I'll play the semi middle-of-the-road here. NDSU tried for 8 years to raise the money to build a new School of Business building and couldn't come up with the necessary money to build it and took the next best thing, a used building. That being said, wouldn't the right thing to do would inform the state what you're plans are? Whether it is private money or not the state has to live the long term ramifications of the decision of people who are thinking short term.
Sica has some very good points regarding the additional costs associated with an existing building, not on campus. I'm sure these buildings are not in such a state that the school can just move in. Add the cost of renovation and probable code upgrades to the additional costs Sica already mentioned and it may not be any cheaper in the long run.
Okay, maybe I'm come down a little closer on the side of the state.