The University of Iowa has agreed to sell property it received from the former AIB College of Business in Des Moines to a nearby apartment complex for a fraction of its value when donated in 2015.
The Board of Regents at its meeting next week will consider approving the UI sale of nearly 14 acres that previously housed AIB to The Village at Grays Lake LLC for $7.5 million.
When AIB executives in early 2015 announced intentions to give their campus to UI — initially hoping it would become a satellite University of Iowa — the full 20-acre campus was valued at more than $30 million. In fall 2018, when the UI began pursuing a plan to sell a pared down 14-acre piece of the AIB gift, the Polk County Assessor’s Office valued the main 11-acre chunk at $20.3 million.
Because the transaction is not final, the university on Tuesday declined to provide The Gazette with a copy of the signed purchase agreement with The Village at Grays Lake, an apartment complex that sits just a half mile from the former AIB campus.
Management with The Village did not return a call from The Gazette, and UI officials said they don’t know how the buyer plans to use the property.
Under terms of the original AIB gift agreement, proceeds from any sale of the land must go toward scholarships for central Iowa students wanting to attend the UI. UI spokeswoman Anne Bassett told The Gazette details are being worked out, and the university doesn’t have more information to share at this time.
But the $7.5 million sale is a far cry from intentions aired in January 2015 — when the three Board of Regents universities were locked in a heated battle for more in-state students and the extra money those students would avail as part of a proposed new performance-based funding formula.
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At that time, AIB President Nancy Williams shared truths about her family’s no-longer-thriving 94-year-old AIB College and hopes it could continue its higher education legacy as a UI-Des Moines campus. The idea, at the time, was that AIB students would become UI students within relatively short order.
But those plans quickly derailed, with the Board of Regents stepping in to rebrand the campus as a regional resource center available for use to Iowa State University and University of Northern Iowa as well. Neither UNI nor ISU ever used the former AIB campus, although UI did — in 2016 launching four programs on site aimed at better serving those in Des Moines interested in a UI degree.
But the center operated at a $2.6 million loss for the UI — costing $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.
So in July 2018, UI President Bruce Harreld, while searching for places to cut amid declining state support, announced plans to close the Des Moines location — as one of seven centers to lose UI funding. Programming was discontinued after the fall semester, and tenants using the site for other reasons were told to vacate after Dec. 31.
The university in October 2018 hired CBRE-Hubbell Commercial to help sell the site, offering a commission worth 5 percent of the final sale price — $375,000 for a $7.5 million sale.
The property was listed “through an extensive advertising and marketing campaign,” and numerous prospective buyers toured the campus and facilities last winter and this spring, according to a Board of Regents timeline of the sale.
In mid-March, the UI issued a “call for offers” from prospective buyers, with an April 5 deadline. Five firms replied, with the top three firms all “close” in terms of price, contingencies, earnest money and other factors, according to Board of Regents documents.
Those top three firms were asked to submit a “best and final” offer — with the understanding they were in the final running to buy the property. The Village at Grays Lake offered the “highest value,” which included a price of $7.5 million.
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“Based on the five proposals received and additional research, the university is confident the $7.5 million price is indicative of the fair market value for this unique Des Moines property,” according to Board of Regents documents.
Along with the price, The Village at Grays Lake must address several contingencies during a 45-day “due diligence period,” including inspections of the facilities and land, along with final arrangements with their lender.
Should the Board of Regents approve moving forward with the sale at its meeting next week, the university expects to close this summer.
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