The University of Montana Foundation sold its island mansion on Salmon Lake to the owners of Paws Up last month for less than half of what it reported in June as the property’s worth, financial statements show.

The David Lipson family purchased the 18,000-square-foot lodge and private island for $1.6 million, the Missoulian reported. The sale price was far lower than the foundation’s earlier asking prices (most recently $2.5 million), but foundation officials have been cagey about the property’s valuation, declining to disclose its appraisal history.

Publicly available financial statements, however, offer the clearest picture yet of the gap between the property’s estimated worth and the sale price, which critics say raises questions about the foundation’s handling of the sale.

Each year, the foundation assigns the property a “fair value”—an accounting term for the estimated market value of assets, which the foundation calculates using an independent appraisal. The mansion’s valuation when it was bought and donated to the foundation by Dennis Washington in 1995 was $4.8 million. Its fair value was adjusted downward over the last two years while it was on the market, to $3.6 million in 2017.

Both figures are higher than the estimated appraised value of “possibly around $3 million” that Commissioner of Higher Education Clay Christian—whose brother Kirby is Lipson’s attorney and the registered agent of the LLC created for the purchase—offered to the Missoulian. And they suggest that Lipson got as good a deal as Washington did when he bought the property at foreclosure auction for $2.2 million. Both men paid about 45 percent of the property’s estimated fair value at the time of sale.

The valuations “strengthen the concern” of citizen activist Ross Best, who successfully challenged the legality of a UM Foundation land sale at Fort Missoula in 1994, and is sending letters this week to UM leadership demanding more documentation about the Salmon Lake sale.

“The history of valuations raises questions. We can’t properly answer those questions without fuller disclosure,” Best says.

UM Foundation CEO Cindy Williams says she doesn’t release appraisal information because the foundation considers the initial appraisal to be part of Washington’s “private record of [his] gift” and to shield independent appraisers from public scrutiny surrounding the sale.

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How much is an 11-bedroom mansion on an island really worth?

From 1995 until 2017, the UM Foundation leased the facility to UM for use as a conference center. Were it owned and sold by UM directly, state law would require the university system to “obtain consideration that equals or exceeds the full market value of the land” as determined by the Board of Regents after an appraisal. That law was created after Best’s challenge of the Fort Missoula sale, and was later amended to prohibit universities from passing property to foundations to circumvent the requirement.

The Indy asked Christian via email if he believes the foundation, which operates under a regent-approved agreement with UM, shares the obligation to obtain full market value for land sales, and whether it did so in this case. Christian replied that fair market value for the property is “hard to say,” and that the foundation “did the right thing by the students of these campuses.” Williams says she accepted the $1.6 million offer after weighing it against the “carrying costs” of maintaining the property. (UM paid for maintenance at the site before terminating its lease in January 2017, and may seek to recoup those costs, previously estimated at $1 million, before remaining net proceeds are distributed among UM’s four campuses.)

The Lipsons purchased the property through an LLC, then passed it as a “charitable contribution” to a “Montana Educational Benefit Foundation” formed on Dec. 12. David Lipson’s son, Larry, told the Missoulian the new charity will grant college scholarships and host events featuring “prominent educators in the fields of hospitality, culinary and training.” He did not respond to the Indy’s emailed questions by press time.

The Lipson family already runs the charitable Paws Up Foundation. The cash the family paid for the Montana Island Lodge is more than the $1.4 million that David Lipson’s website says the Paws Up Foundation has donated since 1994. In addition to philanthropy, Lipson is known for an insider trading conviction while he was CEO of Supercuts, and using a shell corporation to avoid paying Dick Anderson Construction for work at Paws Up.

The Paws Up Foundation and the Lipsons have no public association with UM. Williams describes the Lipsons as “very well-known community leaders known to the campus.”

In 2016, then-UM Vice President Mike Reid saw Paws Up as a potential partner that could help UM return the lodge to profitability. Reid told KECI he was hopeful the university could work out a deal with the resort to rent UM’s facility on days when the university couldn’t book guests.

The deal the university eventually made looks much different.

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