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Though Advantage Homes LLC is among the first to assemble a sizable parcel of land for redevelopment along Merle Hay Road north of Johnston’s city hall, owners Mark Bradley and Kirk Hesse want out of the corridor. So far, they haven’t found any buyers for their land.

“We’re open to any suggestions right now (for development), but our main goal is just to sell the property,” Bradley said.

About a year and a half after the Johnston City Council approved a site plan for the area along Merle Hay between Northwest 62nd and Northwest 66th avenues, the corridor is still a collection of nicer and run-down homes, a few businesses and vacant land with “For Sale” signs.

On the surface, it looks as if little has been done to move the improvement plan forward. The city still must work with about 40 property owners to get them to agree to sell their land to potential developers, some at a lower price than the commercial value many expected for their properties. It also must attract developers to an area farther north than the commercial redevelopment going on along Merle Hay during a time when many cannot secure financing.

But behind the scenes, the city has been putting the pieces in place to encourage development to move forward once the economy picks up. New members have brought a primarily pro-development stance to the City Council, which has led to the implementation of several incentives to entice development. In February, the city hired Terrus Real Estate Group to work with landowners on assembling larger parcels of land that could be sold more easily to a developer.

“The economy obviously plays a factor in how quickly we move along,” said City Administrator Jim Sanders, but “we want to put ourselves in the best position.”

The big picture

At the April 1 Johnston Development Forum, city leaders touted the work that is going on in this area to more than 50 people with the hope that even one developer would become interested. Now that the 86th Street commercial corridor is nearly fully developed and the city is close to running out of annexable land, the Merle Hay corridor has become a focal point for the city’s efforts.

“It’s a new paradigm for Johnston,” said City Councilman Jon Kallen. “We’re used to having all green fields. This is a redevelopment issue.”

The RDG Planning & Design proposal the council approved in October 2007 calls for mixed-use redevelopment, which would increase the value of the area to $64 million from about $5 million – a significant boost to Johnston’s tax base.

The plan calls for a town center made up of smaller retailers and restaurants on the northeast corner of Northwest 62nd and Merle Hay. The area across Merle Hay from the town center is earmarked for offices, along with a small office/business park around Maurice’s distribution center to the north. High-density housing is recommended for the rest of the area, which would help support a greater diversity of families in Johnston.

The amount of residential development proposed for the area was the biggest shock, city leaders said. Many landowners believe their property currently zoned for mixed-use is worth more than RDG’s report indicates. According to the Economic Research Association market study included in the report, the value of high-density residential in that location is $2 to $4 per square foot, compared with $6 to $10 per square foot for mixed-use.

But city leaders say the study makes sense. Saylorville Lake, Camp Dodge and Pioneer Hi-Bred International Inc.’s research fields surrounding the corridor prohibit the further residential development needed to support a lot of commercial activity along the northern section of Merle Hay. Kallen added that higher-density residential development in the corridor would help drive traffic to some of the shopping districts springing up to the south.

Ideas to development

RDG’s report proposed two options for the city to implement the corridor project: promote and coordinate redevelopment with property owners and developers or purchase properties as they come on the market and sell them in larger parcels to developers.

Though the city is willing to purchase some properties, it has primarily employed the first strategy and has been working on economic development incentives that will encourage private investment.

In a July 2008 report, the City Council’s economic development subcommittee recommended several tools that the city could use to encourage development, including using the current tax-increment financing district to attract commercial/office development but not retail, “chain stores” or restaurants; purchasing some properties to be sold for future development if resources are available; helping remove existing structures to prepare for redevelopment; and paying for property owners to have their land appraised so that they can have a basis from which to price it.

Kallen said he wants to make sure the city is using “as many tools available as possible to incent redevelopment/development along the Merle Hay corridor.”

This is a more proactive stance than those typically taken by past city councils, Sanders said. “Most recently, folks seem much more in line in the philosophy of how to use different economic tools, so that certainly helps that everyone is working in the same direction,” he said.

Though these tools are helping Johnston become more competitive with neighboring cities, Kallen said the council still is not willing to give up high architectural design standards. The city also is waiting to use tax abatements until it determines whether other incentives have worked, and the subcommittee recommended not providing direct incentives for residential development.

One way the city has pushed the project forward is by hiring Terrus last month to work with landowners on assembling larger parcels of land that can then be offered to a developer. Terrus has worked on a couple of other projects in this capacity, including the Windsor Heights Town Center along University Avenue and Wellmark Blue Cross and Blue Shield’s new headquarters downtown.

Dan Dutcher, senior vice president of Terrus, said the recession has given the city and his company time to explain the plan to landowners, develop their trust and encourage them to work with officials and developers, without the pressure of having to develop the area quickly. The downturn may also help lower landowners’ expectations for how valuable their land is, he said.

The city is primarily focused on assembling the parcels for the suggested office park north of Northwest 62nd and west of Merle Hay. Commercial development would help generate more money for the tax-increment financing district fund that can go toward infrastructure improvements or assisting with other projects in the area, Sanders said.

Meanwhile, the step of turning City Hall into a town center will likely come much later. The city will have to assemble 14 parcels, making it the largest and most expensive project in that area.

Advantage Homes, the first to assemble a larger tract of land, was interested in using its 5.5 acres on the east side of Merle Hay for an assisted living facility or multifamily housing. But since the economy tumbled, the company’s goal has been to sell it. Bradley and Hesse say they have talked with a few interested parties, but no one can get enough financing to move forward right now. They are asking $8 a square foot, which is more in line with commercial use than the townhomes suggested for that area.

“It’s going to take somebody with the dollars to do it,” Bradley said. “I don’t think the city’s going to kick out a lot of money on this thing. Somebody has to step up to the plate to get this thing going.”

The long view

“We have a general idea of how we want to attack” the project, Sanders said, but it also depends on how property owners respond. The city stresses that it doesn’t want to force a property owner to sell and by law cannot use eminent domain on this project.

One bit of progress may be seen this summer, when the city plans to widen Northwest 62nd east and west of Merle Hay and reconstruct Northwest 59th Court.

But Sanders is patient, recalling how in his 12 years as city administrator that area has remained mostly unchanged. Still, he said, “we certainly are motivated to try to get things going up here.”