Education

Legacy to loss as University of Iowa jettisons former AIB campus in Des Moines

Former AIB president 'disappointed' donation didn't pan out

The AIB College of Business administration building in Des Moines is shown Jan. 29, 2015, shortly after the University of Iowa announced it would merge with AIB to create a second UI campus. That never materialized, and now the Des Moines property is up for sale. (The Gazette)
The AIB College of Business administration building in Des Moines is shown Jan. 29, 2015, shortly after the University of Iowa announced it would merge with AIB to create a second UI campus. That never materialized, and now the Des Moines property is up for sale. (The Gazette)
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Sitting shoulder to shoulder with University of Iowa President Sally Mason on a winter day in 2015, Nancy Williams shared with a gaggle of reporters and dignitaries a dream for her small, private college.

No longer thriving, the 94-year-old AIB College of Business — which had been in her family since its inception in 1921 — would become the University of Iowa-Des Moines campus.

“Our merger with the University of Iowa is the logical next step for our future, providing an innovative opportunity to continue AIB’s tradition,” Williams, then the college’s president, said during that Jan. 26 news conference. She had spoken with her father, Keith Fenton, who was AIB president for 42 years before her, about her decision to give away most of the 20-acre campus worth more than $30 million to the UI.

“He said I couldn’t be more proud for the legacy of AIB, to be entrusted to an educational institution of the caliber of the University of Iowa.”

But AIB never became the University of Iowa-Des Moines. Its 1,000-some students never became Hawkeyes, as was proposed. And while the UI in 2016 did begin offering four programs at what eventually was named the Iowa Center for Higher Education — available to all three of Iowa’s public universities — soon it will close.

Last month, current UI President Bruce Harreld announced the center is among seven his institution no longer will fund in light of state budget cuts. Programming will cease after this fall, and other tenants using the property must find other accommodations after Dec. 31.

The UI issued a call July 27 for real estate agents with “a proven record of selling large and unique parcels of commercial real estate in the greater Des Moines area” to help find a buyer for the 14 acres. The Polk County Assessor’s Office values the main 11-acre chunk at $20.3 million.

Most of the sale proceeds, per the gift agreement, must finance an AIB College of Business scholarship for Iowa students wanting to attend the UI. Some of the proceeds, though, have to go toward expanding higher education opportunities in the greater Des Moines and Central Iowa region.

UI officials have said the university will continue offering programming, and even expand it in some cases, at its John and Mary Pappajohn Education Center in Des Moines.

“The announcement regarding the sale has just been public for a short time,” UI spokeswoman Anne Bassett said last week. “The university has not yet been contacted by anyone expressing an interest in the property.”

MILLIONS LOST

Although expected to be an economic boon for the UI when it was donated in 2015 — in the heat of a spar with Iowa State University and the University of Northern Iowa over limited legislative resources — the Des Moines-based center actually operated at a $2.6 million loss for the UI.

With a stagnant enrollment of 140 students across the center’s four UI programs in spring 2018 — most in social work and just 28 total in the other three programs — the campus cost the university $1.6 million in the 2017 budget year, more than $455,000 in 2018 and about half a million in startup costs, advertising expenses, and other expenditures.

“Certainly the budget cuts made it difficult,” center Director Tom Rice said, noting the campus’ size and maintenance needs exacerbated the financial challenges.

But, Rice said, the campus never really got a fair shot.

“If you’re going to start a branch campus, you’re going to have to weather at last three or four or five or six years, maybe more, where your tuition revenue may not cover your costs,” he said. “It takes time to grow a program. It takes time to grow a campus.”

But the Board of Regents and its universities didn’t have time. Consecutive midyear state funding cuts and lagging annual appropriations forced the campuses to delay faculty raises, hike tuition, halt construction, postpone maintenance and end some scholarship programs.

“With the budget cuts, it was hard enough to maintain the quality of our programs back in Iowa City,” Rice said. “It became very difficult to consider, how are we going to be able to set aside enough money to grow this campus relatively quickly?”

MANDATE CHANGES

Although the spirit of the AIB gift was to benefit the UI, the donation technically went to the state of Iowa through the regents. Then-regents President Bruce Rastetter seemed on board with the notion of a UI branch at the 2015 gift announcement, stepping to a microphone in praise of AIB President Williams.

“President Williams, her grandfather, and father all shared a vision of providing access to college education,” Rastetter said then. “It will continue to be realized for students across Central Iowa with the University of Iowa being here.”

But soon, confusion about how the transition would happen, what it would mean for UI enrollment and thus funding, and what would become of the AIB community sparked an often critical backlash.

The Board of Regents consulted with then-ISU President Steven Leath in nearby Ames, he later told The Gazette.

And then everything changed. AIB would not become a UI branch. Rather, it would be available to ISU and UNI, too.

Notes from an AIB Board of Trustees meeting held in advance of the donation revealed executives considered a proposed Board of Regents funding change that would have tied state appropriations to performance metrics, including number of in-state students.

The change would have stripped nearly $13 million from the UI in its first year.

“Iowa has to get more in-state students, and we have 800 of them,” one AIB trustee said, according to the notes.

But AIB students never became Hawkeyes. Lawmakers never approved the new funding model. And ISU and UNI never used campus, leaving the UI alone to cover its overhead.

“I think it was a wise decision, given the state of the higher education budget in Iowa,” Rice said of the recent decision to close the center, just two years after launching programming there. “But it makes me somewhat sad. Because I think there is a demand for public higher education in Des Moines.”

Williams, recently reached by The Gazette, said she, too, is saddened the UI-Des Moines dream didn’t materialize.

“Of course I’m disappointed,” she said. “We had greater hopes that the university, as well as the state of Iowa, would really embrace the property and make it a robust center. But things happen that are out of people’s control.”

STILL HELPS STUDENTS

The AIB gift agreement repeatedly stressed the property would be used for higher education programming and noted the UI “has no current plan or intention of selling or otherwise transferring the gift assets for use by a third party for commercial purposes.”

A sale, according to the signed document, would occur only if the university found keeping it to be no longer feasible “for economic or other reasons.”

“I thought that little clause wouldn’t be exercised for years to come,” Williams said. “But I take the president at his word that they are not being funded properly and are having to make lots of cuts.”

About the board’s quick shift from a UI branch campus to a systemwide learning center, Williams noted the tug of war over in-state students — and the money that was to come with them — and “negativity” from ISU.

“Iowa State didn’t want them that close,” she said. “Lots didn’t go as we had hoped.”

Although not what she had envisioned, Williams said, the alternate use of the property for finance scholarships gives her consolation.

“The place will continue to support student learning,” she said. “It’s an indirect way of meeting our goal.”

The gift agreement also required the UI to honor AIB’s history by managing its student records and producing a video memorializing the school. The UI paid Hawk City Productions LLC $81,374.23 to make an hourlong AIB documentary. Hawk City is an Iowa City-based company that grew out of the UI John Pappajohn Entrepreneurial Center.

Although the center’s programming will shift to the Des Moines Pappajohn center or online, its six staff positions will go away. As for the property’s next chapter, Williams said, she’d like it to sustain an educational use and go, potentially, to another school.

Even with disappointments, Williams said, she wouldn’t undo the gift.

“I think we made the right decision at the time,” she said. “All of our conversations were to do something really great for the University of Iowa. So, no, I can’t say I would do anything differently. We will have a nice endowment to help students of the future through scholarships. All’s well that ends well.”

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

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