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Research facility loan to stay: Legislators unhappy with UND’s handling of building purchase

GRAND FORKS — North Dakota legislators learned Wednesday there is probably not much they can do about their concerns about the University of North Dakota’s controversial purchase of a struggling research facility.

North Dakota legislative staff testified Wednesday that it doesn’t appear the state can void a loan agreement between UND and Bremer Bank that was used to finance the purchase of the Research, Enterprise and Commercialization building. UND purchased REAC from the UND Research Foundation for $9.8 million last fall.

That deal has come under legislative scrutiny in recent months, and lawmakers have questioned whether the sale went through the negotiation process described in law.

During the previous Interim Government Finance Committee meeting in March, Sen. Ray Holmberg, R-Grand Forks, questioned whether language in UND’s request for loan proposals conflicts with state law and thus potentially renders the loan agreement void or voidable.

But John Bjornson of the Legislative Council said that doesn’t appear to be the case.

“The Legislature doesn’t have many tools left,” Holmberg said after the meeting. But he warned that State Board of Higher Education members involved in the sale will face questions from legislators when the Senate considers their reappointment.

Marketing REAC

Wednesday’s meeting also touched on UND’s marketing efforts to attract more tenants to the facility. The building, which provides lab and office space for private enterprises, has struggled financially because it hasn’t attracted enough tenants.

Kevan Rusk, UND’s new director of REAC, told lawmakers that he has been in contact with several potential tenants for the facility, and helped develop trade show materials and attend conferences.

Holmberg said he’s encouraged by Rusk’s hire, and pointed to his background in business. Rusk previously worked for LM Wind Power, which located research and development staff into REAC during his time there.

“So I’ve actually been a tenant of the facility before,” Rusk told legislators. “And as a tenant of REAC, I realized that the real value of the facility was not just the quality of the spaces, but resulted with the connections with the variety of university resources.”

LM had “great access” to UND’s mechanical and chemical engineering departments, Rusk added. He said the opportunities to collaborate with UND have become “the cornerstone of our marketing campaign.”

Going forward

Government Finance Committee Chairman Jeff Delzer, R-Underwood, said he was concerned that a state institution purchased a facility from a struggling foundation. He asked Legislative Council staff to research ways legislators could prevent similar situations in the future.

“I think that’s one of the things that we should be taking out of this study, is trying to find a way so this doesn’t happen to us again so that we have knowledge of it early enough,” Delzer said.

Delzer also asked Legislative Council to research what power legislators have when they believe state agencies have done something contrary to the law.

Holmberg said he’s hopeful UND can make the building successful.

“We hope that they can lease it out and make the best of the situation,” Holmberg said.

John Hageman

John Hageman covers local business and North Dakota politics. He attended the University of Minnesota in the Twin Cities, where he studied journalism and political science, and he previously worked at the Bemidji Pioneer.  

(701) 780-1244
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