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Many share blame: NDSU officials say several factors caused president's house overruns

John Adams, vice president of finance, center, answers questions from the State Board of Higher Education Budget, Audit and Finance Committee as he sits between North Dakota State University President Joseph Chapman, left, and NDSU Foundation Executive Director Jim Miller during a meeting Friday in Fargo. Dave Wallis / The Forum

Many share blame for unauthorized cost overruns with the North Dakota State University president's house, officials said Friday, but there were no intentional abuses that drove the cost up.

A committee of the North Dakota Board of Higher Education met Friday at NDSU to investigate why the house that was authorized to cost $900,000 in private dollars escalated to more than $2 million.

The three-member Budget, Audit and Finance Committee will recommend to the full board that a state audit is needed before they can authorize the cost overruns.

"In the end, I don't think that anyone intended to have any inappropriate state funds going anywhere or to do anything inappropriate," said Jon Backes, chairman of the committee. "I think mistakes were clearly made."

Jim Miller, executive director for the NDSU Development Foundation, said by the time the architect provided an estimate for the house - at that time about $1.2 million - the footing was already in the ground and it was too late to turn back.

"The process broke down, basically," Miller said.

During the meeting, committee members did not ask President Joseph Chapman questions or discuss his role with the house.

Chapman announced his resignation Wednesday effective Jan. 2. In his resignation letter, he asked for a full audit of the house project.

In materials provided to the committee for the meeting, Miller wrote that Chapman and his wife, Gale, pressured architect Terry Stroh to finish the project in 11 months.

Following the meeting, Chapman disagreed with those comments.

"Certainly, I wanted to be back on campus," Chapman said. "But I just don't feel we put undue pressure on them."

Architect Terry Stroh, who was not asked to attend the meeting, said in an interview Friday afternoon that he told the foundation committee in charge of the house that it couldn't be completed in 11 months.

"I said it's going to take 18 months, and they said 'Well, it can't,' " Stroh said.

The committee wanted the house done by June because the Chapmans' daughter was getting married that month and they wanted to hold a reception at the house, Stroh said.

"I'm not blaming them for that; it's a fact that happened," Stroh said. "And that's what drove us to manage the project the way we managed it."

Cathy Backer, Chapman's assistant who was on the committee, said it was committee members, not the Chapmans, who discussed the possibility of getting the house done in time for a wedding reception.

But members realized it wasn't going to be realistic, Backer said.

"As a committee, we all decided that wasn't going to happen," she said.

Higher Education Board President Richie Smith said he's had discussions with Chapman in recent days about his role in the cost overruns of house.

"Joe was as removed as possible from the daily decisions that were made," Smith said after the meeting. "If there's any fault here, the fault is he didn't pay attention. ... He probably should have and, in retrospect, we probably all should have."

Stroh said he didn't have contact with Gale Chapman other than at committee meetings.

Stroh said he received one request from Joseph Chapman, through Backer, to make the patio outside his office larger so he could hold Cabinet meetings there. That change probably added $700 to the total, Stroh said.

"That's the only thing President Chapman was personally involved in," Stroh said.

A portion of the basement was finished to give Chapman a shop where he could work on his model airplanes, Stroh said. That involved putting up wallboard in two rooms, which were left with concrete floors, he said.

The 1,210-square-foot bonus room above the garage, which added $120,000 to the total of the house, "was asked for by Gale," Stroh said.

Backer, however, said the bonus room was her idea because she thought it was a good use of the space above the garage.

"Gale wasn't the only one who asked for it," Backer said.

Miller said the committee selected Stroh after interviewing four firms about their ideas for the house. There was no formal bidding process, he said.

It was disclosed to the committee that Stroh is a trustee of the Development Foundation. Miller said that connection did not affect the committee's decision.

It wasn't until after Stroh was selected that he told the foundation he wanted to donate his services, Miller said. The foundation did not have a contract with Stroh.

Stroh's firm collected more than $50,000 in interior design fees for the project.

Stroh's firm also did construction management of the project because of the expedited timeline, he said. There was a bidding process for 12 of the subcontractors, Stroh said.

Because the project was put on the "fast track," Stroh said he was forced to start construction before a final budget was prepared and firm prices were secured for materials and services.

Stroh said the reports provided to the committee made it sound like he had free rein over the project.

"It gave the impression that I was totally in control, I did my own thing and I handed in the keys one day," he said. "That isn't it at all."

Stroh said he had authorization from the subcommittee or members of the subcommittee for change orders.

The whole process was flawed from the start because the project had a $900,000 budget before anyone decided on designs for the house, Stroh said.

"I think everybody knew but nobody wanted to say it," Stroh said. "I am certainly at fault to some degree."

After the budget came in at $1.2 million, Stroh thought they would be able to get in-kind donations to bring the cost down. However, the economy turned and those donations didn't materialize.

A question remains about some of the $516,000 of NDSU funds that went into the exterior of the house.

The funds were not state dollars, but interest income, auxiliary revenues and Coke/Pepsi commissions, according to a document detailing the project.

The foundation has agreed to pay for $373,855 of the outside work.

The remaining $142,000 of NDSU money in the project is "problematic" and board members will address that later, Smith said.

Committee members said it was appropriate for NDSU to pay for about $58,000 in costs related to moving, storage and temporary housing.