- Associated Press - Friday, February 28, 2014

FARGO, N.D. (AP) - Grand Forks lawmakers on both sides of the aisle said Friday they are unhappy with the way the sale of a University of North Dakota building was handled and an apology from the interim chancellor of the university system doesn’t fix the situation.

The building designed to provide lab space for private companies was a failed project between university and the UND Research Foundation. The school got approval from the Legislature to buy the building from the foundation, but the bill required the state Board of Education to negotiate the sale. That never happened.

Interim Chancellor Larry Skogen, who was just a few days on the job in September and unaware of the provision, approved the $9.8 million purchase agreement. The issue has already been reviewed by one legislative committee and will be examined again by the Interim Government Finance Committee at its March 13 meeting.

Skogen apologized during Thursday’s board meeting and took responsibility for the snafu. Republican Sen. Ray Holmberg and Democratic Sen. Mac Schneider, both of Grand Forks, told The Associated Press Friday that they appreciated the gesture but said it’s not enough.

“You apologized for the scratch on the table when you were a kid. Your mother accepted the apology, but the problem is there’s still a scratch on the table,” Holmberg said. “And this is a $9.8 million scratch.”

Said Schneider, “We need to work together as a Legislature and a board to ensure incidents like this don’t threaten college affordability.”

Lawmakers passed a provision in the 2013 university system funding bill regarding the sale of the building primarily because UND had a seat on the research foundation, which has since disbanded. It stated that the board “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 building “using donations, gifts, or other funds.”

Holmberg acknowledged Skogen should not have been expected to know the background on the issue, but “there were people in his office who did.” Holmberg said the chancellor signed off on a bad deal that was the result of UND negotiating with itself.

“The bank got 110 cents on a dollar, plus a very hefty loan they made at a very hefty interest rate,” Holmberg said.

Said Schneider, “I think there should have been more of an arm’s length transaction to ensure that the costs didn’t fall on people like my constituents who are funding UND through their tuition dollars, as well as taxpayers who play an important funding role.”

Board member Grant Shaft, of Grand Forks, wondered at Thursday’s board meeting if the mistake would hurt future projects and whether it was possible to find out possible remedies before the March 13 meeting. The senators aren’t sure what those would be, especially for a transaction that has been completed.

“Lawyers know more about what is doable and what isn’t doable,” Holmberg said.

Shaft, himself a lawyer, had no suggestions Friday.

“My comments were meant to urge a proactive approach so that if a remedy is sought by the committee, whatever that may be, we can try to address it sooner rather than later,” he said.

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