The USIU Land Rush

...Yet none has been so adept, or so single-minded, in playing the real estate game as an obscure San Diego-based institution that calls itself United States International University (USIU...

...This approach was chosen in order to enable the University to grow without destroying one of its major objectives, that of offering undergraduate education on campus areas with a small enrollment so that the student is able to feel a part of a real campus life...

...It would appear, however, that the goal has been carried to extremes...

...Three years ago, the trustees empowered him with the authority to buy and sell stocks, bonds and securities for the university...

...IN CONTRAST, USIU had very little trouble convincing Federal and state officials that it needed the base...

...In an effort to explain their action, gsa officials said the buildings had deteriorated after 1969...

...The officers "hereinafter named" are Rust and John Cranston, a San Diego attorney and chairman of the board...

...Herbert Heller, director of summer sessions at the Cal Western campus from 196265, strains began to develop in 1963, when the church asserted that the university was in precarious financial condition and academic "disrepute...

...Bishop Gerald Kennedy, one of the old Methodist Church appointees to USIU's board of trustees who rarely attends meetings nowadays, recalls that the church requested an audit in 1966 to evaluate Rust's expansion program...

...Equally unconvincing is Rust's contention that public "hostility" prompted USIU to give up the Adair property...

...Supporting the shift were McCall, Congressman Wendall Wyatt (R.-Ore...

...He took GILBERT JOHNSON, western regional editor of the College Press Service, attends the University of Oregon...

...Although I have no proof, it seems to me that someone wanted USIU to have the Adair land awfully bad...

...As the church gradually pulled away from USIU, Rust proceeded to pack the board of trustees with wealthy San Diego bankers and businessmen—Harold Starkey of First Federal Savings and Loan Association, Jack MacDonald of Security First National Bank, Walter Zable of Cubic Corporation, and Burt Raynes of Rohr Aircraft...

...The procedure appears extremely profitable, USIU has raised over $5 million from mortgages, loans and grants, supposedly for construction or alteration of campus buildings, yet faculty members at the various sites say nothing near that sum has been put into physical improvements...

...As soon as USIU was granted the air base, it applied for the adjoining 152-unit Capehart housing development, up for sale as a separate parcel...

...When USIU was given title to Adair in February, Democrats in the State Legislature, with the assistance of Hatfield's office, were in the middle of an investigation of the university...

...The deed was to be given to the university in November, but Hatfield asked hew Secretary Elliot Richardson for a three-month delay...

...The presidents of Oregon's 14 private colleges and the Council of the Poor—a militant organization composed of Mexican-American farm workers, Portland-area blacks, and unemployed whites—had registered their opposition to the transfer...

...Nevertheless, the Council's remedy fell on deaf ears in the governor's office...

...The moving force behind this educational conglomerate is its president, 53-year-old William C. Rust, though students say he is never seen on any campus...

...The college's president, faculty and student body had opposed the merger overwhelmingly in a campus referendum...

...In recent years, such educational giants as Harvard, Columbia, Michigan State, and the University of California have added to their landholdings...

...According to Dr...

...If these connections haven't helped, they surely haven't hurt USIU in securing surplus government properties...

...Members of Republican Associates, the largest gop fund-raising organization in Southern California, these men have considerable influence with the Nixon Administration...

...A substantial amount of hostility has been stirred up by a small group," he said, "and the issues have become political ones which really have very little to do with this university...

...Rust's critics—for the most part faculty members who lost their jobs after disagreeing with USIU's policies —contend that his financial prowess is overrated...

...For a while everybody was excited, because a center like this is needed, but then the quietus was put on the plan by someone in Washington...

...The 35.5-acre site—part of a former military housing project—is conservatively estimated to be worth $1.7 million...

...The statements we were getting didn't make sense," said Kennedy...

...Once the Agriculture Department withdrew, hew asked state and local agencies if they could use the base...

...Paul M. Lee, an accountant on that audit, observed that financial facts could only "be dug out by expert and time-consuming review...

...The agency admitted that it had erred...

...Office of Education leaking the word that an investigation of the university is imminent, it seems more likely that Rust's Washington friends advised him to avoid any additional exposure...

...Furthermore, the university easily won precedence over other applicants who would normally have received higher priority...

...Their activities attracted particularly wide attention when an fbi informer was discovered in their midst who later admitted he also worked for USIU...

...Those agencies cannot locate recent audits...

...At a mass meeting last fall attended by 2,000 of the state's poor, the organization resolved that "Adair belongs to the people" and declared that it must be obtained by any means necessary...

...RUST HAS certainly used his genius to gain the unquestioning support of the majority of his trustees, to talk college presidents into merging with USIU, and to procure surplus government land...

...Yet at most 50 students were among the 2,000 poor at the meeting...

...To document its need for the base, the Council cited the state's own surveys...

...Mel Summers, the hew official responsible for dispensing surplus properties on the West Coast, maintains: "We got only one application—from USIU...

...The General Services Administration (gsa) then refused to take any other bids...

...Except for an abortive occupation attempt on May 3 by its more radical elements, however, the Council's tactics remained legal...

...and seemingly the entire Federal bureaucracy...

...Earlier this month San Diego residents began questioning USIU's request for a permit to construct a multimillion-dollar residential development on property it owns adjacent to its Cal Western campus...

...In 1970, the church severed all USIU ties and denounced the president, who is an ordained Methodist minister...

...Noting that the campuses in Colorado and Hawaii are located in the middle of rapidly developing resort areas, and that USIU's trustees include hotel owners in Colorado and Mexico, they reason that someone hopes to make a bundle...

...A Federal agriculture official in Oregon, who requested anonymity, disclosed that he had asked his superiors in Washington to acquire the property...

...No less puzzling is the university's abrupt turnabout in policy...

...And the Health Department has conceded that medical care for the state's poor is unsatisfactory...

...According to established procedures, when the property of a Federal agency is declared surplus, other government agencies are given first option...

...One radio station called the San Diego campuses 27 times before it was able to talk with an administrator...

...Herb Klein, the two having met in the late '50s when Rust was Chamber of Commerce chairman and Klein was editor of the San Diego Union...

...Minutes of the relevant meeting show that besides the two of them, only seven of USIU's 32 trustees were present when the resolution was passed...

...Hatfield's assistants said they left the meeting convinced that USIU had quite a few friends at the top of the Administration...

...over at USIU in the '50s and soon earned a reputation as a "financial wizard...

...On April 28, Rust announced that was returning the deed to Adair...

...For six months, members picketed regularly outside the entrance to Adair, met with legislators, the governor and hew officials, and even planned to seek an injunction against the transfer...

...Many realtors consider it the most valuable oceanview property in the county because of its natural state of preservation...

...With sources in the U.S...

...At the Elliott campus, the university is currently utilizing less than 50 of the 410 acres...

...The university has never paid hard cash for any of its eight campuses...

...USIU's handsome Bulletin explains the small enrollment: "Since the early days of the University it was planned to expand the institution into a multicampus, international university...

...Apparently somewhere between the state bureaucracy and the Federal bureaucracy, the applications were mislaid...

...at its Steamboat Springs and Mexico City colleges, already existing facilities are not in full use and there has been no new construction for over two years...

...But all of it can be mortgaged, as it has in the case of the Elliott base...

...The same resolution permitted him to "cause certificates of stocks, bonds and other securities held in the university's account to be transferred to the name of any officer hereinafter named...

...With USIU on Adair," said Pablo Ciddio, a director of the incorporated Council, "the only poor who will be admitted will be maids and janitors...

...Mrs...

...Since 1956, it has acquired half a dozen properties under this provision, among them three complete military installations: Camp Elliott Marine Corps Base (1965), Sundance Air Force Base in Sundance, Wyoming (1971), and Adair Air Force Base in Corvallis, Oregon (1971...

...In addition, the Council had adopted a resolution last September asking McCall to "have the decency not to run for governor," provoking the governor's assistant in charge of human resources to claim the organization had been "taken over by college radicals...

...After Adair was deactivated, the Navy briefly considered using it for a weather station and just as fleet-ingly abandoned the idea...

...The record shows that the development of the Elliott campus has not been very costly at all, however...

...Morevover, even though the development had been independently appraised at $ 1.7 million in 1969, the gsa reduced the usual mortgage downpayment and offered the housing to USIU at a total price nearly 15 per cent below the appraisal...

...And the 410-acre Elliott campus north of San Diego, designed for 3,000, has 800 graduate students...

...The state superintendent of public instruction and the chancellor of the state university system each had designs on Adair, and both say they applied...

...During the past decade, USIU has expanded from one small Methodist institution, California Western University, to an international academic empire encompassing eight campuses that spread from Africa to the mid-Pacific...

...On January 20, Richardson and other hew officials met with the senator to discuss the issue...

...To Hatfield's questions about the university's financial stability and academic quality, McCall answered that the base had been empty for two years and a use must be found for it...

...AS A NONPROFIT educational institution, USIU may receive public land free through what is known in federalese as a "public benefit allowance...

...Rust's answer: "We thought it was a good idea to accept these military bases at first, but the expense of keeping them up and developing them satisfactorily over a 30-year period is very high...

...The primary reason was the group's staunch refusal to be linked to any existing government poverty agency...

...He said some of the accounting practices of the university could mislead trustees, especially its listing of net equities in various assets...

...It is common for universities to buy and sell stocks, of course, but it is highly unusual for an institution to grant this authority to a single officer, and unheard of to allow the transfer of assets to the accounts of individuals...

...Some San Diego businessmen, who now refuse to deal with Rust, say USIU's curious expansion has a strictly pecuniary motive...

...The Oregon Human Rights Commission has published a report proposing a career-oriented training center for the poor...

...Oregon newsmen, meanwhile, have found it difficult to get information of any kind from the university...

...To close observers of USIU's operations, that statement typified the university's policy of tailoring its educational programs to fit the larger objectives of its wheelings and dealings in real estate...

...The university's auditors, the U.S...

...The University of the Americas, which once accommodated 1,800 students comfortably, now has 31...

...gsa's second explanation was that part of the land was not under the mortgage, but really a gift from the Oregon Fish and Game Commission...

...AN EDUCATION IN REAL ESTATE The USIU Land Rush BY GILBERT JOHNSON SALEM, OREGON MANY MAJOR universities have found it profitable, if sometimes embarrassing, to assume the roles of landlord and real estate developer when investing their endowments...

...She said Rust and his executive committee handle all the financing, and praised him as a "one-man show" and a "financial genius...

...In announcing the plan, which would include housing for the public as well as faculty and students, USIU explained that the land, originally intended for graduate facilities, had been freed by a decision to headquarter all graduate departments on the nearby Elliott campus...

...Rust claims that the university annually sends audits to hew and the Department of Housing and Urban Development...

...The Council of the Poor agreed, but wanted the facility for a housing and vocational training complex...

...Office of Education, Oregon's Republican Senator Mark O. Hatfield, and others investigating USIU's activities cannot figure out where the money is going...

...Arguing that a mania for expanding his academic empire has resulted in mismanagement, they charge that to raise quick capital he has been forced to sell university property short of value or take out high interest loans...

...With equivalent acreage, the University of California educates 125,000 students...

...My own initial questions—concerning enrollment figures, the size of USIU's endowments, the amount of money generated annually by tuition, and the like—were met with answers so ambiguous as to be meaningless...

...the Office of Education and Hatfield's staff have requested copies without success...

...Interestingly, Rust's rise to power at the university parallels his falling out with the Methodist Church...

...Lee also held that writeups in the university's report on "endowment and invested plant fund," specifically its property appraisals and reevaluations, were "contrary to general accounting principles...

...We had the cooperation of Oregon State University, the state agricultural people, and others," he said...

...An aid who was present reported that Sol Elston, the deputy hew assistant in charge of surplus properties, referred to "my good friend Bill Rust...

...Of 800 migrant labor camps in the state...

...In the case of Mauna Olu College, Rust persuaded its trustees that their school was failing financially, then offered to take over its administration...

...Only if all of them reject the land may a private institution apply for it...

...And why has USIU abandoned the Sundance base, where no political issues have been raised...

...Six days later, in a briefer statement, Rust revealed that USIU was also returning the deed to Sundance and withdrawing applications made in the last year for other Federal surplus property —including one for the 773-acre, 100-building Oxnard Air Force Base near Ventura, California...

...Since Federal procedures for surplus land require that all facilities be kept in good condition, the Air Force—still in charge of maintenance—protested to gsa...

...indeed, the university may have made money on it...

...600 have been judged substandard by Oregon's Bureau of Labor...

...But USIU refuses to release any complete accounting, and it is impossible to obtain an audit for the past two years...

...Nor can they understand why USIU was delinquent with interest payments on Health, Education and Welfare (HEW) loans twice in the past two years...

...Required by law to use "public benefit" properties for educational purposes for 30 years, the university receives ownership of one-thirtieth of the land each year...

...The commission replied that the land had temporarily been donated to it by the Federal government two years ago, but was never owned by the commission, gsa's third explanation has yet to come...

...Mary Catherine Stone, a trustee for several years, affirmed that she had never seen an audit and did not know of anyone who had recently...

...The Steamboat Springs school, formerly Alpine College, has 79...

...The unexpected moves climaxed a controversy that had revived an old political feud between Senator Hatfield and Oregon's Republican Governor Tom McCall...

...A former chairman of the San Diego Chamber of Commerce, Rust may well be the Milo Minderbinder of academic administrators...

...But while USIU has grown from 200 to 2,400 acres, its total enrollment has merely increased from 3,000 to 3,800 students...

...Faculty members who have caught brief glimpses of him note that he is continuously arriving from or leaving for negotiations concerning the land growth of the university...

...Rust himself is a friend of the President's communications director...

...Next, the U. S. Department of Agriculture contemplated converting the facility into a pesticide research and disposal center...

...These include three plants in San Diego, the old University of the Americas in Mexico City, study centers in England and Kenya, and small two-year colleges in Steamboat Springs, Colorado, and Mauna Olu, Hawaii...

...Neither the Council of the Poor nor any other local private organization had been notified of Adair's availability until USIU's application was accepted...

...It took a record 20 days for USIU's request to be processed and approved last August...

...Now that USIU has relinquished Adair, the dispute over Rust's financial practices has shifted back to California...