Lawmakers get update on bungled building sale

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BISMARCK, N.D. (AP) - A University of North Dakota official told lawmakers Thursday that the Grand Forks school hopes to turn a controversial and money-losing building on campus into a success.

“We’re hoping to make this work to the benefit of the university, students and the state,” Alice Brekke, UND’s vice president of finance and operations, told the Legislature’s 16-member Government Finance Committee. Brekke said the university has hired someone to market the building to try to attract tenants, but she didn’t know how much that person will be paid or what the specific duties would be.

Lawmakers have been scrutinizing the university’s $9.8 million purchase of the Research, Enterprise and Commercialization building from the UND Research Foundation. The 50,000-square-foot facility was built in 2006 at a cost of almost $19 million, and funded with federal, state, city grants and loans. It was meant to provide lab space for private companies specializing in life sciences and technology, and match those companies with faculty engaged in research.

The project failed to attract enough tenants and lost money, so the school got approval from the Legislature last year to buy the building from the foundation. But lawmakers required the state Board of Education to negotiate the sale, which never happened.

Interim Chancellor Larry Skogen, who was new on the job when he approved the deal in September, has repeatedly apologized for the foul-up.

Skogen, who attended the legislative meeting Thursday, was not questioned by the committee. Lawmakers on both sides of the aisle previously have said that the arrangement, which was tantamount to UND negotiating with itself on the purchase, was a bad deal for taxpayers.

GOP Rep. Craig Headland, a farmer Montpelier, wondered if it still is, since the facility and the project it was designed for failed previously.

“Why would UND want this?” he said.

Brekke blamed part of the facility’s woes on a downturn in the U.S. economy in 2008, which hurt companies’ interest.

The building has about 32,000 square feet of leasable space, but only about half is occupied, Brekke said.

Because the facility was partially funded with federal dollars, the school cannot use more than 20 percent of the space for staff or office use, under the terms of the federal grant.

Brekke said federal officials have indicated the restrictions could be lifted if the $1.5 million grant was repaid.

The research building was originally pitched as a facility that would allow UND to commercialize innovations created by faculty and students and create new student internships and high-paying jobs in Grand Forks.

UND President Robert Kelley said in an interview that the facility still holds promise.

“We’re working as hard as we can to get industries in there,” he said.

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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