CORALVILLE — The first time the Coralville City Council met as a group to discuss a multimillion-dollar agreement with Von Maur was the night it voted to approve the deal, according to city officials.
The council quickly approved the $9.5 million agreement Sept. 27 with no questions, debate or a public hearing.
Instead of discussing it before the vote in work sessions or even meetings closed to the public — Iowa law allows that for some real estate matters — council members talked individually with each other or city staff, which meant they did not have to comply with the state’s open meetings law.
An open-government advocate said that while Coralville may not have broken the law, the city violated its spirit and in turn prevented the public from having any meaningful input on a taxpayer-supported transaction.
“Certainly the way it was conducted is an affront to the whole idea of transparency in government,” said Kathleen Richardson, executive secretary of the Iowa Freedom of Information Council.
City officials, however, defended their actions, saying talking about the deal publicly could have hurt their negotiating leverage with Von Maur.
“We talk about lots of things (in open session), but some of these retail things are a little tough to do that with,” said council member John Weihe.
Coralville has agreed to use $9.5 million in tax increment financing funds to build Von Maur a department store in its Iowa River Landing District near Interstate 80 and First Avenue. A public finance expert estimated the true value at $16 million.
The size of the incentive and the likelihood that Von Maur will close its store in Iowa City’s Sycamore Mall has led to criticism from some people.
Coralville announced the details of the agreement at a news conference Sept. 22 — five days before the council voted to approve it.
The Gazette last week asked the city for the minutes and audio recordings of any closed sessions in which Von Maur was discussed.
Under Iowa’s open meetings law, a governmental body can meet in private to discuss the purchase or — since a change in the law effective July 1 — the sale of real estate where premature disclosure could affect the price. Minutes and an audio recording must be kept and become public once the transaction is complete.
Coralville is selling land for the Von Maur building.
City Attorney Kevin Olson said the deal was not discussed in any closed sessions. That means the Sept. 27 meeting when the council voted was the first time it was before the full council and the mayor.
City Council members and Mayor Jim Fausett, who does not have a vote on council, said the agreement was mostly negotiated on the city’s behalf by Oliver McMillan, the firm helping the city develop Iowa River Landing; consultant Deanna Trumbull; and city staff.
The five-member City Council has an Iowa River Landing Committee, made up of Weihe and Mitch Gross. With less than a majority of the council present, the two can consult with non-council members in private meetings.
Gross and Weihe said they would fill in other council members on the negotiations. Weihe said council members also got details from City Administrator Kelly Hayworth. Gross said he talked with the city’s financial consultant and believes other council members did, too.
It’s not unusual for aspects of negotiations like these to occur in private. Making too much information public too soon could affect the price or even kill a potential deal.
“If everything is out in the open … you’re going to have a lot of economic development opportunities walk away,” said Jeff Schott, director of the Institute of Public Affairs at the University of Iowa.
Schott, a former longtime city manager of Marion, didn’t find Coralville’s process unusual. He said Marion occasionally discussed sensitive matters in small groups or individually, although they kept that to a minimum.
Marion, however, typically had such deals before the council at a public work session two days before a formal council meeting, he said.
At Coralville’s only meeting on the Von Maur agreement, two council members — Gross and Bill Hoeft — were absent but sent statements expressing general support. The council members in attendance and Fausett praised the deal.
The city did not schedule a public hearing on the Von Maur agreement, although Fausett invited comments at the start of the meeting. One man said he was concerned about the amount of money being given to Von Maur and the lack of public input.
No one from the city responded to his comments.
Richardson, of the Iowa Freedom of Information Council, said Coralville residents had no voice in the process and didn’t get “any information at all before this was sprung upon the public.”
Fausett said he’s heard only a couple of critical comments from Coralville residents. “I don’t feel that we did anything wrong in this process,” he said.
Gross and Weihe said, in hindsight, the city should have held the news conference after the council met. At the same time, they said Coralville had long made clear how important it was to get an anchor store in Iowa River Landing.
“It’s not as if this quickly appeared,” Gross said, adding the city started considering Von Maur at least as early as summer 2010.