Emails show REAC discussion between UND, Bremer BankGRAND FORKS -- Documents obtained by the Herald this week detail communications between UND and Bremer Bank in the months leading up to the university’s purchase of a struggling research facility.
By: John Hageman, Forum News Service, Grand Forks Herald, Forum News Service
GRAND FORKS -- Documents obtained by the Herald this week detail communications between UND and Bremer Bank in the months leading up to the university’s purchase of a struggling research facility.
The emails, which were originally requested by the North Dakota Legislative Council on behalf of an unnamed legislator and obtained Thursday by the Herald through an open records request, date back to late January 2013. UND bought the Research, Enterprise and Commercialization building from the UND Research Foundation nine months later for $9.8 million using a Bremer Bank loan.
The emails show Bremer officials had an interest in the legislative process that would allow the sale of REAC, which was originally built with the help of a Bremer loan. The UND Research Foundation, the former owner of the building, still owed the bank millions of dollars before the sale occurred.
While the September 2013 sale had been approved beforehand by North Dakota legislators, an interim legislative committee has scrutinized the deal in recent months, arguing that it may have not gone through the proper process.
Sen. Ray Holmberg, R-Grand Forks, has said that legislators were wary of UND negotiating the building’s sale with the Research Foundation, which is led by UND officials. The bill that passed the Legislature in May allowed the State Board of Higher Education to negotiate the deal, he has said.
The Interim Government Finance Committee will meet again to discuss the REAC sale on April 23.
On Jan. 28 of last year, Bremer Bank Vice President of Business Banking Angie Baumann emailed two UND vice presidents about potential legislative action on the REAC building. Bremer Bank had provided a loan to the Research Foundation to originally construct the REAC building, which opened in 2009.
The Research Foundation had $9.6 million in long-term liabilities at the end of 2012, $8.5 million of which was owed to Bremer, according to previous legislative testimony.
REAC offers lab and office space for private enterprises to rent, but the building has struggled to attract tenants. UND officials have said they are working to market the building more effectively and make it successful.
“I just thought I’d check in with you on the status of any legislative activity that may impact UND’s actions within regards to REAC,” Baumann wrote on Jan. 28. “Or perhaps it’s too early yet in the session. Your update will be helpful to keep our file current.”
UND Vice President for Finance and Operations Alice Brekke wrote back that the SBHE had approved UND’s request to seek legislative approval to buy REAC. Baumann asked for another update in April, and Phyllis Johnson, UND Vice President for Research and Economic Development, wrote that the bill allowing for REAC’s purchase was making its way through the Legislature.
Johnson and Michael Moore, UND’s associate vice president for intellectual property commercialization and economic development, met with Bremer Bank officials in June after the bill allowing REAC’s sale passed the Legislature, according to the emails.
UND spokesman Peter Johnson said the meeting was held to provide a status update on the Legislature’s actions.
Other emails between UND and Bremer officials in July show discussion of a purchase agreement between UND and the Research Foundation. Johnson said as the bank that was owed money for the original construction of REAC, Bremer was interested in making sure that the loan would eventually be paid.
“It really had nothing to do directly with Bremer except for the fact that because there was already a loan on the building from the foundation, (and) they were curious to see how that was going to be resolved,” Johnson said.
The Research Foundation no longer has any debt, UND officials have said. The Research Foundation is in the process of dissolving.
In early July, UND sent out requests for loan proposals to 14 banking institutions, according to previous legislative testimony, and four banks submitted proposals. Bremer was ultimately chosen to provide the loan to buy REAC from the Research Foundation.
Other documents included in the information request include the loan agreement between UND and Bremer. It shows that UND will pay almost $60,000 a month, with a balloon payment of $7.4 million in 2023.
In previous testimony, NDUS chief of staff Murray Sagsveen said the loan proposals were reviewed internally, “which involved Assistant Vice President of Finance Peggy Lucke and (Brekke).”
“They then sent all information to Jon Arntson, UND’s bond counsel, who conducted an independent review,” he added. “The group concluded that Bremer was the right choice.”
Peter Johnson said the new loan with Bremer is not connected to the former Research Foundation loan.
“It’s just that Bremer had the best proposal,” he said.