Apr 142011
Authors: Allison Sylte

With a decrease in the amount of state funding available for capitol expansion at CSU, the university has increasingly relied on bonds and third-party donations to pay for construction projects on campus.

“We hope that the economy turns around, so that we can once again rely on some state support for expansion projects,” said Amy Parsons, the vice president for University Operations.

Major construction projects are planned years in advance, with most recently completed projects pre-dating the recession. In light of state financial woes, aside from proposed Lory Student Center renovations and additions to campus housing, no additional major construction projects are in the pipeline, according to Associate Vice President of Finance Lynn Johnson.

“We sort of feel like we’re wrapping up the building boom right now,” Johnson said.

Top-priority projects are initially presented to the state legislature, who either accepts or rejects the proposals for state financing. One of the most recent state-funded expansion projects on campus was the $6 million Clark building renovation, an undertaking for which the state contributed $4 million to the final price tag, according to the facilities management website.

The university has a wish list detailing improvement projects that it would like to see across the campus, but the reality, according to Johnson and
Parsons, is that many of these projects are unable to be completed without bonds or donations.

“Sometimes we’ll have a project on hold, but then we’ll hear about a supporter for it, and it will be able to get underway,” Parsons said. “We’re really appreciative when our donors help out the campus.”

Though donations can account for a significant part of the funding for construction projects, bonds are still often necessary to fill any potholes in financing new buildings.

The Engineering II building, which celebrated its groundbreaking ceremony on Thursday afternoon, is funded by $26.7 million in private donations, with bonds and money from the university filling in the rest of the $68.7 million cost.

When the university takes out bonds for a project, officials say it is highly conscientious of the debt associated with the bond payments, which generally last for 30 years. According to CSU President Tony Frank, given the economic downturn, the administration and the Board of Governors have treaded the
waters of taking out bonds very carefully in an attempt to preserve CSU’s good
credit score.

“We certainly have been looking harder at borrowing money; every institution has,” Frank said.

The funding structure for bond payments is such that the university withholds money to contractors until the project is complete. The money that is withheld accrues interest in the meantime, which can be used either to begin paying bonds or to improve the project, as was the case with the pool area in the
Campus Recreation Center, according to Parsons.

Bond payments for general construction projects on campus are not funded directly through tuition, but instead through a portion of the facilities fee, allocated by the Student Fee Review Board, a body that can also recommend raising fees to make payments on future construction projects.

Students pay $15 per credit hour to the facilities fee, a fee that in the past few years was raised $5 by SFRB.

“If students don’t want to support new projects, then the right thing to do as an administrator is to not undertake them,” Frank said. “But if students get their representative government to support a fee increase, then we allow them to tax themselves to that extent. And surveys have shown that students are generally in support of most improvement projects, and they benefit the university.”

Projects such as the proposed LSC and Campus Recreation Center renovations involve a separate set of student fees, implementation of which are voted on by CSU students.

Renovations to auxiliary enterprises on campus, such as facilities associated with Housing and Dining Services, are paid for by revenue generated by these services and not from general student fees.

Only students who will ultimately benefit from a construction project will pay the facility fees that go toward the construction, a benefit of the bond structure that, according to Johnson, keeps things fair for students.

“When fees are associated with debt service, only the students at the institution at the time of the project being completed are paying those fees, being that they’re benefiting from the completed project,” Johnson said.

Because of this, according to Johnson and Parsons, bonds have a benefit over lump sum payments for new buildings.

“Some students have been critical regarding the amount of renovations in recent years, which is understandable,” Frank said. “However, studies have shown that the physical appearance of a campus makes a big difference in how people perceive the university.”

_News Editor Allison Sylte can be reached at news@collegian.com. _

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