I think that people need to have a holistic view of the whole thing. First off, tailgating is the golden goose for ISU. It's what keeps people coming to games win or lose. So what do you do to make tailgating more of an event than it already is? You add amenities. RVs getting power hookups and the ped bridge are a start. Then you give people without prime spots a reason to come. A restaurant and bar district would do that. A hotel with parking garage makes it easier for people to show up and stay.
Second, when you look at Ames, it's a mess as far as commercial. No one goes to Campustown because you can't park there and it's so student focused. Main St is kind of a jumbled area. Duff is a bunch of chain restaurants with horrible traffic. Somerset is out of the way. I think if you have a couple of decent restaurants and bars with easy access and parking, it will do OK all year round, not just during ISU events. Something like Toppling Goliath would be a huge win.
Third, with the AD taking over Scheman, CY and Fisher, you have more events that will draw people in. Having a hotel and some bars and restaurants increases the likelihood of getting concerts and conferences. And conferences are huge money makers. At a time when TV revenue for the AD is up in the air at the very least, another revenue stream is huge.
Finally, I'm just not too concerned about the floodplain. The biggest flood we've ever seen never even got into JTS. It flooded Hilton because Hilton is at a lower elevation. If you build anything in those lots up a few feet, there's just not much of a chance that water will ever get to it with the mitigation work that's been done downstream.