Construction of $78-million expansion of the North Dakota Heritage Center was halted in July after a year of construction.
Construction of a $78-million addition planned to include a 20,000-sq-ft military gallery at the North Dakota Heritage Center in Bismarck, N.D., is on hold as officials grapple with how to address a private fundraising shortfall.
The 70,000-sq-ft facility is being developed in partnership with the State Historical Society and the North Dakota National Guard and their foundations, which seek to preserve the history of the state’s military members.
The contractor and construction-manager-at-risk, Minnesota-based Kraus-Anderson, is being paid $157,000 a month to cover demobilization costs since the project that broke ground a year ago was halted on July 3, said Bill Peterson, director of the State Historical Association, in an interview with KFGO radio station.
Only $4.1 million of a total fundraising goal of $38.3 million has been raised, and only $800,000 is in hand. Two donors have rescinded offers, Peterson said. Organizers needed to reach one-third of the fundraising goal, or about $12.8 million, in order to access $15 million in state funding approved by the North Dakota legislature in 2025.
Explaining why the project was started without all needed funding, Peterson said, «Large projects like this, when they are public-private capital projects . . . they commonly combine construction with on-going fundraising. Beginning construction avoided inflation, secured favorable pricing and, I think, demonstrated momentum while we continued with our corporate fund-raising.”
The project’s budget outlines $15 million from the state’s Strategic Investment and Improvement Fund; $20 million in a line of credit from the Bank of North Dakota, $4.2 million to repay a prior Bank of North Dakota line of credit and $38- to $40 million in private fundraising.
“It ended up that some of the fundraising forecasts didn’t pan out,” Peterson said. “We ended up in a little bit of a bind so we stopped construction in July.”
“We’ve faced some economic headwinds and changes in the climate over the last 14 months—some factors that have impacted philanthropic giving,” he said, adding “we thought the timing would add up and we’d have the ability of bridge financing when we needed it.»
Organizers plan to ask the state legislature for a $35-million line of credit during a special session starting on Sept. 2 so construction can proceed.
“It’s not a handout. It’s not a gift. It will allow us to continue fundraising while we continue construction,” Peterson said.
While remobilizing the site will also add expenses, Peterson said the contract with Kraus-Anderson will be honored.
“Unless we cancel the contract, we won’t be in breach of the contract with them,” he said. “The guaranteed maximum price will stay in effect until the project is complete.”
The gallery is planned as two levels with enough space to hang large military vehicles or equipment from the ceiling. It is also expected to include an expanded food service area and outdoor courtyard and amphitheater.
Peterson said 65 potential donors have been identified with the potential of $75 million in financing coming through.
“If half of those came through, this project will fulfill it’s obligation to raise [about] $40 million in private obligation (that) the project has promised the state legislature,” he said.
He also said the construction of the recently completed $450-million Theodore Roosevelt Presidential Library in Medora, N.D., may have impacted the ability to raise funds for the military gallery.
Kraus-Anderson declined to comment on the pause.
