In December 2015, the University of Minnesota purchased about 22 acres of land across the railroad tracks, just northeast of campus. At the time it was called a “very strategic acquisition” by regents, giving future boards opportunities to expand.
Less than four years later, the University’s Board of Regents are weighing the benefits of unloading the land.
Unlike the decision to purchase the Murphy Warehouse property, which was unanimous, regents disagreed about the sale, causing the board to delay a decision on the fate of the site to later in the year.
Central to the debate is how valuable land can be to a University that has watched the surrounding urban center grow and with it, land prices. But other regents have expressed dismay over the lack of a long-term plan with the property and the costs it will require to maintain it to an unknown future date when a plan could be implemented.
The property is located near other warehouses south of the Como neighborhood, a popular residential area for students. The buildings are currently used for storage, a need that will maintain if a sale is made.
“We are not the right owners for this building,” Regent Richard Beeson said at a regents meeting earlier this month. “I don’t think any amount of additional time is going to change that basic fact.”
Beeson and several other regents endorsed the sale, but others, like Regent Tom Anderson, said they changed their mind during the meeting. He suggested they delay a decision for a later meeting and the majority of the board agreed.
Also a concern of some regents is the manner in which the University came to own the property. It was not a simple sale, rather the Murphy family sold it at a discount, with an additional $2 million of its value framed as a gift to the University.
“While we could have sold this property for more or to a different buyer, it was important to us to make this gift to you, our neighbors,” Alexandra Murphy, chair of the Murphy Warehouse Company Board of Directors, wrote in a letter to regents earlier this month.
Ryan Companies, a real estate corporation based in Minneapolis, approached the University looking to buy the property, which qualifies for Opportunity Zone tax incentives, a program created in 2017 to spur development in low-income areas.
Some regents worry a delay could dampen the tax incentives, chilling the market to sell the property. Ryan is currently offering $22 million, about $4 million more that the University paid in 2015.
The sale could also allow for more strategic land purchases and avoid significant investments needed for buildings on the property. Despite benefits, some regents are still uneasy about the sale.
Regent Darrin Rosha said flipping the property so quickly could cause future donors of land to the University to “think twice as to whether they can believe we are going to hold fast and honor their commitments.”
Rosha compared this property to West Bank, which he said was purchased to expand the University. He sees a similar opportunity here.
It was once thought the buildings on the property could be used as a library collection facility, but has since been determined it won’t be suitable for this use. The property also does not mesh with a long-term plan to reinvest in the core of campus and expand to the southeast.
Still, some regents see the land as a place to widen the footprint of the University. Regent Michael Hsu said they could build a new residence hall on the property and owning the land gives future boards flexibility, even if the need right now isn’t clear.
“We wouldn’t have the University that we have now if the board at the time wasn’t smart in acquiring land,” Hsu said. “It is the regent’s responsibility for the long-term planning and the purchase of land for the future.”
