With the University of Iowa’s sale of the former AIB College of Business campus in Des Moines almost final, the property’s new owners are moving ahead with plans to subdivide the land, resell some of its buildings for millions and renovate former student dorms into rental apartments.
Tina Smothers, owner-broker of Optimum Real Estate Management of Stuart, and her investment partner, Jason Grove of Adel, won a bidding battle for the nearly 14-acre property previously owned and operated by AIB and donated to the UI in 2015.
The full 20-acre campus was valued at more than $30 million at the time of the gift — initially intended as a UI satellite campus in Des Moines. The UI sold off 6 acres at the time, and the Polk County Assessor’s Office last year valued the main chunk — accounting for 11 of the remaining 14 acres — at $20.3 million. However, Smothers and her partner bought the site for $7.5 million.
A recent State Auditor review found that price to be proper and reasonable, even though a former owner said it’s a far cry from the expected value of a gift that’s taken a big detour from its first plans.
“I am extremely disappointed,” former AIB College of Business President Nancy Williams told The Gazette, hearkening back to the winter day in 2015 when she sat next to then-UI President Sally Mason and then-Board of Regents President Bruce Rastetter to unveil the gift of her family’s 94-year-old campus she hoped would become UI-Des Moines.
“They let it go for very cheap,” Williams said, adding she feels the UI and the regents failed to uphold their end of the gift agreement, or at least the spirit of it. The deal said the gift “shall be utilized by the university to conduct programs of higher education for the benefit and enrichment of the citizens of the greater Des Moines and central Iowa areas.”
The gift agreement stated that the UI had “no current plan or intention of selling or otherwise transferring the gift” for commercial purposes. But it includes a clause allowing a sale if the UI determined continuing to operate it “no longer is feasible for economic or other reasons.”
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The agreement stipulates proceeds from any sale go toward scholarships for Iowans attending the UI. But considering the sales price and UI expenses of making the deal, Williams said she’s unsure how robust the scholarship fund will be.
“I don’t know how much will be left,” she said. “We would have rather it been more, obviously.”
ALREADY ON THE MARKET
To purchase the former AIB’s 14 acres, Smothers created The Village at Grays Lake LLC, the name under which she plans to renovate and lease 91 apartments that previously served as dorms.
With the “due diligence” period of the pending sale over and the closing on track for the beginning of August, Smothers said she already has listed three of the site’s buildings that she’s not interested in using or managing — including the former Legacy Hall buildings, AIB activities center and Keith Fenton Administration Building, which bore the name of Williams’ father.
The three-story, 34,356-square-foot administration building is listed for $2.6 million. The 22,000-square-foot activities center is listed for $1.6 million. And the 18,816-square-foot Legacy building is listed for $800,000.
If all three sell as listed, Smothers could generate $5 million — not including the renovated residence halls she’s keeping to lease, along with one academic building for which she’s seeking a user.
With the additional 91 apartment units, Smothers’ management company would operate about 1,300 units in Waukee, Des Moines and Urbandale. Although she has not started the renovations, Smothers said, she hopes to begin leasing the apartments in late summer.
Smothers was among the top three bidders to make offers in April.
“In my opinion, real estate is only worth what people will pay for it,” Smothers said. “And there were multiple offers for around the same amount.”
The property listings online promote the site as “overlooking the downtown Des Moines skyline,” with “heavily wooded views to the north and west.” A 5-mile radius boasts a nearly 200,000 population, with nearly 10,000 businesses and more than 161,000 workers making an average household income of $67,795, according to the online property listing.
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Former AIB President Williams said the land served as a “beautiful campus,” which is why she would have liked to see the state and the governor recognize its potential and use it for a “higher purpose” before “they just gave it away.”
‘A LOT OF POLITICS’
Instead of opening a UI-Des Moines campus and absorbing AIB students and faculty, as was announced in 2015, the Board of Regents quickly required that Iowa State University and the University of Northern Iowa be allowed to use it, too.
But those schools never did. And the UI in 2016 began offering four programs at what eventually was named the Iowa Center for Higher Education. That programming never took off, with enrollment stalled at just 140 students.
And the UI reported operating the center at a loss of $2.6 million, which — when paired with cuts in state appropriations — compelled its closure last year.
“I thought we were giving it to a very stable school that had a large endowment and wanted the property and had the resources to use the property,” Williams said. “A lot of politics played into it from so many sides … Everyone is gone who had the original vision.”
Former UI President Mason couldn’t be reached Tuesday for comment. Williams said UI President Bruce Harreld, hired just months after his predecessor announced the AIB gift, notified her last summer of the university’s plans to sell it.
“We just didn’t think that would ever happen,” she said. “But you can’t force them to keep it.”
Although Williams is enjoying her retirement, she said it’s hard to drive by the former AIB campus and see it empty.
“It’s sad to me,” she said. “Hopefully the new people will do something good with it. It is a beautiful place.”
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