Show us the money 

UM development about dollars–but how many?

Critics of a controversial plan to turn the University of Montana’s South Campus golf course into a university-linked private retirement community teed off at plan officials last week.

Fans of the university golf course, from golfers to hang gliders to green-space enthusiasts, were vocal in their opposition to the plan, which would eventually wipe out the nine-hole course and a hang-glider landing strip.

While most of the opposition came from groups with special interests in the course, the debate grew most heated over the idea that the university wants to lease public land for a private residential development.

On the other side of the debate, university officials say rising education costs and cutbacks in state funding have forced universities to look for new ways of monetizing assets, such as the South Campus land, in order to maintain their public missions.

The discussion has everyone close to the issue asking the same question: Is a 588-unit retirement community the wisest use of the school’s most valuable land asset?

Bob Duringer, UM’s vice president for Finance and Administration, thinks it is.

In a conversation with the Independent last Friday, Duringer discussed his “brainchild.” (Duringer played a key role in an attempt to bring a similar development to the University of Maine in Orono before coming to UM in 2000. That university eventually decided against the project, opting to link with a private off-campus retirement development instead.) Duringer maintains that the proposed UM development is an important part of a long-range plan to ensure the school’s future economic viability in a climate of declining public funding of higher education.

“[UM’s] general fund had gone from about three-quarters state support a decade ago to about a third today,” Duringer said.

According to Duringer, UM is not facing any kind of immediate financial crises or budget shortfall, but university officials are trying to keep ahead of a trend toward privatization. As a result, the university is exploring a variety of means through which it can rely more heavily on the private sector in order to maintain its public mission. “This is about No. 15 in a long list,” says Duringer of the proposed retirement community. “This is just the biggest and most visible.”

Critics of the project, including ASUM President Gale Price, are frustrated over the process and what some perceive to be secrecy on behalf of the developers and university.

Project officials insist that the development is still in the planning and public input stages, and that the process is being carried out in the open, but Price says the university should have estimates by now as to how much money the school can expect to bring in from the project.

“We’ve repeatedly asked how much money we are talking about. It may be that the amount is great and would really help students, but without knowing, we can’t make informed decisions,” Price said Friday.

How much money per year would the project have to earn for the university in order for it to be worth it?

“That has to be a community discussion,” Price says.

Price introduced a resolution to the ASUM senate requesting that the development be held off until a master plan that includes student and community input can be devised. The measure was scheduled for a vote at Wednesday night’s meeting, after press time.

UM’s current master plan, published in 2002 and extending into 2012, doesn’t outline plans for the South Campus golf course.

Neither Duringer nor the Park City, Utah-based developer brought in to partner on the project, UM alum and former Grizzly football player Walt Brett, would say how much money the University could expect to glean from the project. However, Duringer said Friday that market research on several models of the development suggests the University could see anywhere from $750,000 to $2 million per year, depending on the final design.

Brett also declined to talk about specifics, but seems confident that the project would be a boon for the school.

“Rest assured we know what the golf course brings in each year for the university right now. This development will bring in so much more than that,” he says.

(Duringer says that in a good year the course earns about $80,000 for the University.)

Moneys generated by the proposed development would be distributed across a broad list of categories including student grants and aids, backlog maintenance and repairs and faculty employment, according to Duringer.

“This year is the first year we have not been able to put together a financial aid package so that all of a student’s financial needs were met,” Duringer explains.

He says there’s a $1,600 shortfall this year not covered by loans or other financial aid.

If the retirement development earns $1 million in a year for the University, about 650 students could get a complete financial aid package. However Duringer is quick to point out that the money would not go toward tuition solely, but would be used in a variety of capacities.

“If we give a person a fish, we feed him for a day. But if we build him a fish farm, he can eat forever,” Duringer says.

In a report published in February 2000, Harold Hovey of State Policy Research Inc. projected that in order to maintain current services, state spending for higher education would have to increase faster than state spending in other areas.

That hasn’t exactly happened in Montana.

According to the 2004 State Report Card on Higher Education published by the National Center for Public Policy and Higher Education, higher education amounts to only 10 percent of state appropriations in Montana. That’s down from 11 percent in 1990. Meanwhile, state spending for K-12 education, corrections and Medicaid has climbed.

“Our overall budget is down to 12-percent support from the state,” Duringer says. “The rest comes from tuition, fees, research, housing fees, food service fees, etc.”

Duringer says the state legislature told universities more than a decade ago to “become more business-like.”

“Well, be careful what you wish for,” Duringer says, noting that the University is not the same public institution it was decades ago ago. “We’re not your mother’s Oldsmobile.”

That may be, but some critics of the plan think it’s wrong for UM to lease public land for a private development.

“This land is public property that is supposed to be used for education,” says Jeri Fisher, of Jeri Fisher Real Estate in Missoula. Fisher is an outspoken opponent of the development both as a real estate broker and a concerned citizen.

“I think for [UM] to tie up the limited amount of land they have there in a private development is egocentric and short-sighted,” he says. “I think 20 years from now they’ll look back and wish they hadn’t done it.”

Fisher voiced those concerns at last week’s meetings, along with her concern that the university will take a “Goliath” role in the local real estate market if the project takes off.

“They are developing with no cost on the land in a town where land is very expensive,” Fisher says.

Duringer argues there is neither conflict nor an issue of fairness when it comes to the local real estate market.

“The land is ours. All of the construction will be done by local contractors. The guys putting up the money are putting up their own money. We plan to outsource the sales of some of these units to local real estate agents. So who are we hurting?”

According to university officials and the developer, there is no financial risk to the university, either. The details of the contract are still being negotiated, but according to Duringer, the university will be protected if the developers should for some reason fall through on their end of the contract.

“There is no financial risk,” Duringer says. “There might be an aggravation risk, but we will write into the contract that if [the developer] bails we take claim over everything that is there. Then we find a new developer and move forward.”

Duringer was quick to clarify that he’s not worried about anyone bailing on the project.

“Those are two honorable guys who do good business,” he says, refering to Brett and business partner Ed Rogerson.

On Friday, Duringer told the Independent that the way the partnership is being worked out, the university and the developer would form a joint limited liability corporation (LLC). All money from the sales and rentals of the living units, as well as lease fees, maintenance fees, homeowners’ association fees, etc. would funnel into the newly formed LLC. Duringer originally suggested an even split between the university and the developer but has since backed off. Duringer said Monday he wants to wait and see what the Board of Regents decides before speculating about the details of the LLC partnership.

Brett added that since there will be a sunset clause in the contract pertaining to the developer’s role in the LLC, at some point the entire development will become university property.

“I’m not in this forever, there’s a sunset clause, but the university will keep earning forever,” Brett says.

Duringer described Brett’s involvement in the project as “philanthropic,” considering the proposed arrangement of the partnership: The university puts up the land and no cash, and Brett spends all the money to design and develop the project. Brett agreed that he has philanthropy in mind but said he didn’t want his position to be mischaracterized.

“We would make a profit, there’s no question about that,” he says. “But so would the university.”

Duringer said he should have firm financial projections in the next two weeks. University officials and developers intend to present that information to the Board of Regents at the board’s May 19 meeting in Billings.

However, Regents Chairman John Mercer says he hopes that when the project is officially brought before the Regents, the meeting happens in Missoula.

“This is awkward from the perspective of the Regents because nothing has been brought to us for a decision,” he says. “We don’t have the specifics.”

Duringer said Monday that the board is considering holding a public meeting on May 11 or 12, but no firm date had been set at press time.

jadams@missoulanews.com

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