Inn Operations, Inc. v. River Hills Motor Inn Co.

• Decision Date: 22 September 1967
• Docket Number: No. 52490,52490
• Citation: 261 Iowa 72,152 N.W.2d 808
• Parties: INN OPERATIONS, INC., Appellee, v. RIVER HILLS MOTOR INN COMPANY, a partnership, and F. W. Weitz, Individually and as a Member of said Partnership, City of Des Moines, Iowa, Charles Iles, George Whitmer, Jens Grothe, Wallace Buss and George Nahas, Individually and as Members of the City Council of Des Moines, Iowa, and as members of the Urban Renewal Board of Des Moines, Iowa, Appellants.
• Court: Iowa Supreme Court

Page 808

152 N.W.2d 808

261 Iowa 72

INN OPERATIONS, INC., Appellee, v. RIVER HILLS MOTOR INN COMPANY, a partnership, and F. W. Weitz, Individually and as a Member of said Partnership, City of Des Moines, Iowa, Charles Iles, George Whitmer, Jens Grothe, Wallace Buss and George Nahas, Individually and as Members of the City Council of Des Moines, Iowa, and as members of the Urban Renewal Board of Des Moines, Iowa, Appellants.

No. 52490.

Supreme Court of Iowa.

Sept. 22, 1967.

Philip T. Riley and M. A. Iverson, Des Moines, for appellants City of Des Moines, Charles Iles, George Whitmer, Jens Grothe, Wallace Buss and George Nahas, as members of City Council and Urban Renewal Board.

Thoma, Schoenthal, Davis, Hockenberg & Wine, Des Moines, for appellants River Hills Motor Inn Co. and F. W. Weitz.

Connolly, O'Malley & Conley, Des Moines, for appellee.

MASON, Justice.

Inn Operations, Inc., a Kansas corporation, brought this equity action to restrain defendant city of Des Moines and members of its council and urban renewal board (herein referred to as 'city'), defendant River Hills Motor Inn Company, a limited partnership of Des Moines, and F. W. Weitz, a general partner therein, individually, (both herein referred to as Motor Inn) from consummating sales of urban renewal land. The city acquired the land in question, Parcel T--3, as a part of River Hills Urban Renewal area.

The urban renewal plan for River Hills Project had been approved pursuant to the Federal Housing Act of 1949, 63 Stat. 413, as amended, 42 U.S.C.A. section 1441 et seq., and Chapter 403 Code, 1962, by the federal agency and the city, local public agency and its urban renewal board March 28, 1960. It was revised February 5, 1962, and again January 21, 1963. Under the Federal Housing Act the local program is administered by a local public agency, here the city. Defendant city appointed an urban renewal board as an advisory board to make recommendations to the council, acting itself as the local governing body, and reserved to itself the exercise of the urban renewal powers as specified in Sections 14(1) and 14(2), Chapter 403.

The plan provided that recommended zoning districts within the renewal area 'were established as most closely approaching regulations and controls for the area. Wherever these regulations and controls are at variance with the provisions of the Des Moines zoning ordinance, the most restrictive regulations shall take precedence.'

Sale of Parcels T--1 and T--3 in this renewal area was previously before us in Boss Hotels Company v. City of Des Moines, 258 Iowa 1372, 141 N.W.2d 541.

Plaintiff alleged some of the city's procedures in connection with disposition of urban renewal property were illegal and asked that defendants be permanently enjoined from entering into any contract with other than plaintiff for the sae and development of Parcel T--3 in River Hills urban renewal area; the city be enjoined from taking any steps to perform any contract for the sale thereof to other than plaintiff and be directed to sell and contract with plaintiff for the sale and purchase of Parcel T--3.

After trial the district court permanently enjoined defendants from entering into any contract for the sale and disposal of Parcel T--3, pursuant to Motor Inn's proposal under the disposal procedures used by the city and held any contracts already entered into illegal and void. Defendants moved to vacate the decision, for a new trial and to enlarge and amend the court's findings of fact and conclusions of law and to modify judgment. The motion was overruled with the exception of certain changes in the findings of fact, conclusions of law, summary and direction.

I. Under the Des Moines zoning ordinance adopted as part of the plan, Parcel T--3 is zoned for tourist-commercial use and might be sold for such use to redevelopers under restrictions which required a minimum lot area of 750 square feet per unit, off-street parking requirements, a floor area ratio of .5 and landscaping. Under the restrictions the height of a motel to be erected on the parcel was limited to three stories or 45 feet; sign restrictions included a provision no sign shall be greater than 30 feet above curb level.

The urban renewal board's recommendation to proceed with the disposition of the land in the River Hills area under negotiated open competitive conditions method set forth in the urban renewal manual (exhibit 2) entitled 'Fixed Price with Bidding on Other-Than-Price Basis' was adopted by the council January 15, 1962.

Proposals to purchase various tracts in River Hills were solicited. The disposition parcels, including T--3, were advertised and a cutoff date for proposals of August 16, 1963, was set. When no bids were received the federal agency and the city agreed the latter would proceed as permitted by the manual under type B for a negotiated disposal of Parcels T--1 and T--3.

May 12, 1964, the board received the first submission by Downtowner for a five-story motel with 148 units on Parcel T--1. Plaintiff's president, Mr. Brock, attended the meeting while this proposal was being made or reviewed.

Plaintiff submitted a proposal on T--3 for two 2-story buildings containing 120 units at an amount substantially under that then asked which was discussed at the August 25 board meeting. Plaintiff negotiated with the board at this meeting and was told: 'We are not in a position to take your offer where the price is concerned. We think it requires further negotiating between our staff and your company to see if an actually agreeable proposal can be made.'

Parcels T--1 and T--3 were reappraised and a reuse study was reported at the September 1 board meeting. During the summer and fall many board meetings were concerned with the use of these parcels and the minimum price for which they could be sold.

After reappraisal the board decided to readvertise because of new lower prices, time for receiving proposals was extended to October 30 and the staff was advised to notify all concerned 'that alternate uses for the property would also be considered.'

At an October 27 board meeting the cutoff date for receiving proposals on the disposition parcels was extended to November 2, 1964.

On the latter date Motor Inn submitted a proposal for an eight-story structure and the purchase of T--3. The bid was expressly subject to rezoning or modification to permit thereon the erection of a motel in conformance with the plan attached.

Boss Hotels submitted a proposal for a six-story structure and plaintiff an amended proposal for a three-story structure and purchase of T--3. No proposal met all building restrictions applicable to the area, each required some modification of the renewal plan.

At a November 10 meeting the renewal board permitted those making proposals to make oral presentations.

Motor Inn described in some detail to the board the makeup and structure of its partnership and financial responsibility. The board then voted to recommend to the City Council a contract be awarded to Motor Inn.

November 16 the city conditionally accepted Motor Inn's proposal subject to final approval by the federal agency and authorized and directed the renewal board to negotiate a formal written contract with Motor Inn and present it to the council for approval and execution.

That day the city also adopted a modification of the River Hills urban renewal plan, as revised, amended and modified, by removing the height restrictions and modifying floor area and sign restrictions on both T--1 and T--3 so the proposal was not at variance with the plan or zoning ordinance. In other words, after the proposal was in, after the cutoff date for filing proposals, and after the proposal of Motor Inn had been accepted, the city council modified the urban renewal plan so the proposal conformed thereto. March 15, 1965, the city approved this modified urban renewal plan.

The formal written contract resulting from negotiations between the board and Motor Inn was submitted to the federal agency for approval and concurrence. The federal agency concurred in the offering and the contract between the city and Motor Inn was signed.

The validity and procedure of the revisions and modifications of November 16 and March 15, 1965, constitute one of the issues in this litigation.

Motor Inn's proposal accepted by the City, exceeded the restrictions of the plan and the zoning ordinance in these particulars: the floor area ratio of the proposal was .78, approximately 55 percent in excess of the permitted ratio; the building structure 85 feet high, 35 feet in excess of the height restrictions; the building structure eight stories in height, five stories in excess of the restriction; and the sign was 90 feet above curb level, 60 feet in excess of the restriction.

The city's modification of the urban renewal plan was adopted without notice and public hearing and without observing the requirements and procedures by which the plan was originally adopted. It eliminated the restriction regarding use and development of tourist-commercial areas, including Parcel T--3, as to the maximum floor area ratio: .5, the height restriction building and structure of 45 feet or three stories and the specific restriction as to signs, while retaining floor area ratios and height restrictions in other districts.

Plaintiff's proposal complied with the urban renewal plan except in the matter of floor area ratio. This was computed by the city plan and zoning staff and reported to the board as .53.

II. The trial court found the city failed to comply with Code section 403.8 and procedures used to dispose of the parcel did not comply with the statutory requirement that sale be held under reasonable competitive bidding procedures. This failure resulted in every qualified developer not having a fair opportunity to submit a bid or proposal. Although plaintiff was specifically advised it should observe the plan and zoning ordinances,...