LOCAL

Escalating steel costs, Trump tariffs, lead Coralville to approve early purchase for arena

Press Citizen

Coralville city leaders, facing uncertainty and rising prices in the steel market caused by President Donald Trump's talk of tariffs, moved last month to essentially "lock in" the price of steel needed to build the city's new arena.

The Coralville City Council in April voted to allow Mortenson Construction, the contractor on the Iowa Arena and Sports Performance Project, to place an advance order of steel for the project to avoid further price hikes.

City Administrator Kelly Hayworth told the Press-Citizen the decision was made after Mortenson notified the city of the rising costs and recommended the advanced purchase. The company will buy $4.8 million worth of steel for the $70 million project, he said.

"At that price, there was a slight escalation in the neighborhood of $400,000 over what we had originally priced the steel at when we started our discussions several months ago," Hayworth said. "Not all of that can probably be attributed just to the tariffs because there was some natural inflation, but we still did see an increase."

Had the city not approved the early purchase, Hayworth said costs likely would have risen another $450,000.

"Every dime is important to this project, and we want to put as much as we can into building, not escalating costs," he said.

In early March, Trump announced a 25 percent tariff on steel and a 10 percent tariff on aluminum imports, but offered temporary exemptions to the European Union, Canada, Mexico and a number of other U.S. allies. The tariffs are in effect, though, for other countries, including China and Russia.

USA Today reported Tuesday that Trump, hours before they were set to take effect, chose to delay tariffs on the European Union, Mexico, and Canada — the largest steel exporter to the U.S. — until June 1. It also reported that officials announced agreements in principle with Argentina, Australia and Brazil, delaying tariffs on those countries for the time being.

In a memo to the City Council, Coralville City Attorney Kevin Olson acknowledges that, given the scope of the arena project, the city will be using a "great deal of steel" to complete it.

WATCH: Video gives virtual tour of proposed Coralville arena

As planned, the 5,100-seat arena itself makes up about $47 million of the overall project. The project also will include a new two-story Iowa Fitness and Sports Performance Institute, which would include a field house and a sports sciences area for a "human performance lab." Plans also include a hotel connected to the fitness and sports institute; a permanent, expanded space for the Antique Car Museum of Iowa and the Johnson County Historical Society Museum; and three mixed-use buildings planned to include retail space, townhomes and condos.

With groundbreaking set, work still to be done

With the city's approval to buy the steel at the current price, May 16 is the target groundbreaking date, Hayworth said, and the project still is expected to be finished in fall 2019.

Most of the preliminary work on the site already has been done, Hayworth said, and utility hookups are ready for the new construction. Before the physical work can begin in earnest, the city will work to finalize several agreements with "all kinds of different groups and banks and other financial entities," he said.

"There's a lot of things to do yet, but we are moving forward with that understanding because we have, in principle, agreements in all different directions," he said.

Since the city began discussing the Iowa Arena project about three years ago, officials have been working to secure funding to finance its construction. In 2016, the Iowa Economic Development Authority Board granted the city's request for $12 million of funding through its Reinvestment District Program.

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The state program allows cities to set up 25-acre districts and redirect hotel and sales tax money created in those districts to finance large projects. Hayworth said the state allows the rebate to last 20 years, but that the city estimates it will end after 12.

The city also has been working on a $20 million fundraising campaign and, so far, has raised about $8 million.

"We'll be working on finalizing deals for naming rights, too, for both the field house and the arena. The concourse, the club lounge, even down to individual locker rooms, there will be people that will have donated funds who will be named," Hayworth said. "There is a major philanthropic and investment portion from businesses and individuals to make this successful."

'We're shooting for 200 events a year'

Plans for the arena itself have been adjusted over the past few years as advisers on the project, including consultants from Spectra Venue Management, have made suggestions.

A conceptual rendering by JLG Architects of the proposed Iowa Arena on Coralville’s Iowa River Landing.

Originally, the arena was expected to have nearly 8,000 permanent seats, but Hayworth said as plans and potential costs were examined, planners found that an arena of that size in the Iowa River Landing would generate only two or three events that would fill the arena to capacity per year.

With the planned 5,100 permanent seats and multi-use features, Hayworth said the city is confident the arena will be well used once it's completed.

"We want to have it as full as possible throughout the whole year," he said. "We're shooting for 200 events a year, and to do that you really need it to be multi-use."

Plans call for the arena to include a single-sheet ice hockey surface to support the University of Iowa club hockey team, the Iowa Ice Hawks, and Iowa City/Coralville Youth Hockey teams. Project leaders also are looking to collaborate with the United States Hockey League or the East Coast Hockey League.

Comcast Spectator, the parent company of Spectra, owns the National Hockey League's Philadelphia Flyers, and Hayworth said commissioners of both the USHL and the ECHL have approved of the city's arena.

Outside of hockey events, Hayworth said there will be systems of replaceable flooring and, if the arena hosted a concert, it could hold 7,000 people.

With the flooring system, the arena also could house multiple basketball and volleyball courts. The multi-use aspects of the arena are key in meeting the city's yearly event goal, Hayworth said.

"The field house is 53,000 square feet, so it can get five basketball courts in there alone, or six volleyball courts," Hayworth said. "You can use that completely separate from the main arena, or you could have an event that might need all of that space, and we can put an additional three basketball courts on the floor of the arena as well.

"We could have eight basketball courts operating at one time if you had a large amateur event going on," he said.

The amount and flexibility of the space, combined with developments attached to and located around the arena, make the project unique, Hayworth said.

"You could come there and literally spend the full weekend there for your event and never move your car," he said. "You can shop, you can dine, you'll be able to stay in the hotels and have your event all in one location within walking distance."

Reach Andy Davis at 319-887-5404 or at aldavis@press-citizen.com, and follow him on Twitter as @BylineAndyDavis.