Port of Dubuque apartment faces lengthy delay, but officials say project still on

Plans for of a six-story apartment complex in the Port of Dubuque have been temporarily put on hold, according to the project developer and city officials.

Documents distributed to city officials ahead of today’s City Council meeting outline an amended agreement between the City of Dubuque and Port of Dubuque LLC, the entity established to oversee development of the apartment complex.

If approved, the amendment would give developers up to two more years to line up extra funding sources and close on the development deal.

Officials from Merge Urban Development Group first disclosed plans for the Port of Dubuque apartment complex in October 2019.

The complex would be located on a vacant stretch of land just west of the corporate headquarters for Flexsteel Industries Inc. and also would include space for multiple business tenants. Initial estimates placed the cost of the project in the ballpark of $20 million.

Brent Dahlstrom, a partner with Merge, said the location, cost and overall vision for the project remain unchanged. But the timeline for construction — initially slated to being in summer or fall of this year — has been altered by multiple factors, many driven by the pandemic.

“With COVID there are increased challenges in getting a project like this off the ground,” Dahlstrom said. “This is not a cancellation. It is just a delay. We are requesting a little more time.”

This additional time will allow Merge to apply for an Iowa Economic Development Authority Workforce Housing Tax Credit, as well as an Iowa Redevelopment Tax Credit award specific to Brownfield or Grayfield sites.

The proposed amendment stipulates that Merge will apply for each of these two grants in 2021. If the grants are not awarded next year, the company can reapply in 2022.

In the event that Merge cannot obtain the sought-after state tax credits, there is a possibility they could walk away from the deal entirely.

The amended agreement states that the developer must close on the deal by the end of 2022, effectively establishing a deadline for when plans must be finalized.

“They can choose to not close on the deal if they don’t receive that funding,” said Jill Connors, economic development director for Dubuque. “They have an out.”

Despite that possibility, both the city and Merge remain optimistic that the plan will move forward.

“All parties are still very committed to this project,” Connors said.

Dahlstrom also struck a positive tone.

“We have confidence that the state will support this project,” he said.

Despite this optimism, he acknowledged that the pandemic has interrupted supply chains and impacted the prices of lumber.

Connors, meanwhile, noted that developers throughout the country have struggled to secure the necessary lending to support large-scale construction projects.

Officials with the city and Merge share a belief that the development project could be a transformative one for Dubuque.

“It really fleshes out the vision for the North Port, which is for it to be a mixed-use (area),” Connors said. “This project provides a residential use, which we don’t yet have. I think it fills out that part of the vision.”

Dahlstrom said he is excited about the project for multiple reasons.

For one, the building would be constructed using “mass timber,” a relatively new category of building materials widely viewed as being more environmentally friendly than alternatives. Moreover, he sees the project as one that would fill needs in Dubuque.

“The downtown area in Dubuque has a lot of great things going on for it,” he said. “There are a lot of great projects that have taken place, but there are also some gaps. More people are looking to live down there, and we feel this is another step in the right direction.”

During today’s meeting, City Council leaders will consider a resolution that would set a Nov. 16 public hearing to discuss the amendment.

Connors believes approving the amendment would be a positive step for the city, noting that flexibility is of the utmost importance at a time when many economic development projects are facing interruptions.

“If we cannot be flexible, there is a chance the project won’t happen at all,” she said. “If we want it to happen, it behooves us to work with them and allow them time to line up their capital.”