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Clause causes strife

North Dakota State University wants to limit its responsibility for damage that may occur in its new football locker rooms and offices at the Fargodome.

North Dakota State University wants to limit its responsibility for damage that may occur in its new football locker rooms and offices at the Fargodome.

But dome officials want to make sure the facility would be covered if the damage wasn't their fault.

The liability issue delayed approval of the contract between the school's Development Foundation and the Fargo Dome Authority on Wednesday.

It's the final sticking point in lease negotiations between the two entities. The Fargo Dome Authority and its committees have been debating the locker room issue since the fall of 2003.

The Finance Committee was supposed to approve the lease agreement Wednesday so it could go before the Dome Authority next week.


The Fargo City Commission needs to give final approval because the dome is a public building.

After a three-hour meeting Monday, a Fargodome finance subcommittee thought it had all the details of the proposed contract worked out.

But NDSU later disagreed to the indemnity clause, which would hold the university liable for claims or damages related to its use of the leased space in the dome.

The clause threw a wrench in the approval process, said Dale Beling, chair of the Finance Committee.

Rick Johnson, NDSU's general counsel, says the indemnity provision is too broad and could potentially bankrupt the university's Development Foundation, the lessee.

Under the suggested contract wording, NDSU could be liable for up to $100 million if the dome was ever destroyed, even if the university was not negligent, Johnson said.

NDSU officials want to limit liability to their insurance coverage, or $2 million.

But the dome needs to be sure it won't have to rely on tax dollars to rebuild the facility in an extreme scenario, said John Cosgriff, a committee member and Fargo city commissioner.


"It's a significant detail that has to be worked out," Cosgriff said. "It's not likely to ever be invoked."

But NDSU and the Fargodome have faced off before over indemnity issues.

The city was found liable when floodwaters traveled from the Fargodome through steam tunnels and damaged NDSU in June 2000.

Earlier this year, a judge decided the city must pay NDSU $3 million over the matter.

That responsibility stretched back to a ground lease between the city and NDSU, entered into before the dome was built, said city attorney Garylle Stewart.

Stewart said NDSU's level of responsibility in the locker room lease can be negotiated, but the city must determine a high enough cap.

This will be done through a risk analysis.

Johnson said NDSU also will propose new language for the clause. Both parties will look into insurance options.


Assuming the contract is approved, NDSU will begin a $2.2 million construction project for new locker rooms and offices.

The university hopes to be in both spaces permanently by next fall. NDSU has a temporary agreement with the dome for use of locker rooms this football season.

Beginning Aug. 1, NDSU will pay $57,500 in annual rent for its leased space.

In other business Wednesday, the Finance Committee reviewed the city's most recent sales tax collections for the Fargodome.

Total collections so far this year are down 1.2 percent, compared to collections last year at this time. That's better than last month, when the city's sales tax collections were down nearly 5 percent from the previous year.

The September mid-month report shows collections of $874,796, an increase of $179,631 from last year during this same time.

Readers can reach Forum reporter Sherri Richards at (701) 241-5525

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