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More reax on REAC

More questions are being raised about UND’s purchase of a building from the UND Research Foundation.

And this question concerns how a loan is going to be repaid.

The REAC -- or Research Enterprise and Commericalization -- building was built by the Foundation, using a Centers of Excellence Grant, federal grant monies and loans. But the building g hasn’t lived up to its promise – and UND agreed to buy it from the Foundation for $9.8 million. The University is financing the purchase through a loan from Bremer Banks. But state Sen. Ray Holmberg (R-Grand Forks) says there is a potential conflict over how that loan should be repaid. He told the Legislature’s interim Government Finance Committee state law does not allow UND to use state appropriated funds to help pay off the loan – but in the “request for proposal” that went to Bremer and other banks, state appropriations were included.

"And the basic question is, does the fact that the RFP appears to be in conflict with the law -- does that make the contract void, or voidable?" said Holmberg.

Holmberg has asked Legislative Council legal staff to look into that question.

Right now, about 55 percent of the building is leased. And because of the federal funds, UND can’t use more than 20 percent of the space.

The 2013 Legislature authorized the purchase – saying the Board of Higher Education had to negotiate the purchase price. But the Board delegated that authority to the Chancellor – which some lawmakers believe is contrary to legislative intent. And at least some are again questioning the purchase itself.

"The question is, why would UND want to purchase a building that was under performing, that they can't use for anything else, and it costs the taxpayers a lot of money," said state Re. Craig Headland (R-Montpelier). "It just appears to me like it was nothing but a simple bailout."

"When the request was put forward, the case was made as to the importance and value of the partnerships that could evolve between UND research areas and private sector partners," said UND vice-president for Finance and Operations. She says UND's goal is to have the building fully leased, and has hired a person to market the REAC building to private industry.

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