North Dakota State University did not break the law with its lease agreement for Richard H. Barry Hall, the state attorney general said Monday.
Wayne Stenehjem said in his ruling that NDSU and the state Board of Higher Education have the authority to enter into leases, and the session law approved by the 2007 Legislature did not contain any requirements.
In addition, NDSU is not using taxpayer dollars to make the lease payments to the NDSU Development Foundation, Stenehjem wrote.
The state auditor's office requested the attorney general's opinion this spring while doing a performance audit of several university building projects.
Barry Hall is the former Pioneer Mutual Life building in downtown Fargo that houses NDSU's College of Business and other entities.
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The $23.5 million project was funded with more than
$12 million in donations, $968,000 from NDSU's general fund, and nearly $10.5 million that NDSU will pay the foundation through a long-term lease, according to numbers provided to the state board.
The lease payments come from NDSU's "local funds," which are not taxpayer dollars or tuition revenue. Local funds come from indirect cost recoveries, interest income, soft drink commissions, parking revenues and other auxiliary funds.
State audit manager Gordy Smith said local funds are still public money and auditors questioned whether NDSU violated legislative intent by using public dollars.
"From our perspective, we felt the Legislature's intent was fairly clear: To use private monies or donations to remodel Barry Hall," Smith said Monday.
In the opinion, Stenehjem writes that the board has the authority to spend the funds that are under its control.
However, he also wrote that NDSU and the board could have kept the Legislature better informed about the plans for Barry Hall.
NDSU officials are pleased with the opinion, said Rick Johnson, NDSU's general counsel.
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"It's a very positive opinion for NDSU and the board," Johnson said. "But we also recognize that we're committed to keeping the board and Legislature informed."
Readers can reach Forum reporter Amy Dalrymple at (701) 241-5590
