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Iowa City committee backs $950,000 for medical building project

Gregg Hennigan, CR Gazette –

Iowa City may put nearly $1 million in public money toward a $5 million medical office building proposed for an east-side neighborhood city leaders have targeted for redevelopment.

MDK Development LLC has asked for the money for the 14,850-square-foot building it wants to build at the corner of Muscatine Avenue and William Street in the Towncrest neighborhood.

On Tuesday, the City Council’s Economic Development Committee, made up of council members Susan Mims, Michelle Payne and Mayor Matt Hayek, voted unanimously to recommend the project receive $950,000 in city money. The full City Council will make the final decision at a future meeting, possibly next week.

It would be the first new building constructed as part of the city’s efforts, started a couple of years ago, to revitalize the Towncrest neighborhood. Towncrest was originally intended as a medical campus south of Muscatine Avenue, but many of the medical offices have relocated and there has been a lack of investment the area.

Mims said she thought the medical building could be a catalyst for further projects.

“I’m excited to see some significant private money coming in. I think it’s a real key,” she said.

The public money would come up front from three sources, said Tracy Hightshoe, Iowa City’s community development planner. It would include $325,000 from two programs created to help with Towncrest projects. The other $625,000 would come from selling bonds, which the city would repay with tax increment financing.

The city received an opinion from the National Development Council saying the project demonstrated a need for the $950,000.

Hayek said city staff also thoroughly vetted the request.

“I think this is a significant jumpstart and is absolutely consistent with what we’ve talked about for years,” he said.

Hightshoe said the project would bring good-paying jobs, redevelop a blighted area and boost the city’s tax base. The property’s assessed value would increase from $885,880 currently to an estimated $2.1 million with the office building.

Kevin Digmann of MDK Development, which includes fellow local developers Mike Hodge and Dave Hodge, said it would cost about $1.5 million to acquire the land, demolish the buildings there now and do environmental mitigation work on a gas station that is part of the site. The $950,000 in public funds would help them get closer to what it would cost to build on a typical undeveloped lot, he said.

Hightshoe said business representatives in Towncrest wanted to work with Hodge Construction, which the MDK principals are part of.

Digmann said the building would have space for three occupants, and they have strong commitments from two potential tenants in the medical field that he declined to identify. MDK plans to establish the three spaces as condominiums and sell them, he said.

If all goes well, construction could start this fall and be complete in nine or 10 months, Digmann said.

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