The next time bureaucrats in higher education complain about parents, students and legislators suggesting there should be more oversight of our state-financed institutions, ask them about universities buying restaurants far above market-value. And for no immediate reason.
The Austin American Statesman reported this weekend that UT is buying a restaurant called Players for $3 million in cash, plus a 10-year no-charge lease valued at about $1 million. Nice deal for the owners, but is it a good deal for the students and taxpayers?
After all, that’s a lot of cha-ching — and apparently far more than the property is worth. To circumvent state laws prohibiting payments for property above fair-market value, one of UT’s related charitable foundations is kicking in cash — the McCombs School of Business Foundation.
It goes like this, according to the Statesman:
The foundation bought the property for $3 million and the no-charge lease. UT then purchased the property from the foundation for $1.5 million in cash and assumed the $1 million lease obligation, for a total cost to the university of $2.5 million — the appraised value of Players. In other words, the foundation contributed $1.5 million to cover the difference between the appraised value and the sale price.
While UT might have an interest in actually using the property, they also might not.
Apparently UT just has a lot of cash laying around. And they just couldn’t use that money for, you know, reducing tuition or improving the ratio of teacher-faculty to students. No, buying a restaurant makes a lot more sense… to a bureaucrat.