30-year deal clears way for Iowa State’s CyTown

Five years after first investigating the concept of a multiuse development district in the heart of its athletics and entertainment complex — in part to help fund sorely needed upgrades — Iowa State University this month took a meaningful step toward realizing its innovative CyTown by signing a 30-year management deal for the 48-acre development.

The three-way agreement involves the Ames campus, its over 550-acre research park and Goldenrod Companies — an Omaha-based commercial real estate firm founded in 2005 by Zach Wiegert, a former NFL lineman of 12 years for the Rams, Jaguars and Texans and College Football Hall of Fame inductee.

Under the contract — approved by the Board of Regents this month — Goldenrod will have development rights to about 48 acres of land between Jack Trice Way, just north of Jack Trice Stadium, and Center Drive, south of the Iowa State Center.

  Buy Photo

The center — a cultural and athletics complex consisting of Hilton Coliseum, Stephens Auditorium, Fisher Theater and the Scheman Building — was the vision of former ISU President James Hilton in the 1950s and 60s, with construction of the four facilities spanning 1966 to 1975 and costing $19.2 million.

Considered a premiere arts and entertainment venue in the region for years, competition from nearby urban centers in recent decades has posed challenges for the center — which for years required an annual $800,000 subsidy from ISU.

The university in 2019 — the same year it began exploring the feasibility of CyTown — transferred management of the center to its self-sustaining athletics department, relieving it of the subsidy. But the four buildings together still need more than $110 million in renovations — a problem ISU is hoping revenue from a new CyTown can solve.

‘Game-changer’

Having poured tens of millions into underground infrastructure for the project, ISU through its new deal with Goldenrod is charging the firm to “arrange the financing necessary to construct and will build all the vertical infrastructure” for CyTown — pitched as a “vibrant entertainment district” that will be a “game-changer for the Ames community.”

ISU first selected Goldenrod a year ago to research and develop a financial model for the project — with the intention of entering into a long-term land-use deal. Since that time — when the project was pitched as a 40-acre district encompassing more than 400,000 square feet — development plans have swelled to a proposed 563,000 square feet over 48 acres.

“The CyTown project has evolved since it was first announced in 2022,” ISU spokeswoman Angie Hunt told The Gazette. “Likewise, cost estimates have changed with continued planning — as well as inflation.”

  Buy Photo

Goldenrod’s development plans for CyTown — presented to regents this month — include eight buildings costing between $175 and $225 million total. Two will offer a combined 96,000 square feet of office space, another two will offer nearly 150,000 square feet for residential living in the form of 60 “one-of-a-kind” units, and all four of those buildings will feature a combined 55,000 square feet of retail, food and beverage space on the ground level.

  Buy Photo

A fifth 17,000-square-foot building will host a “food and beverage anchor,” and McFarland Clinic will fill a medical office building, with a 6,500-square-foot amphitheater capping a walkway that will divide the development.

The eighth building — the largest, spanning 240,000 square feet — will feature a seven-story 215-key hotel and conference center, planned for what currently is the courtyard of the 119,476-square-foot Scheman Building, a 25-room conference facility built in 1975 that features a 450-seat auditorium.

Two years ago, regents approved a $10 to $12 million Scheman renovation, scheduled for completion next month, creating new social spaces for sports fans on campus for games and meets at the adjacent Hilton Coliseum.

  Buy Photo

‘No debt obligation’

In addition to the 30-year development agreement, regents have approved a 30-year ground lease between ISU and its research park, which will be responsible for overseeing Goldenrod’s construction and subsequent operation of CyTown.

ISU is creating a “CyTown Management Committee” — including its senior vice president for operations and finance, general counsel, research park president, director of athletics and a regent — and giving it broad authority to direct Goldenrod throughout its development and post-construction role “managing and servicing the overall operations of the development, including securing the vendors.”

Although ISU will maintain ownership of the land and all the CyTown venues that are built, while its research park oversees development, Goldenrod will be responsible for arranging the financing and debt.

“The university will have no debt obligation regarding any aspect of the development,” according to the management agreement and ground lease, which also reports, “The research park will have no financial obligations … and will have no debt obligation to any aspect of the project.”

In spelling out anticipated returns on each entity’s respective investments, the management agreement prioritizes ISU’s “payment in lieu of taxes” — or “PILOT” — agreement with the city of Ames. That deal allows ISU — a public entity exempt from property tax — to charge CyTown tenants an amount similar to commercial development on private property.

Instead of sending that money to the city, ISU under the deal will reinvest those collections back into CyTown and, after 20 years, an increasing percentage of that portion of tenant payments will go back to the city for its general use.

Following those PILOT payments, any revenue generated from CyTown will go toward paying off debt to third-party lenders and then paying off costs associated with owning and operating the new district — like policing, lighting, insuring and repairing it.

Goldenrod also will get an administrative fee. And remaining revenue can be split between Goldenrod and the university.

The research park will benefit by getting “priority leasing rights to office space in CyTown for research park clients,” along with access to CyTown amenities for research park clients.

“More than building a space, this is about creating a place that brings together students, businesses and the community,” Goldenrod managing principal Wiegert said in a statement. “CyTown will foster innovation, drive collaboration and most importantly encourage meaningful interactions.”

Vanessa Miller covers higher education for The Gazette.

Comments: (319) 339-3158; vanessa.miller@thegazette.com