Contract favors UND
By Janell Cole
The Forum - 26 January 2001

BISMARCK, N.D. – University of North Dakota benefactor Ralph Engelstad’s threat to abandon the hockey arena he is building on the campus is toothless, higher education officials said Thursday.
 
The state has a contract with Engelstad’s company that says it can take over construction of the arena and charge Engelstad’s company for the costs, said UND President Charles Kupchella and Pat Seaworth, an attorney for the state Board of Higher Education.
 
“There’s a clause right in the lease that describes our right to take it over,” Kupchella said.
 
Engelstad, the Las Vegas casino magnate and UND alumnus who donated $100 million to the Grand Forks campus for a new hockey arena, threatened last month to abandon the partially completed building and let it fall apart if UND changed the name of its sports team and logo.
 
The building is on UND land, but is being built by and would be operated by Engelstad’s companies. The construction company is Arena Construction Inc.
 
Seaworth and Kupchella said the state Board of Higher Education signed leases with Engelstad in March 2000. Engelstad signed it on behalf of Arena Construction, which is the “tenant” in the agreement.
 
The relevant paragraph says: “Tenant shall, once construction has commenced, diligently and conscientiously pursue the construction of the winter sports facility to completion. Tenant agrees that the construction contract, financing agreements and other documents should be so drafted so that in the event of a default and after failure to cure a default within the prescribed time, UND shall have the right to pursue the construction project to completion according to the plans and specifications, on the above mentioned default of tenant or tenant’s agent or contractor, at tenant’s sole expense.”
 
It also says that upon any termination of the lease, title to the “improvements” – the arena – transfer to UND.
 
Seaworth said state Board of Higher Education members all knew about UND’s right to take over construction when they voted Dec. 21 to keep the Fighting Sioux name and logo. Their decision came right after Engelstad wrote his threatening letter.
 
“You can draw your own conclusions,” Seaworth said.
 
Kupchella declined comment on what he thought about the validity of Engelstad’s threat in light of the lease agreement.
 
“I’ve made it a policy not to comment on the letter,” he said.
 
A woman who answered the phone Thursday at Engelstad’s company he was not available for comment.
 
But Kupchella and Seaworth both said the lease negates any need for a bill in the Legislature to protect the college’s or the state’s right to take over the building if Engelstad abandons it.
 
Sen. Tim Mathern, D-Fargo, has introduced a bill, Senate Bill 2322, to protect the arena from destruction by Engelstad’s abandoning it. Along with Mathern, the sponsors are Sen. Linda Christenson and Reps. Roxanne Jensen, Amy Kliniske and Lonny Winrich, all of Grand Forks.
 
“This is more of a statement,” Kupchella said, when he saw the bill Thursday. “This just gives us additional encouragement and support.”
 
Seaworth agreed.
 
“This bill would accomplish nothing,” he said.