UI seeks approval to purchase Old Capitol Mall

Upon approval from the Iowa Board of Regents, the university would purchase the downtown space for $20.6 million.

Brianna Brands, News Reporter

November 6, 2024

A Board of Regents staff member reacts to a presentation during a board meeting at the Iowa State Alumni Building in Ames on Wednesday, Sept. 18, 2024.

The University of Iowa requested approval from the Iowa Board of Regents on Wednesday to purchase the remaining 45 percent of the Old Capitol Mall.

The UI currently owns about 55 percent of the mall and is seeking to purchase the remainder for $20.6 million, funded by University Funds.

David Kieft, UI senior director of university business and real estate business services, spoke on behalf of the university at the meeting Wednesday.

“The mall, which covers nearly two city blocks in the heart of the University of Iowa campus, is nearly 375,000 square feet of space, of which the university already owns 55 percent interest, totaling 207,000 square feet,” Kieft told the regents.

The part of the mall currently owned by the UI, largely consisting of the second floor, is used for UI administrative and student services. This includes spaces such as the Office of the Vice President for Research and Information Technology Services, the Office of Student Financial Aid, International Programs, and Student Disability Services. The entire basement is home to UI Campus Safety.

The existing 55 percent was purchased in three phases between 2006 and 2009, Kieft said. During the 2008 flood, it helped house the School of Music and Iowa Memorial Union operations.

The UI has an option agreement to purchase the remainder of the mall, which was presented to the board in January 2022 as part of the 10-year UI Facilities Master Plan. According to the proposal document presented to the board, the agreement required the university to inform the current mall owners of their decision to purchase the remainder of the mall by Oct. 1, 2024, and close on the transaction no later than Oct. 1, 2025.

Upon approval, the purchase price of $20.6 million will be paid with a 10 percent payment immediately, the remaining 90 percent being paid off over three years and the final closing occurring on Oct. 1, 2027.

The initial down payment will be funded by university reserve funds, and the remaining 90 percent will be funded by a commercial loan taken out by the university.

“All existing commercial leases would be assigned to the university at the time of transfer of ownership on Oct. 1, 2027, and all rents received would be prorated to the date of the sale,” the proposal states. “The university would be required to approve any new commercial leases or change in terms of existing leases in the mall if the lease extends beyond Oct. 1, 2027.”

Kieft said the university plans to maintain the building’s importance to the community and campus.

“The question might be asked, ‘Why do this transaction?’” Kieft said. “We don’t immediately need the space. This is less about either the short or long-term need for the first-floor commercial space in the building, but more about the university acquirement, control, and significant footprint in the heart of our campus.”

The university has developed a close relationship with the current management team over the last 18 years, Kieft said, and their joint interests have benefited business owners, university students, staff and faculty, and the Iowa City downtown district.

“It’s imperative that this building and this center remain an important part of the community and university,” Kieft said. “The university has no plans to make any immediate changes to the mall when we take ownership.”

In a recent Q&A with The Daily Iowan, UI President Barbara Wilson said all businesses will remain in the mall once purchased.

Regent David Barker congratulated the UI on the project, viewing it as a great idea and emphasizing the importance of the mall for students during the flood renovations at the Iowa Memorial Union.

“We’ve had such patience waiting for it, but [the] long-term vision of what to do is working well with the ownership group,” he said. “As [Kieft] said, I think this is a great thing to do.”

Rod Lehnertz, UI senior vice president for finance operations, also spoke, informing the board the university plans to maintain commercial leases and continue paying real estate taxes. He also highlighted the university’s positive relationship with the city.

“We have a very productive and positive relationship with the board of the downtown district for Iowa City,” he said. “Our relationship with the city has been very positive and partner-based.”