Council approves property transfer amid city attorney warning of legal risk under Iowa code

Summary

City legal counsel warned the council that transferring city property for less than fair market value could trigger an Iowa Code prohibition on giving away real property and raise litigation risk; after debating the risk and timing tied to an expiring option agreement, council approved the development agreement, final plat and public improvements.

City attorney Mark Emhoff told council there is an Iowa Code provision barring cities from giving away real property and that transferring property for less than fair market value presents legal exposure. "There's a certain amount of risk there," he told the council, adding he could not guarantee a court would uphold a transfer if challenged but that "we may have enough to be able to justify this" based on economic-development considerations and the record of public hearings and findings.

Council members pressed for clarity on what council should state on the record to bolster a public-purpose defense and whether more time was needed to research case law. Staff and multiple councilors emphasized the timing constraints: an option agreement with the purchaser required execution that night or the purchaser could walk away. The purchaser's timetable and prior public hearings on the property's disposition were cited as factors for proceeding.

After discussion, council moved to approve the development agreement, final plat and public improvements agreement; the motion passed on roll call.