03044 REAC bldg 2-28-14 ddt
University System interim Chancellor Larry Skogen says he and the Board of Higher Education should have handled the purchase of a building at UND from a private foundation differently.
The building in question is called the “REAC I” building. It was built using Centers of Excellence money and a bank loan taken out by the UND Research Foundation. The plan was to have space leased to commercial clients – and to UND – and that would pay off the loans. However, only about half the space was leased – and the financial plan didn’t work out.
UND sought legislative approval to buy the building outright. And the Board of Higher Education – in January, 2013 – authorized then- Chancellor Ham Shirvani to negotiate the purchase. However, the Legislature added language to the higher education funding bill, saying the negotiations were solely in the Board’s court.
Skogen told the higher ed board he didn’t learn of the legislative language until last October – two weeks after negotiations were completed, and UND bought the building for $ 9.8 million.
“I have come to the conclusion that we should have handled the purchase of the REAC I building differently, and I take responsibility for that," Skogen told the board. "I apologize for any confusion or ill will this has caused the board, the Legislature, UND or the University System. The last thing I wanted to do is create any more controversy for the University System. I'm very sorry that I did.”
The chairman of the Legislative Council says Skogen’s apology is a good first step. But State Sen. Ray Holmberg (R-Grand Forks) says questions remain.
“It's ver much like, if you scratched your mother's new dining room table, you apologize," said Holmberg. "She accepts it. But the table still has a huge scratch in it. And this scratch is $9.8 million in taxpayers’ money.”
Holmberg assigned the study to the interim Government Finance Committee. And he says that committee will continue to study what happened – and how to prevent it from happening in the future.
