Gold from gravel? MoreU Park
The MoreU Park fiascco continues unabated. A longer post will appear over the summer.
For now, suffice it to say (from the Senate Research Committee Meeting of April 27):
Dr. Muscoplat said that UMore Park will be a revenue center for the University, not a cost center.
Professor Dahlberg said he would like to see a financial plan that includes the dollars invested and an estimate of when the University will start to receive money. The University has invested about $5 million and will need to put in a little more, Dr. Muscoplat said, but he expects that money will be paid back all at once because of the value of the gravel to the University's mining partner. The University will need to spend more on real estate development, but it will make money from the gravel. There are also significant opportunities to create ancillary businesses derived from mining products or an energy utility, for example, based on investigations into ground-source heat pumps, solar, and biogas generation. A segment of the property is envisioned as an eco-industrial park, which would attract tenants, generating rental income.
Professor Ruggles asked what the University's comparative advantage is when it gets into the energy business. The University won't be in the business; it will allow others to do that, Dr. Muscoplat said.
Professor Hays asked what the projected revenue from the known gravel deposits would be. Dr. Muscoplat said that 3-5 million tons per year would be sold, over several decades, at perhaps $1 per ton. It is a big number, but it is only possible to sell so much into the local market in any one year. This will not be a windfall, he emphasized. Professor Hays inquired if they expected to use the money for development. They do not, Dr. Muscoplat said; they expect the developers to pay all the costs of development, not the University. Will they build quickly in order get a payoff, Professor Hays then asked? The University must be careful, Dr. Muscoplat responded, and developers will be required to adopt plans that carry the University's imprimatur; the University will be in control.
Professor Dengel commented that he would not want to live near dump trucks hauling gravel; he would want the industry cleared out, and usually the gravel is removed and only then is the land developed. The take-home message, in his view, Professor Cohen said, is that gravel pits are a dicey business and long-term development around gravel is a leap of faith he is not willing to take. Dr. Muscoplat said the University will not to do the mining; there are several companies in the Twin Cities that would like to mine the gravel and send the University a check each year. The University will be well-rewarded, he maintained.
Professor Ruggles said that aside from the research platform, the University could just sell the land on the market. Dr. Muscoplat said they studied that alternative and concluded that developing the land with a plan would generate ten times as much money as simply selling the land. Why would the University get into the development business, Professor Ruggles asked? That is also his question, Professor Dahlberg said: is it proper for the University to do this? It would be investing for academic reasons, but only for a few faculty members. He said he did not know of any other university that has taken on a project like this.
It was agreed that the Committee would return to this subject in the fall, and would wish at that time to see financial projections.