Iowa State’s CyTown expected to generate $184M in 30 years

AMES — With construction underway on a sprawling CyTown district — aspiring to integrate Iowa State University’s athletics and entertainment venues into an innovative year-round destination — ISU has agreed with developers on building plans, a financing structure, and financial projections showing massive gains in the coming decades.

CyTown, over its first 30 years, is expected to generate $184 million for the university — half coming through a revenue-sharing agreement with the developer and another 30 percent coming through a “payment in lieu of taxes,” or PILOT, deal with Ames.

“We're very pleased with the depth of the (financial) proforma here that we're seeing,” Board of Regents President Robert Cramer said Wednesday before the full nine-member board unanimously approved site development lease proposals for six CyTown buildings. “We're pleased with the results of what they're projecting.”

And, he said, the early income projections — incorporating not just shared and PILOT revenue but receipts from already-signed tenants — are “conservative.”

Regent Nancy Dunkel said she too feels comfortable with the financials.

“We have had a chance to thoroughly vet these numbers, and I feel they’re as good a budget projection as you can get,” Dunkel said. “I did have a lot of questions in the beginning of this. That's probably how I got on this committee … But I have to say, it's a very open process, and I feel really good about what's going to happen at Iowa State with this CyTown project.”

Board approval of the development lease proposals this week clears the way for Goldenrod, the developer, to sign tenant agreements for two office and retail buildings, two suite buildings, a food-and-beverage anchor building, and an amphitheater.

A proposed hotel remains in the design phase, while a medical McFarland Clinic remains under construction.

When asked Wednesday what happens if deadlines or financial projections aren’t met, Cramer pointed toward Goldenrod as carrying the burden.

“The beauty of it is that our developer, Goldenrod, has a lot of risk here, so they're going to go out and find tenants to fill these spaces,” he said. “The only way Goldenrod is going to make money is if they can keep the space filled.”

  Buy Photo

And, Cramer said, Goldenrod is doing its due diligence to vet all the prospects and set them up for success.

“One tenant actually wanted more space than what Goldenrod really thought they should tackle,” he said. “So they talked them down into a little bit smaller space because they have a really good idea of how these things work and what businesses are going to thrive here.”

If Goldenrod manages to fill the spaces with strong tenants, “it's all win, win, win.”

“The downside for us really isn't that great,” Cramer said. “We end up with these buildings, and it’d obviously be a big black eye if it failed. But we've got a developer there who's very motivated to make it work.”

  Buy Photo

Building breakdown

Goldenrod — in seeking board approval of its site development lease proposals this week — spelled out its vision for the six central buildings.

The food and beverage anchor building — at nearly 17,000 square feet, costing $5.8 million — will sit prominently along the south edge of CyTown near Jack Trice Stadium.

  Buy Photo

“Designed to create an inviting, year-round dining experience, the two-story building will accommodate two tenants — one on each level — offering flexibility and visibility in a high-traffic area,” according to the proposal.

Two CyTown Suites buildings — at 83,230 square feet and 82,453 square feet, costing nearly $28 million and $27.6 million, respectively — are “designed to bring energy and activity to the heart of CyTown by featuring ground floor retail space and accommodations above for both short-and-long-term stays.”

Entertainment space on their upper floors will offer “expansive views” of Jack Trice Stadium and the amphitheater, creating a “distinctive setting for gatherings and events.“

Two office and retail mixed-use buildings — at 66,434 square feet and 67,692 square feet, costing nearly $29 million and $30 million, respectively — will offer retail space on the ground floor, enhancing the “pedestrian and visitor experience, while the upper levels offer a modern office environment, tailored for flexibility and collaboration.”

Those buildings aim to create shopping and working opportunities for businesses, professionals and visitors.

The “glue that holds all of CyTown together” will be its “spine” — or “Cyclone Alley,” as Goldenrod is calling it.

Connecting the Iowa State Center with Jack Trice Stadium and the Alumni Center with CyRide users, the signature piece of that project will be an amphitheater at the north end of the alley called the “Cylo.”

“A massive digital backdrop enhances the immersive experience for up to 3,500 people on the viewing lawn,” according to Goldenrod’s proposal.

Covering a total area of 12,715 square feet and costing an anticipated $19.4 million, the alley will offer restroom banks of 28 stalls for both men and women.

All six buildings combined are expected to cost $112 million — with the developer and debt covering most of the up-front expenses. At 5.65 percent interest-only payments the first five years, Iowa State expects to pay off its debt in full by year 30.

Including its PILOT agreement with Ames and its revenue-share arrangement with Goldenrod — giving Iowa State 70 percent of the profit — the university expects to generate $184 million over 30 years, when the center’s estimated value will be up to $450 million, according to board documents.

Vanessa Miller covers higher education for The Gazette.

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