Gongol.com Archives: April 2025
April 19, 2025
$28 million and what to show for it?
Some of the tallest and most recognizable private structures in Iowa City will be sold at a sheriff's auction after the developer behind them defaulted on some $28 million in loans. It's certainly not what city officials had in mind when they backed some of the developments with millions of dollars in TIF financing. ■ Iowa City is unusual in that its downtown really is the University of Iowa, the school has been effectively landlocked as enrollment has grown and the city's population has grown by even more. These factors make the real estate surrounding the campus disproportionately valuable and create economic incentives to build taller buildings than would normally be found in a city of 75,000 people. ■ But, as ever, the risk is higher with large individual projects than it would be when spread across a larger number of smaller individual developments. Cities are forever falling in love with blue-sky promises of tall, eye-catching buildings. While the allure is understandable, it's also nothing new for big dreams to fall flat. ■ Even though the city says it is not on the hook for any bad debts, it's a good reminder that picking winners is extremely hard to do right -- and public programs are very rarely equipped to do so better than the banks and credit unions with real risk capital on the line. Just because something looks nifty in the architectural drawings doesn't mean it's going to work out profitably once the walls go up.
