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Cali Owings, Published September 11 2013

Scheels to buy plane NDSU leases

FARGO – A controversial private airplane leased by North Dakota State University will be sold, as state legislators critical of the plane have advocated.

But one of NDSU’s top donors is set to buy it and arrange a charter agreement giving the university access to the aircraft.

North Dakota legislators approved a state law earlier this year requiring NDSU’s private nonprofit fundraising group, the NDSU Development Foundation, to sell the airplane it leases to the university.

School officials say NDSU has leased the $2.3 million 1991 Beechcraft King Air B200 from the foundation since it was purchased in July 2007. The university has been paying $320,000 a year on the lease with plans of buying the 13-passenger plane for $1 after the lease payments had covered the cost of the aircraft in 2017.

Some legislators have criticized usage of the plane, which a state study found cost more than $5,600 an hour to operate for the 69 flight hours it was used in fiscal year 2011. NDSU officials have defended the airplane as time-saving and cost-efficient.

In a Wednesday news release, the foundation announced it had signed a letter of intent with Scheels All Sports for the purchase of the plane.

In the release, the foundation said the Legislature passed a bill essentially requiring it to sell the plane by 2017.

Doug Mayo, the foundation’s president, said it does not have any use for the plane if the school is unable to lease it.

“It’s an asset that the foundation owns. We lease that operation to the university. It was a need that they had,” Mayo said. “There are other ways to resolve that need without us having that asset.”

The foundation initially purchased the plane, but the plane’s owner is registered as North Dakota State University as a government aircraft, according to the Federal Aviation Administration Registry.

In emails obtained by The Forum, NDSU President Dean Bresciani discussed earlier this year the sale of the plane with Steve Scheel, CEO of Scheels All Sports.

Bresciani wrote that the goal of the sale would be to break even on the remaining principal balance of about $1.1 million.

Mayo would not confirm a sale price for the aircraft, but he said the foundation intends to sell the aircraft at a fair market price and ensure it does not lose money in the transaction.

Based on the letter of intent, posted online by Minot-based blogger Rob Port, the deal calls for Scheels All Sports to pay $1,365,000 for the aircraft.

Emails obtained by The Forum indicate NDSU could still use the plane if it came under Scheels ownership.

“It would obviously be win-win if we can help a local business leader get into a very solid plane platform with multi-state range, while maintaining access for ourselves,” Bresciani wrote in March 2013.

Scheel was responsive to the idea, indicating he would like to move forward with a charter agreement if usage dates of the company and the university would not conflict.

NDSU would require 80-100 hours of chartered use annually, according to Bresciani’s emails. The school used it for 68 hours in 2010 and 69 hours in 2011.

One of the chief legislative critics, Rep. Jeff Delzer, R-Underwood, didn’t return a phone message on Wednesday. NDSU officials did not offer any comment when requested, either.

Scheel is a major donor to the university. In 2010, for instance, the Scheel family pledged $5 million toward a renovation of the Bison Sports Arena – a gift that will lead to the basketball venue being named the Scheels Center.

The sale is not official yet and the plane will be inspected before the parties reach a final agreement. The letter of intent states the purchase agreement, dated Sept. 5, is valid through Friday.

Once a sale is final, NDSU’s lease will be terminated, Mayo said.

Readers can reach Forum reporter

Cali Owings at (701) 241-5599