The Arizona Auditor General’s recent performance report on the Arizona Board of Regents’ commercial real estate policies provides a number of recommendations that will improve those policies. The Arizona Board of Regents appreciates the opportunity to engage with the Auditor General to strengthen governance of university property.
As the citizen board appointed to oversee Arizona’s public universities, we undertake complex policy issues every day, working to ensure the future sustainability of the universities and to increase access to high quality degrees at the lowest possible cost for resident students.
Arizona’s three dynamic and renowned universities represent some of the state’s most important and strategic assets. The universities own thousands of acres of land and appropriately engage in the development of that property. While most university property is used for academic purposes, on occasion, commercial activity is the highest and best use. For example, university research parks, hotel and conference spaces and other commercial developments produce revenues and services. In turn, the revenues advance the mission of our universities and decreases reliance on state funding or increased tuition.
To ensure proper oversight of commercial use of university property, the board recently implemented a robust governance structure for commercial real estate activity. We have adopted governance principles and established a thorough set of policies to govern commercial lease activity. Those policies set forth the expectations for the universities regarding commercial real estate transactions requiring board analysis, review and approval. These policies represent perhaps the most robust governance structure of commercial real estate at public universities in the country.
The Auditor General reviewed our work and has proposed a number of recommendations intended to further strengthen the established governance structure. The Auditor General’s recommendations will assist in providing more clarity and transparency around university real estate activity.
Securing the long-term sustainability of our state’s outstanding public higher education institutions for future generations of Arizonans is central to the board’s work. This report comes at an ideal time, as the board continues its efforts to evolve sound governance in the real estate sector for 21st Century universities evolving their own designs for continued success and advance in an increasingly competitive market for higher education.
John Arnold is executive director of the Arizona Board of Regents.