PEOSTA, Iowa — The City of Peosta recently gave 2.7 prime acres to a preselected private developer without evaluating other options — a move that city and state officials indicate was allowed under state law.
City Council members last week voted unanimously to give the land located on the west end of Northeast Iowa Community College’s Peosta campus to College Suites LLC. Under a development agreement with the city, the developer will construct an apartment complex that will be able to house up to 200 students.
A press release from NICC states that the project “represents an approximately $10 million (private) investment with a much larger potential economic impact.”
NICC sold the property — which has an assessed value of $38,500, according to county land records — to the city for $1 earlier this month.
Wes Schulte, of College Suites, said the project came about as a cooperative effort between him, the city and NICC, and that same collaboration is likely to continue as the development moves forward.
“It needs to benefit all involved in order for the project to be successful,” Schulte said. “It’s a collaborative effort.”
City Administrator Whitney Baethke said College Suites will begin work on the design of the apartment complex, which will require approval from a special committee made up of officials with the city and the college.
“This is just a fantastic project that touches every element of our community,” Baethke said. “It’s a great opportunity for the area.”
A development agreement drafted by the city requires that the project be completed by Oct. 1, 2022. The building is described as a four-story structure, offering one- to four-bedroom “apartment-style units” furnished with appliances.
Wendy Knight, NICC’s vice president of institutional effectiveness and advancement, said the developer was introduced to college officials via the city.
Baethke said College Suites approached the city prior to the formation of the student housing project, looking to develop local housing.
As discussions continued with NICC on the project, Baethke said, she and city officials decided that College Suites best fit the purposes of the student housing project.
“I did not discuss this project with other developers,” Baethke said when asked by the Telegraph Herald. “We did not intend for this to be a competitive situation.”
Because the initiative is not a city-government initiative being paid for through taxes, Baethke said the city is not required to competitively seek bids. She added that Iowa Code allows the city to transfer funds or property to developers under the goal of promoting economic development.
“We’re not required to bid for something like this,” Baethke said. “This is a private development. All the city did was transact some land.”
Robert Palmer, general counsel and director of governmental affairs for Iowa League of Cities, agreed that state code allows cities to transfer property to private developers if there is a defined public purpose.
Baethke said the decision was made early on to not sell the property to the developer in order to ensure the property would be invested in.
“It was more important for us to guarantee the development on the property,” she said. “We are playing the long game. The city will make more off of property taxes through this project.”