Developers of former Red Avocado site upset with proposed zoning changes

Developers say city trying to change rules after project plans were put in place

Gregg Hennigan
Published: February 17 2012 | 12:33 pm - Updated: 3 April 2014 | 12:40 pm in
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Jesse Allen and Tom Kaut have felt the wrath of a few thousand Iowa City residents, but now they’re upset with the city.

A $7.25 million building project by their company, Washington Plaza LLC, that is already under way could be stopped by a construction moratorium the City Council will consider imposing Tuesday as part of proposed changes to Iowa City’s zoning regulations.

“You can’t change the rules after I’ve invested in a project,” said Allen, the owner of Allen Homes.

The project led to the demolition last month of three buildings on the 500 block of East Washington Street, including one that held the Red Avocado restaurant and bookstore Defunct Books.

In their place, they plan to construct a four-story building with commercial space on the first floor and 30 apartments of up to three-bedrooms each above.

The project has brought new intensity to the debate about the concerns some full-time residents and city officials have on neighborhood stability and the proliferation of large apartment buildings in the neighborhoods near downtown and the University of Iowa campus.

A petition circulated last month was signed by nearly 5,000 people opposing the Washington Plaza project. Some City Council members also spoke against it but said they were powerless to do anything because the plan complied with zoning regulations.

That could change.

On Feb. 21, the City Council is to consider setting a public hearing for March on changes to the zoning code for neighborhoods nearest downtown and the UI campus. They apply to new construction and would include:

  • Limiting the number of bedrooms per apartment to no more than three.
  • Establishing a maximum percentage of three-bedroom apartments per lot.
  • Capping the number of unrelated people allowed to live in one unit at three.

If the City Council sets the public hearing, a 60-day moratorium would take effect prohibiting projects that would violate the proposed changes from starting construction.

That’s what has Allen and Kaut upset. They said they have met with city staff four times, including before they bought the properties, and were told their project was allowed under the zoning and were given no indication a moratorium was a possibility.

As a result, they bought the land and paid for design work, and hoped to break ground soon. If the zoning rules change and force them to alter the scope of their project and devalue the property, they’ll seek compensation from the city for the difference, they said.

Their attorney, Michael Pugh, made the same statement in a letter to the City Council Thursday.

Council member Terry Dickens said that while he’s open to discussing changes to the zoning code, he is opposed to a moratorium.

“When a person has already done all he was supposed to … to suddenly say you can’t do that, that’s wrong,” he said.

The City Council could decline to set the public hearing and instead first send the zoning amendments to the Planning and Zoning Commission. There would be no moratorium during that process.

The Greater Iowa City Area Home Builders Association believes that is what should happen.

Mike Bails, co-chairman of the group’s legislative committee and a colleague of Kaut’s at Lepic-Kroeger Realtors, said the proposed moratorium would hit just as construction season is starting and would hurt everyone involved in building projects.

“The headline’s always, ‘the rich developers,’ but it affects a lot of trade people,” he said.

Lepic-Kroeger is not involved in the Washington Street project

Jeff Davidson, Iowa City’s director of planning and community development, said the council also could decide to address only apartments with four bedrooms or more, which would let the Washington Plaza plan stand.

“It’s kind of a complicated thing, and we’re very sympathetic and want to work with Jesse (Allen),” he said.

He and City Manager Tom Markus said the current zoning proposals are not aimed at any one development. They noted that the council, concerned about neighborhood stabilization near downtown, has rejected at least three high-density housing projects in recent months.

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