

When dealing with city officials, there’s always a veil of doublespeak you need to penetrate, resulting from their constant need to put a positive spin on what otherwise appears to be a catastrophe. In both public and more private venues, the city manager has consistently noted the need to use “all the tools available” as a justification for why the city is doing so many disparate things to address housing issues, and yet the city’s most powerful tools remain completely unused. Iowa City currently has over $200 million in unused borrowing capacity that could be directed toward a major capital project like public housing. To finance that outlay, the city could implement a progressive property tax. Iowa City is also currently the only major city in the state without a local option sales tax. Or, the city could use eminent domain to seize vacant rental units and convert them into public housing, funding for which could come from the existing affordable housing budget allocation or any of the funding options noted above.

The city has no interest in a public housing project of this scale, though, even if that is what the situation seems to demand. In my correspondence with Tracy Hightshoe, director of Neighborhood and Development Services, it’s taken as a given that the private market should be the primary supplier of housing. “Working with the private market will be critical as they provide the lion share of our rental housing,” she says. In a later email, in response to my question as to why the city doesn’t measure its efforts against the census data I noted earlier in this essay, she adds, “I agree that we do not have enough funds (as they are allocated now) to eradicate cost burden when just looking at housing… [t]o achieve zero cost burdened households would require a massive amount of subsidy and additional staffing to administer. I don’t anticipate having either in our planning timeframe.”

The reason why Hightshoe’s department lacks sufficient resources to arrest the city’s housing crisis lies squarely at the feet of the city manager, who is responsible for composing the city’s budget, and the members of city council, who determine policy and approve budget outlays. Now that the Iowa Freedom Riders and their supporters have once again brought the issue of housing justice to their doorstep — quite literally in some cases — it remains to be seen whether they will have the wherewithal this time to meet the moment with the bold, direct action it requires or slink back into old habits of 15-point plans with ever shifting policy priorities.

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