Behind the scenes of the Iowa River Power saga: Business frustrated with looming closure, building owner

Peservance has anchored the Iowa Power River Restaurant throughout several decades of service.

That grit runs dry on Nov. 26 when the restaurant closes its doors for good, a fate co-owner Danice Petsel has slowly come to terms with despite her displeasure and frustration with the building owner.

Danice and David Petsel have owned the Iowa River Power Restaurant for more than two decades, while the building, which originally housed Coralville's power plant, dates back more than a century.

The Petsels were told renovations planned by building owner Randy Ward will force their business to close, leaving a potential gap at an iconic landmark. The trio are also entangled in an argument whether or not Ward owes the Petsels money for the restaurant and who is responsible for building repairs.

Current building conditions seem to be the main area of frustration for all involved, though specific leasing terms have also come into play.

A brief history of the IRP

The Iowa River Power restaurant is an ode to Coralville's rich history with water power.

Coralville's location along the banks of the Iowa River has been instrumental for the local energy and food industry for more than a century, inspiring the construction of the current building to harness the power of the reconstructed dam in 1916.

According to Press-Citizen archives, the local dam was first built in 1844, a 13-foot structure built out of wood and stoned spanning the river's width.

The river's strong current once powered the Coralville electric plant, which now houses the Iowa River Power business, and several other mills, including a profitable paper mill that employed more than 50 residents.

A portion of the original building was demolished in 1930 as a new turbine was built. The city operated its energy grid independently for another decade before merging with the Iowa Illinois Gas and Electric Company in December of 1941, kick-starting nearly 30 years of operation until the company closed the local plant in 1968.

Coralville's population more than doubled from 1940 to 1950 as businesses along Second Street, commonly known as the "Coralville Strip," began to blossom, bringing much-needed commerce.

The City of Coralville purchased the power plant that would become the Iowa River Power Restaurant and 1.84 acres of land for $1 in 1969, while the Iowa Conservation Commission also bought rights to the nearby Iowa River dam the same year for $1.

The city sold the building and land for $32,000 a few years later in 1971, which set the ball in motion for plans of a new restaurant. Gary Huysman, C. David Koenig and Allan Johnson purchased the land and building five years later in 1976, opening the Iowa River Power Company restaurant 11 months later on Oct. 22, 1977.

The Coralville electric plant, which now houses the Iowa River Power business, merged with the Iowa Illinois Gas and Electric Company in December of 1941, operating for nearly 30 years until they closed the plant in 1968.

According to the Iowa City Press-Citizen archives, the original restaurant’s bar and cocktail lounge was housed in the space previously occupied by a pair of water-powered turbines, while the dining room was constructed where the boilers and steam-driven turbines were once stationed.

Initial investments in 1980 surpassed $1 million while 150 employees were needed to operate the business, according to a Press-Citizen article from 1980.

In 1988, nearly 11 years after the restaurant venue opened, Huysman and John Fisher partnered to buy the business, building, and land. The duo quickly built an addition to the east wing of the main dining room in 1989, expanding the restaurant's capacity.

Fisher left the partnership in 1996 and Husyman became the sole owner before selling the building and operations to Ward a few years later. The Petsels bought rights to the restaurant from Ward in 2002.

A recent disagreement is forcing the long-standing restaurant to cease operations this fall.

IRP has endured a lot, but Petsels are frustrated with building owner

The fluidity of the restaurant business has done little to deter the Petsel's over the last 20 years. They bought what is now Iowa River Power in 2002, continuing a storied tradition of fine Coralville dining.

Danice Petsel told the Press-Citizen on Friday that the building, the staff, and her husband have endured a lot in two decades of operation, from flooding to derechos to the pandemic.

“There hasn’t been a time where this restaurant hasn’t had to struggle,” Petsel said. “It's always like every time you think you're just getting ahead, some tragedy happens.”

David Petsel worked for Randy Ward, the building owner, at his flooring company - Randy's Flooring - in Coralville. When the building came under Ward’s control, Petsel said Ward asked the couple to run the restaurant housed in the building. Danice once owned a fine-dining French restaurant in the Quad Cities.

Ward turned over operations and ownership of Randy's Flooring to a group of employees in 2016.

More: Iowa River Power Restaurant set to close, cites owner's plans to renovate

Danice's most recent frustrations stem from what she said is a lack of communication with Randy Ward, who wants to renovate the building, forcing the restaurant to close a few years earlier than planned.

While the makeover will provide room for a new tenant, Ward told the Press-Citizen last week, he isn't sure what will fill it with upon completion. He said the building that houses IRP is in dire need of repairs.

Structural safety is a major concern.

“The fact is that place could implode tomorrow,” Ward said last week. “It is so tired and worn out that it just needs to be remodeled. I'm embarrassed to say I own it.”

The Iowa River Power restaurant will close just after Thanksgiving, Danice Petsel said. She admits the building needs significant work, citing ancient plumbing in addition to their frequent updates over the years.

“There’s 40-year-old plumbing in here," Danice Petsel said. "I have been nickeled and dimed to death repairing everything in this building.”

The plan to renovate is nothing new, Ward told the Press-Citizen, saying he warned the restaurant owners in the "last 18 to 24 months."

He denies claims from restaurant employees that the Petsels were blindsided by news of the restaurant's closing.

Restaraunt, building owners feud over lease, construction

In an email obtained by the Press-Citizen, Ward informed Petsel in March that plans were in place for renovations to start in October. He offered free rent to Danice Petsel for the summer months — July, August, and September — before the restaurant needed to close. It was unclear from the email whether the offer of free rent was accepted.

More: Iowa River Power Restaurant set to close, cites owner's plans to renovate

After a bit of back and forth, Ward said he and Danice Petsel agreed that the restaurant would be given until roughly the end of the year to clear out the building before construction began.

A window between the restaurant closure on Nov. 26 and the final day of the lease on Dec. 31 gives the Petsels about six weeks to move everything out, which Danice plans to sell most of at auction.

Sixteen-year IRP employee Travis Heck disputes claims of an expiring lease.

He told the Press-Citizen the IRP's lease was extended five years through 2027 due to the 2008 flood. Ward denied the claim, saying that the Petsels never agreed to the terms, though he said they were sent a lease extension in October of 2022. Ward said the couple never signed the agreement and didn't return the document.

David Petsel said Ward only this year told him the lease was year-to-year rather than the expected five-year renewal. The 2027 date was key, David Petsel said, as the restaurant owners planned to retire in four years and hand over full control of the building to Ward.

In 2021, after IRP survived the restaurant industry’s COVID-19 pandemic-induced slump, Ward asked Danice Petsel about the dining establishment's future. She told him she was “exhausted” and didn’t “know how much longer I wanted to do this.”

She said she understood why he asked, given the condition of the building, but did not ask him to, as Danice Petsel put it, “screw me over” and “kick me out," which she feels news of the reno has done.

The closure impacts more than her family, Danice Petsel said. The restaurant has been a mainstay for decades and it'll leave a significant hole in a thriving district.

“It will be sad when it’s gone,” Danice Petsel said. “It's just the camaraderie, and seeing everyone every day and knowing that you're part of their lives, in the good times and in the bad.”

Ward says IRP's rent is a "great deal," Petsels want compensated for restaurant

Deteriorating building conditions and a kerfuffle over restaurant rights have both the Petsels and Ward entangled in a verbal scuffle.

Though Danice Petsel pays about 7% of the monthly revenue of IRP or a minimum of $11,666, whichever is larger, as rent, Ward argued the market rate for that specific square footage of commercial space should eclipse $25,000 each month.

The Petsels also asked Ward to purchase the restaurant in return for the upfront fee they paid the landlord when they took over operations in 2002. Danice Petsel asked Ward to return the fee, but Ward confirmed he wouldn't agree.

Ward pointed to the building lease, which says the restaurant is responsible for building improvements. He said the condition of the building and everything inside has deteriorated over the years, from the tables and chairs to the kitchen.

“It's crazy to me because you know what, I think I've been a tenant that has never bothered him,” Danice Petsel said. “I pay for things that he never handled. I had to pay for them. We've always been friendly, but obviously not friends because you don't [do this to] your friends.”

Employee outrage persists over looming closure

Heck told the Press-Citizen Friday that he spoke with several of his coworkers who feel as if they are getting evicted. They believe the Petsels have maintained the building while Ward provided little help.

“We are upset at the situation and that’s slowly turning to anger,” Heck said. “Where were you to fix this building? Denise has paid for those renovations.”

Several IRP employees have contacted “important people” in the community, from Coralville city staff to state Sen. Zach Wahls to Hawkeye sports teams.

Heck said restaurant staff will also start passing out slips of paper to restaurant-goers that include the email addresses of Wahls as well as Coralville’s city manager and mayor to help amplify their voices.

Heck previously told the Press-Citizen that Danice Petsel works day and night to keep IRP running. Though Danice Petsel said the move might be just what she needs as she nears retirement age.

“This might be a blessing in disguise,” she said. “I think a 40-hour-a-week job might be pleasant if I have to continue to work.”

Ryan Hansen covers local government and crime for the Press-Citizen. He can be reached at rhansen@press-citizen.com or on Twitter @ryanhansen01.

This article originally appeared on Iowa City Press-Citizen: What led to Iowa River Power's pending closure? Lease issues, owners say