UI plans to buy another downtown Iowa City bank

University of Iowa officials plan to spend $4.6 million to buy a MidwestOne Bank branch as part of a plan to replace the flood-damaged School of Music downtown.

UI leaders will seek permission from the state Board of Regents next week to buy the bank at 325 S. Clinton St. The purchase price is $4.6 million, plus actual relocation costs and actual business interruption costs. It's anticipated the sale will close in summer 2012, according to information released in the regents meeting docket today.

According to the regents information, “since the seller is an unwilling seller,” the proposed purchase price of $4.6 million is about 28 percent over the highest appraised value and is an exception to regents policy regarding the purchase of property, which states property shall be purchased at no more than the highest appraisal, or not more than 5 percent more than the average of two appraisals, whichever is lower.

“The premium purchase price and the relocation and business interruption payments are needed to make the seller whole,” the regents docket states.

It's the second downtown bank the UI has purchased to make way for the new School of Music complex. The former School of Music was damaged in the 2008 flood, and classrooms and offices are now scattered around campus and downtown.

The regents in December approved the UI purchase of Bank of the West, 301 S. Clinton St., for $3.1 million plus $350,000 in relocation costs.

UI officials next week also will seek regents permission to demolish the two bank buildings after they are acquired.

The MidwestOne property is a 28,550-square-foot lot with a two-story building that is 5,062 square feet.

UI officials also propose to enter into a separate agreement with MidwestOne Bank for the bank to purchase from the university the downtown property the UI bought from the Iowa City School District, at 509 S. Dubuque St. The bank will purchase the property or portions of the property for $80 per square foot, which was the university's purchase cost.

The regents in August approved the UI's purchase of the school district's Central Administration Office building for $4.5 million.