It's a combined heat and power plant, meaning that they use the waste heat from the electrical generation cycle to provide localized heating. The Chena site mentioned in your linked article is 56 miles from Fairbanks itself, so they'd only be able to get electricity (via wire) from geothermal; there's no way to transport waste heat over that distance. It certainly could be more environmentally beneficial to use electrical heating with geothermal electricity instead of a coal CHP plant. When they say in the article that the numbers didn't pencil out for alternatives, I presume they mean financial numbers.

This sort of application is where one of the smallest Small Modular Reactor designs would theoretically be great, but nobody is offering a commercial SMR yet. All SMR designs are still in the R&D phase. The smallest commercially available power reactor designs start at hundreds of megawatts, which is far larger than the 17 MW the campus needed.