When should neighbors be involved in redevelopment plans? They question what's happening with Des Moines University sale

Lee Rood
Des Moines Register

Two and a half years have passed since Des Moines University put up for sale its campus on Grand Avenue, creating a conundrum wrapped in opportunity for the city of Des Moines.

The longtime health sciences institution’s planned relocation to West Des Moines disappointed many but opened up a prime piece of real estate in the heart of one of the most vibrant neighborhoods in the metro.

Just like that, Des Moines, which has more than its share of tax-exempt property, had a rare opportunity to add millions to the tax rolls.

But no one could have imagined back in March 2019 just how much the COVID-19 pandemic would change how we live or alter what’s possible for the 24-acre property at 3200 Grand Ave. DMU has said it will relocate all but its medical clinic to its new $250 million, 88-acre campus in West Des Moines in the fall of 2023. 

Mark Quiner, who lives behind the campus on 34th Street, believes the outcome of the Des Moines City Council Ward 3 election Nov. 2 could hinge on how candidates make their case for handling the opportunity. 

Quiner wrote Watchdog in October wanting to know what’s going on with the sale, what uses would be allowed by the city and what policies could affect the buyer's plans for the property. In short, he wanted to know anything that could be found out.

"I suspect the redevelopment of that campus is going to be a big deal. You're gonna have development pressures that could conflict with the neighborhood," Quiner said. "Our concern as neighbors all along has been that the footprint of the campus goes right up to the neighborhood. Are we going to be constantly fighting a battle against (encroachment) into the neighborhood?"

More:Get to know who's running for the Des Moines City Council and where they stand on issues

Des Moines resident Mark Quiner poses for a photo outside of Des Moines University on Thursday, Oct. 22, 2021.

Is there a standout candidate?

Quiner and his wife, Rochelle, who is vice president of the Greenwood Historic Neighborhood Association, are just two of the many with an interest.

Businesses, nonprofits, students and families along the Ingersoll and Grand corridor also have a stake. So do the city, county and school district, which would benefit if the property, now tax exempt as an educational institution, became taxable.

If the DMU property sold for its assessed value of $83.5 million and was zoned commercial, the county treasurer would collect about $3.52 million annually. If the entire property were to be converted to multi-family apartments, as some have hoped, the annual property taxes would be about $2.2 million, according to the Polk County Assessor’s Office.

More:Des Moines University grows fundraising campaign amid move to West Des Moines

But because so many are working from home now, researchers have found the pandemic has shifted populations away from downtowns and focused more attention on the attractiveness of neighborhoods and their amenities. Universities were losing enrollment for years before the pandemic hit and some are selling off, not buying up, large pieces of real estate like the DMU property.

Retrofitting DMU's existing buildings will likely be expensive and trying to alter its current footprint could face pushback from neighbors, especially those behind the campus.

That's what happened in 2019, when neighbors successfully fought DMU’s plans to add a 45-space parking lot uphill from their homes. They argued rainstorm runoff had already destroyed two homes in the neighborhood, and the addition of more pavement would make matters worse.  

DMU officials said upgrades to a stormwater retention basin, which had silted over, would reduce any runoff from the campus and protect neighbors downhill.

Later the same year, university officials announced the growing campus needed to move.

Josh Mandelbaum is the current Des Moines City Councilman representing Ward 3.

Council member Josh Mandelbaum, a 42-year-old attorney at the Environmental Law & Policy Center, ran for the first time four years ago on a sustainability platform.

Mandelbaum said any neighborhood needs to work collaboratively with the city and developers, and that’s what happened before rezoning for a redevelopment project at Wesley Acres, 3520 Grand Ave., was approved.

Because of the concerns raised by neighbors in that area, he said, the wooded buffer area behind the nearby Wesley Acres campus remains protected and stormwater control has improved. 

Cory McAnelly, a 36-year-old intellectual property attorney at Principal, is challenging Mandelbaum. He is painting himself as the neighbors-first candidate, insisting the Ward 3 council member should be a key player, leading the discussions for what’s possible at the campus.

"I think we've got to start planning now," he said. "People are looking at the spot. Where’s the narrative? It’s a very high-value, very important spot in the core of the city. I’m not a standard politician. I don’t want any backroom deals. I think we should get out in front of it now, and ask, 'What do neighbors want to see?'

"Also, if you start having those conversations, you’re also going to pique the interests" of prospective buyers.  

Elections 2021: Cory McAnelly is currently running for Des Moines City Council Ward 3.

McAnelly says he feels too many projects in Des Moines are being negotiated behind closed doors without early input from neighbors, which can create a nasty dynamic by the time plans reach zoning officials or the City Council.

"We set up these builders for animosity. They go in with the hubris of knowing the council has already signed off and they just get hammered,” he said. “It drives wedges between people. Maybe I’m going to be a terrible politician, but to me you just frustrate neighbors.”

A commodities broker, Quiner, 40, and his wife, a teacher who is currently a stay-at-home mom, are supporting McAnelly. 

Neighbors have a track record of pushing back

Ward 3 covers a huge part of the city — from 63rd Street on the west to Southwest 9th Street on the east, and from University Avenue on the north past Highway 5 on the south. Neighbors along the busy Ingersoll and Grand corridor often push back on plans they feel don't fit. 

Near 23rd and High streets, neighbors opposed Rally Cap Properties’ plans to build seven row homes on a vacant lot, arguing that was too much density in an already densely packed corridor.

Wesley Acres reworked some of its redevelopment plans last year when neighbors got in heated discussions over green space and parking.

More:Des Moines seniors community prepares to invite the neighbors over for a drink — and more

Some neighbors are currently fired up about plans to put a Starbucks at 2510 Ingersoll Ave., where Abelardo’s Mexican Restaurant currently sits. They worry traffic will be too congested and the national chain will kill business at existing local coffee shops.

A zoning change for the coffeehouse was approved by the council in March.

But the flip side of involving too many people too early is that a deal can fall apart.

And for now, DMU is holding its cards close. President Angela Walker Franklin did not return calls and messages seeking comment.

Bill Wright, senior vice president and managing director at CBRE Hubbell Commercial, sent Watchdog a message from the university that said DMU had "received inquiries from a variety of entities, but at this time is not in a position to discuss the status of those discussions."

"CBRE | Hubbell Commercial will continue to market the property in search for a fair market value. Otherwise, DMU is in a position to hold onto the property considering the DMU Clinic will continue to operate in the DMU Clinic building at 3200 Grand Ave." 

Erin Olson-Douglas, Des Moines' development services director, said the university has not reached out to the city with news of potential buyers. A WesleyLife spokeswoman said that company is not trying to buy any of the DMU land.

Brandi Webber, another candidate in the Ward 3 race, said on Thursday she would send Watchdog her thoughts on the DMU sale. She did not follow up by deadline. A graphics artist and stay-at-home mom, Webber has been campaigning for more affordable housing in the city.

Brandi Webber is running for Des Moines City Council Ward 3.

Mandelbaum says it’s ultimately DMU’s choice what to do with the campus. But he encouraged the university to engage with the city early so the potential buyer could find out what's possible, he said. 

"We want people engaging with us," Mandelbaum said. "This is an opportunity to be part of one" of the metro's most vibrant corridors.

Too costly or a great opportunity?

McAnelly said a potential problem with the DMU sale may be the high cost of tearing down or retrofitting what’s already there.

He said developers complain the cost of construction in Des Moines has become prohibitive compared to the suburbs. He said he thinks the city needs to streamline its building codes if it wants projects to be financially viable.

"If they are as prohibitive as some claim they are, we are not doing ourselves a favor," McAnelly said. "We are losing to the suburbs."

The city just overhauled its zoning code in 2019, a yearslong process that included amendments based on concerns raised by developers and others. 

Mandelbaum says he thinks McAnelly's view is pessimistic. DMU has well-maintained buildings that would make a great corporate campus for something like a biotech or agritech company, he said.

"There’s a remodel cost, but that’s possible,” Mandelbaum said. “And we amended our urban renewal district so we are positioned to talk with a buyer about what’s possible there. The land is eligible for (tax increment financing) and there’s a good increment there."

Mandelbaum said he doesn’t want to limit any possibilities because he sees a lot of potential for the site.

Olson-Douglas says the right buyer will probably weigh the environment surrounding the land more than the cost. A zoning change is likely, she said, since it's unlikely another tax-exempt institution will take its place. That can take 90 days or longer.

"The city will first want to look at what's around it for consistency's sake" in mulling that change, Olson-Douglas said.

More:Revised zoning code will encourage growth in Des Moines, city officials say

Because DMU won't relocate until the fall of 2023, it's unlikely many buyers will be lining up early to buy the campus, she said. 

"The first access to the property wouldn't be until two years from now," she said. "If you give a year of retrofitting, that's three years out to have access to the space. That's a pretty long horizon."

But the time is approaching when a buyer is more likely to act, she said.

When one does, you can bet the neighbors will want to be the first to know.

Higher property taxes and a lot of tax-exempt property

As of this year, all the property in Des Moines has an assessed valuation of $19.9 billion.

But about 22.7% of that is non-taxable, either because taxes have been abated or the property is exempt, according to the Polk County Assessor's Office. (Qualifying nonprofits like hospitals, religious organizations like churches and  government property like schools are among those that qualify for tax-exempt status.)

At the same time, homeowners around the metro are seeing much higher property tax bills because of record-breaking home sales.

This spring, residential assessments increased an average of 7.45%, according to the Assessor's Office. A homeowner's individual assessment is based on a variety of factors, including the home's location, physical changes or improvements and the surrounding neighborhood's overall home sales.

Lee Rood's Reader's Watchdog column helps Iowans get answers and accountability from public officials, the justice system, businesses and nonprofits. Reach her at lrood@registermedia.com, on Twitter at @leerood or on Facebook at Facebook.com/readerswatchdog.