City council denies LANE4’s request for extension, but encourages talk to continue

By Katherine Klingseis,

The Ames City Council voted unanimously Tuesday to deny the LANE4 Project Group’s request to extend the terms of its Campustown redevelopment agreement. The council’s decision signifies that LANE4 is no longer the master developer for the project, meaning that all exclusivity of the agreement has ended and other developers can now negotiate with the city and Iowa State on plans to redevelop the area.

The group’s request to the council asked for an additional 60 days for LANE4 to negotiate with Iowa State. Negotiations would have centered around the university leasing space in a development to be built on the southeast corner of Lincoln Way and Welch Avenue. A grocery store or pharmacy would be on the first floor of the four-story building, and the university would occupy the top three floors.

“We are looking for activities that need additional space [to occupy the office space],” said Warren Madden, vice president of business and finance at Iowa State. “We haven’t specifically identified what they will be yet.”

Madden said that Iowa State and LANE4 have had problems negotiating a rental agreement because the rental rate for the estimated $20 million building would be quite high. He said the average rental rate in Ames is between $10 and $12 per square foot. In order to rent the space in LANE4’s planned development, Iowa State would have to pay $16 per square foot.

Madden attributed this high cost to the fact that LANE4 would have to develop on land with existing property. Most of the property on the 2400 block on Lincoln Way, where the new development would take place, is owned by A. Louis Champlin.

“LANE4 negotiated with Champlin on an acquisition price,” Madden said. “The development would have a high [starting price] and it would also cost a lot to redevelop the land.”

The redevelopment of the southeast corner of Lincoln Way and Welch is the first phase of LANE4’s Campustown renovation project. The second phase of the project involves the southwest corner of Lincoln Way and Welch, which would be the home of retail stores and a hotel on its upper floors.

In order to begin the first phase of its project, LANE4 sought to negotiate a deal with the university, the development’s biggest potential tenant. LANE4 and the university were not able to negotiate an agreement in the initial allotment of six months, nor were they able to reach an agreement during the 90-day extension period.

At the city council meeting Tuesday night, LANE4 requested another extension to its development agreement. With the exception of council member Matthew Goodman, who abstained from voting due to a conflict of interest, all council members voted to deny the request. Since the agreement has expired, LANE4 no longer has exclusive rights to the project.

“The council’s decision indicated that [it] would be open for other project development,” said Steve Schainker, Ames city manager.

Schainker said redevelopment projects are quite difficult because the development company must take into account the needs of all the parties involved. For LANE4, the company had to consider the needs of the university, the property owners and the city.

“It’s very complex to make everyone happy,” Schainker said. “It’s hard to pull these ventures off. It’s not surprising that it took longer than we hoped.”

Although LANE4 no longer has exclusive rights to the development project, Schainker said that the city council encouraged all involved parties to continue discussions.

“The council did not extend [the agreement], but it encouraged city staff and the university to continue discussion with LANE4,” Schainker said. “It wants discussion to continue. It didn’t shut the door.”

Hunter Harris, LANE4’s director of development, could not be reached for comment.

(Posted originally on on June 29, 2011)

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