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Bill would give universities access to Bank of North Dakota funds

BISMARCK -- Higher education officials are asking the state Legislature to consider allowing higher education institutions to use a loan program through the Bank of North Dakota to help reduce deferred maintenance costs.

Senate Bill 2116 would allow institutions under the control of the State Board of Higher Education to become a part of the Bank of North Dakota’s infrastructure revolving loan fund.

The fund currently allows political subdivisions to apply for low-interest loans of up to $15 million for essential infrastructure projects dealing with water treatment plants, wastewater treatment plants, sewer and water lines, as well as storm water and transportation infrastructure such as curb and gutter construction.

The loans can be given out by the BND for up to 30 years at a 2 percent interest rate.

Passage of the bill would expand the program to include higher education institutions in North Dakota.

Jed Shivers, vice president for finance and operations at the University of North Dakota, noted UND has a fairly “significant” amount of deferred maintenance that has continued to grow during the past few decades. Shivers said the university has been searching for “innovative” ways to address the deferred maintenance problem, including ways that wouldn’t require direct appropriations from the Legislature.

“When you think about the university, we’re really a city within a city,” Shivers said.

He said the university has similar infrastructure to the city of Grand Forks, including roads and sewer and water line projects that would be eligible for the BND program if the university were a city but because they are not, the projects just add to the school’s deferred maintenance pile.

Tammy Dolan, North Dakota University System chief financial officer, said every campus has some level of deferred maintenance, including infrastructure that needs to be updated. However, she noted it would be up to each campus to decide if the BND fund would work for them and how they would ultimately pay that loan back.

“Each campus has a different need, and they each have their own situation so it would be up to them to determine if they wanted to pursue this or not,” she said.

Shivers said UND could possibly pay back the loan through the school’s ongoing operating expenses, rather than raising tuition or other means.

During the hearing, committee members questioned whether adding the university system under the program would take away from political subdivisions that need the money, too.

Dolan said she believes that the legislators bring up a “valid point” but she hopes that issue could be worked out some way if the bill were to pass.

Sen. Erin Oban, D-Bismarck, who is a member of the Senate Education Committee, said she plans to give the bill “due consideration” but hasn’t decided whether she’ll give her full support to the bill, noting that the state is “seemingly tight on funds for everything.”

“I understand that all of this is related to ultimately the taxpayers’ funding of infrastructure projects, and if we can reduce the cost of that in any way then that’s certainly something I’m supportive of, whether that’s higher ed institutions or political subdivisions,” she said.

Oban said it “makes sense” for the university system to come to the Legislature to ask for the option to use the Bank of North Dakota, but whether or not that actually happens is yet to be seen.

“If the Legislature isn’t able to appropriate the funds that (the university system) needs then I can appreciate that they’re looking for other ways to reduce the cost of doing the things that they need to do,” Oban said.