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Lawsuit to block Coralville’s Von Maur deal marches on

Dave DeWitte, CR Gazette –

The City of Coralville and Von Maur may have to decide whether to go forward with a deal to bring the department store chain to Coralville while a lawsuit is hanging over it.

Iowa District Judge Marsha Bergan Friday denied a motion by the city for dismissal of the lawsuit over the city’s plans to bring Von Maur to its Iowa River Landing retail development.

Bergan had denied a preliminary injunction to block the transfer of city land for the deal on March 26, indicating plans to rule on a city motion to dismiss the case.

In denying dismissal Friday, Bergan said legal precedent required her to view the lawsuit in the light most favorable to the plaintiffs, a group of 18 businesses and business owners in Coralville.

Bergan’s ruling, in part, read “it cannot be said with certainty that Plaintiffs have failed to state a claim upon which relief may be granted under any state of facts that could be provided in support of the four claims asserted.”

The lawsuit challenges agreements that would transfer a 7.2-acre site from the city to a private developer, Oliver McMillan, for $1.5 million with the stipulation that Oliver McMillan then transfer the property to Von Maur for $10 and take other actions to develop the site. The agreements would also provide Von Maur with a $9.47 million grant to offset construction of its new store.

The lawsuit also claims the deals constitute an unlawful gift of property by a municipality and violate state laws against using economic development grants to relocate a business from one community to a neighboring community. It says Coralville’s selection of Oliver McMillan as developer does not meet state requirements for conducting urban renewal, which requires that urban renewal commissioners must reside within the municipality.

Von Maur plans to close its store in Sycamore Mall in Iowa City after it opens its new Coralville store. Coralville city officials say the Davenport-based chain was already looking for a better location before the City of Coralville recruited it.

Coralville City Attorney Kevin Olson said Monday that while he would have preferred to get the case dismissed, he did not have any qualms with the judge’s order.

“We accept her ruling, and I appreciate the fact that she ruled on all these motions as fast as she did,” Olson said.

Olson declined to say whether the city would proceed with its transfer of the land to Von Maur, which at one point was expected to occur this week.

The plaintiffs filed an amended and expanded lawsuit Wednesday against the city and Oliver McMillan. Among the changes are claims that the city circumvented state competitive bidding procedures on the development of urban renewal property.

Olson said he didn’t believe the plaintiffs substantively changed their arguments from the initial lawsuit.

The city had argued in previous court hearings that granting the injunction to block the land transfer to Von Maur would cause irreparable harm and impede the project at a critical point.

City officials have said the incentives used to draw Von Maur are warranted because the anchor store will be a strong draw to shoppers and help attract other businesses to Iowa River Landing.

More than two dozen businesses and individuals filed the lawsuit, which was prepared by Cedar Rapids attorney Matt Adam.

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