Legislator: Chancellor Skogen "Overlooks And Ignores Facts" In REAC Building Sale

Last week Senator Ray Holmberg, R-Grand Forks, asked the interim Government Finance Committee, chaired by Rep. Jeff Delzer, R-Underwood, to investigate the sale of the REAC building from the UND Research Foundation to the University of North Dakota (here’s a summary of the issues being investigated). Senator Holmberg and other legislators I’ve spoken to feel the sale was a “bailout” of the UND Research Foundation, which is improperly under the control of UND officials, by selling the REAC building and its debt to UND, thus putting the burden on the backs of taxpayers.

Recently Chancellor Larry Skogen told Prairie Public Radio that everything about the sale was kosher:

UND and University System representatives say the welcome the study – and they say the sale was handled properly. University System interim Chancellor Larry Skogen says the 2013 Legislature authorized UND to buy the REAC building outright.

“The state Board of Higher Education had, in January 2013, delegated the authority to the Chancellor to approve the process and any agreement UND came up with,” said Skogen. “We have dotted all the “Is” and crossed all the “Ts” on that.”

A UND representative says the University paid market value for the REAC building.

In an email sent to members of the Government Finance Committee, Senator Holmberg disagrees with Skogen’s characterization of the sale in some fairly blunt terms. You can read the email below.

The issue at hand isn’t just whether or not the price of the REAC building was inflated when it was sold to the taxpayers. It’s a question of whether or not a non-profit controlled by UND President Robert Kelly and other UND officials dumped a struggling building onto the taxpayers in order to clear the foundation’s books.

Keep in mind, the original building was paid for by state tax dollars made through the Centers of Excellence program. Now that the building has been sold to UND, the taxpayers are essentially paying for it twice.

This is yet another scandal for the North Dakota University System which has been plagued with them for years now. Later this year North Dakota voters will be casting ballots on a constitutional measure to abolish the State Board of Higher Education and replace it with a new governing board that has more oversight from the state legislature.

It seems, through their actions if not their words, the powers-that-be in the university system are making a case for the reform.

From: “Holmberg, Ray E.”
Date: January 27, 2014, 1:53:47 PM EST
To: “Delzer, Jeff W.” , “Oversen, Kylie” , “Cook, Dwight C.” , “Wardner, Rich P.” , “Lee, Gary A.” , “Schaible, Donald G.” , “Sorvaag, Ronald G.” , “Wanzek, Terry M.” , “Bellew, Larry D.” , “Grande, Bette B.” , “Boschee, Joshua A.” , “Headland, Craig A.” , “Holman, Richard G.” , “Vigesaa, Donald W.” , “Williams, Clark D.” , “Meier, Lisa M.”
Subject: REAC

I was asked to respond to a radio interview.

The chancellor was on Prairie Public Radio this morning and said, in part:

“The state Board of Higher Education had, in January 2013, delegated the authority to the Chancellor to approve the process and any agreement UND came up with,” said Skogen. “We have dotted all the “Is” and crossed all the “Ts” on that.”

Unfortunately, The chancellor overlooks and ignores the facts.

Although UND did seek permission to handle the negotiations in January, the legislature specifically rejected that request. The legislature did not authorize UND or the chancellor to come up with any agreement. What the legislature did do was direct the Board of higher education to negotiate the purchase and financing of the building from the UND research foundation.

To compound the problem the chancellor has stated that an authorizing email he sent in June to UND is all that was needed to complete the purchase. Unfortunately, that is contrary to the law. In effect, the chancellor approved a negotiated agreement prior to the negotiations, which occurred in July and August. It was a blank check authorization, absolutely contrary to good stewardship of public funds.

The interim committee is interested in the role members of the BOHE had in this purchase and assumption of public debt as they were given the responsibility to do so. Additionally was the law followed, specific timelines and most importantly, were the interests of taxpayers adequately protected.

SECTION 23. UNIVERSITY OF NORTH DAKOTA – RESEARCH ENTERPRISE AND COMMERCIALIZATION BUILDING PURCHASE – BUDGET SECTION REPORT.
During the period beginning with the effective date of this Act and ending June 30, 2015, the state board of higher education may enter a purchase and financing agreement or agreements with a private entity and do all things necessary and proper to authorize the purchase of the research enterprise and commercialization building on the campus of the university of North Dakota using donations, gifts, or other funds. The state board of higher education shall provide a report to the budget section if the research enterprise and commercialization building is purchased as provided under this section.