Two Central Iowa residents with experience in real estate redevelopment and finance are buying the former AIB College of Business campus overlooking downtown and plan to rehabilitate former student housing for apartments and resell the remainder of the property for office, commercial and residential uses, the Business Record has learned.

The proposal, submitted by Tina Smothers of Stuart and Jason Grove of Adel, to buy the 14.5-acre parcel at 2500 Fleur Drive for $7.5 million was approved by the Iowa Board of Regents on June 5. The two were working through the final details of financing for the project at press time. The site, zoned for multifamily and light industrial, includes seven buildings and an undeveloped 3-acre parcel.

Smothers and Grove were among five finalists to whom the University of Iowa considered selling the property. UI acquired the property in 2016 as a gift from AIB.

Operating as the Village at Grays Lake LLC, Smothers and Grove plan to retain Fenton Hall East and West, and Wells Hall. The remainder of the property has been subdivided and will be resold.  

The venture is the largest multiuse project Smothers and Grove have done together. 

“It’s been very scary but at the same time very exciting because we knew that great things would happen,” said Smothers, 39. “Everything seemed to just fall in place.”

UI decides to sell campus

More than four years ago, AIB and University of Iowa officials announced that the Des Moines business school would be gifted to the Iowa City university.

The plan originally was to make the former AIB campus into a regional regents’ center that UI would manage. That never materialized. 

Instead, UI officials expanded the university’s Central Iowa educational offerings at the former AIB campus, which was renamed the Iowa Center for Higher Education.

Less than two years into operating the higher education center, UI President Bruce Herrald announced that the center would close and the property would be sold because it was too costly to operate.

Former AIB president Nancy Williams said she was surprised by UI’s move.

“This really was a gift to the state of Iowa and we wanted to see [the property] used to serve students,” said Williams, whose grandfather started AIB.

Proceeds from the sale of the property will be used by UI for student financial aid and to support its Des Moines-area academic programs, according to information provided by the regents. 

Sale price less than assessed value

According to the Polk County assessor, the land and buildings, which have been tax-exempt, are valued at $21.6 million, nearly three times the sale price.

State Auditor Rob Sand, in a special report, said the sale price was fair and the property’s assessed value too high.

“Real estate is only worth what somebody is willing to pay for it,” said Smothers, a 2000 AIB graduate. “From what I understand, all of the offers that were submitted [to UI] were within the same price range. …

“The market is going to determine the value. If people weren’t willing to pay $20 million for [the property] then maybe that’s not the true value.”
Still, Smothers said, the property will soon be generating property tax revenue, something it hasn’t done for several decades.

Updating former student housing

Smothers’ background is in rehabilitating and managing multifamily properties. Grove, 42, has a background in finance and buying and selling properties.

Smothers and Grove said they plan to renovate what was known as Fenton Hall East and West, located along the south side of Bell Avenue, and lease the more than 90 one- and two-bedroom units. Updates include new cupboards, countertops, flooring and appliances including washer and dryers. Grove estimated up to $10,000 in improvements will be made to each unit.

Leasing could begin in late summer, Smothers said. The apartments will be named the Village at Gray’s Lake, Smothers said.

“We thought ‘the Village’ was really appropriate because it took a village to build everything that [the Fenton family] had here,” she said. “We wanted to honor that and also honor ourselves because it’s taken a village to get where we are today.

“You can never do it by yourself.”

The two also plan on leasing Wells Hall, located in the middle of the campus. A variety of lease options exist for the building, which housed classrooms, Smothers said. It could be used by a day care provider, a nonprofit organization or small businesses, she said.

Selling the remainder of the parcels

Smothers and Grove have listed the remainder of the property with a broker and said a couple of the buildings have already been shown to prospective buyers.

The 25,000-square-foot sports arena, built in 1999, has sparked interest from area sports clubs as well as someone considering using the space as a bar with a recreational theme, Grove said. 

The former AIB administration building, which sits on a hill with views of Gray’s Lake and downtown, has also generated showings, Grove said. He said the 35,000-square-foot white building with a 1950s-themed eating area with a working kitchen could be converted into condominiums or a small hotel targeting business executives.

“A hotel could be a nice option because the building is between the central business district and the airport,” he said. The building could also be used for office space, he said.

Smothers and Grove are also selling two other buildings that could be used for office space and the undeveloped 3 acres with access to Fleur Drive. The site could support a mix of uses such as retail, commercial and multifamily, they said.

Williams, the former AIB president, said she’s sad the property will no longer be used for educational purposes. Still, she said, she hopes Smothers and Grove are successful in their venture.

“I wish them well,” Williams said. “Having some life brought into the buildings will be good.”