University of Iowa to enter public-private deal for Hawk Shop, bookstore operation

IOWA CITY - Another public-private partnership is materializing at the University of Iowa - which last year tasked a private collaborative with operating its $1 billion utilities system - this time at its historic Hawk Shop and University Bookstore.

The Board of Regents next week will meet to authorize a UI agreement allowing Follett Higher Education Group, Inc. to assume operation of the University of Iowa Hawk Shop and University Bookstore, housed on the ground floor of the Iowa Memorial Union.

UI issued a call for potential partners in the fall after experiencing hundreds of thousands in losses from the shops over the past five years.

Although gross revenue averaged about $11 million for both the Hawk Shop and bookstore since 2015, average annual net losses have topped $100,000 during the period - excluding support costs for items such as marketing and personnel.

The new deal under consideration would require Follett to pay UI a cut of all gross sales, 'calculated on an annual basis and payable in monthly installments,” according to regents documents that didn't explicitly state the percentage UI would reap.

The new private operator also would have to pay UI $250,000 for every five-year operating term; $100,000 annually for utilities; $50,000 annually to support student life programs and initiatives; and an annual bookstore credit of $10,000 for UI library programs.

If approved, the initial five-year operating term would require Follett to keep the businesses in the Iowa Memorial Union; acquire all the sellable or rentable merchandise; and hire all current bookstore employees.

Although the university hasn't been charging sales tax at its shops through an 'educational exemption” for state institutions, the collaboration with Follett would change that - putting the shops on a more level playing field with other private sellers in the area, such as Iowa Book.

'A private vendor operating the bookstore would be obligated to collect and remit state and local sales taxes,” UI spokeswoman Anne Bassett told The Gazette in October, in an article on the UI's inquiry into private collaboration. 'They would not fall under the university's exemption.”

In articulating the need for an 'external supplier and industry expert to manage the day-to-day operations” of the stores, regent staffers this week noted they were 'impacted significantly by the 2008 historic flood.”

The bookstore was moved to the University Capitol Center until returning to the Iowa Memorial Union in 2015 - although it's continued losing money.

Stepping out of the bookstore business at a time of massive change both for that industry and higher education in general - and with dwindling resources - seems wise, according to regent staff.

'Partnering with a large national provider of college and university bookstore services enables the university to leverage an external supplier's expertise in the industry, provide more efficiencies and enhance the services for the campus community,” according to regent documents.

Follett - an Illinois-based enterprise that promises innovative 'campus store solutions” - was chosen for offering 'the best financial terms, as well as the best response demonstrating (its) industry expertise, commitment to customer service and commitment to current bookstore staff.”

UI officials in the fall told The Gazette the Hawk Shop had 17 full-time staff, about 110 part-time student workers and another six temporary employees.

Although UI isn't alone in skipping sales tax - allowing it to pass on savings to customers and enjoy an advantage over private vendors - industry advocates for years have been pushing for lawmakers to force the universities to play by the same rules.

'We're OK with not charging tax on text books, but we have issues just not charging taxes,” Iowa Book textbook manager Virgil 'Scooter” Hare told The Gazette in the fall.

Hare noted UI sells a lot more than books at its shops, such as clothing, stuffed animals and game-day items.

'If we can have a level playing field, we're perfectly OK with that.”

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