Iowa State Auditor Rob Sand is reviewing the bidding process and the bids related to the University of Iowa’s pending sale of the former AIB College of Business campus in Des Moines.
The Board of Regents next week will consider approving the UI’s sale of nearly 14 acres that previously housed AIB to a nearby apartment complex — the Village at Grays Lake LLC — for $7.5 million, a fraction of its value when donated to the UI in 2015.
At the time of the gift — originally intended for a UI satellite campus in Des Moines — the full 20-acre campus was valued at more than $30 million.
After original plans fell through and a re-envisioned “Iowa Center for Higher Education” struggled to build enrollment — losing millions — administrators in 2018 announced plans to close the campus and sell a pared down 14-acre chunk of the gifted property.
At that time, the Polk County Assessor’s Office valued the main 11-acre chunk at $20.3 million.
UI hired CBRE-Hubbell Commercial as its real estate agent for the sale, listed “through an extensive advertising and marketing campaign” — although online advertising reported the property as “unpriced.”
To whittle down its top three bidders for the property, the UI issued a “best and final” notice for proposals — due April 19. It chose the Village at Grays Lake, reporting the buyer “submitted the best and highest value offer, including a purchase price of $7.5 million.”
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The UI has signed a purchase agreement with the Village at Grays Lake, although it declined to provide that document to The Gazette until the sale is final. Its contract with CBRE pays the realtor 5 percent of the final sale, amounting to $375,000 for a $7.5 million deal.
Auditor Sand said he’s reviewing the bidding process and bids related to the AIB sale “due to questions raised about the discrepancy between the property’s assessed value and sale price.”
“While it will not be a complete audit or investigation, Iowans can trust that the sale and process are being reviewed by an independent party,” Sand said in a statement to The Gazette.
In response to questions about the auditor review Friday afternoon, UI spokeswoman Anne Bassett said the university appreciates the auditor’s work and “looks forward to the review.”
“Based on the offers received and additional research, the university is confident the $7.5 million price is indicative of the fair market value for the unique Des Moines property,” she said.
In addition to any value depreciation the university incurs upon sale of the property, administrators reported operating the campus at a $2.6 million loss since accepting the gift — a decision administrators made in 2015 amid a scramble for more in-state students and a resulting bump in state appropriations.
Instead of bringing in more money for the UI, however, 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 start-up costs, advertising expenses and other expenditures.
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