These minutes reflect
discussion and debate at a meeting of a committee of the
Minutes
Present:
Charles Speaks (chair), Jean
Bauer, Bruce Brorson, Charles Campbell, David Chapman, Tom Gilson, Gary Jahn,
Thomas Klein, Joseph Konstan, Michael Korth, Timothy Nantell, Richard
Pfutzenreuter, Susan VanVoorhis, Susan Carlson Weinberg
Absent:
none counted for a summer
meeting
Guests:
Mike
Berthelsen (Office of Budget and Finance)
Other:
none
[In
these minutes: (1) issues coming to the
committee; (2) the six-year capital plan and the capital request]
1. Issues Pending Review
Professor Speaks convened the
meeting at
Professor Jahn noted that this
Committee must also discuss the agenda of the Subcommittee on Twin Cities
Facilities and Support Services: what
should it be doing this year?
2. Status of the Six-Year Capital Plan
Professor Speaks turned next to Mr.
Berthelsen to discuss the six-year capital plan. Mr. Berthelsen reminded the Committee that
the University has a two-part six-year capital plan: a capital budget, which is for buildings with
funding available and approved for the next year, and capital plan for the
following five years.
This year the University will make a
supplemental capital request to the State (which is not usual, because this is
not a legislative session devoted to capital construction) to seek funding for
the $61 million in items that Governor Ventura vetoed. The University will only seek funding for
projects that were approved by the House, the Senate, and the conference
committee. Will the University know who
the new Governor is before it submits the supplemental request, Professor
Speaks asked? It will not, Mr.
Berthelsen said; the Regents will act on the request in October and it will be
submitted shortly thereafter.
Mr. Berthelsen reviewed the
assumptions underlying the six-year capital plan contained in a memo from
Associate Vice President Pfutzenreuter to the chancellors and vice presidents.
1. Vetoed projects will become the 2003 supplemental capital
request and not included in the 2004 request at this time.
2. The
updated 6-year plan builds on the Regents' current and approved 6-year plan.
3. The Regents will only approve preliminary capital requests
for 2004 and 2006 until the outcome of the 2003 supplemental request is known
(after which time the 2008 request may be added).
4. The 2004 and 2006 requests will not exceed $250 million in
projects per biennium.
5. The 2004 and 2006 requests will limit the University's debt
obligation to $30 million per biennium.
6. The 2004 and 2006 requests will maintain the principle that
the academic unit that is the primary beneficiary of the proposed project will
be required to finance in cash 1/6 of the project budget during the project
construction time except for projects that were originally requested in 2002
and were subsequently vetoed or not approved.
Mr. Berthelsen also quickly reviewed
the timeline for preparation of the 6-year capital plan, existing University debt
($706 million outstanding), the debt reduction schedule (assuming no additional
debt is incurred, existing debt would be largely eliminated by 2022), and the
projected annual cost of debt service (it peaks this year at about $67 million
and then declines to about $60 million or slightly less for the next five
years). In response to a question from
Professor Konstan, Mr. Berthelsen said he would be preparing revised graphs
showing the impact of adding debt if the 2004 and 2006 capital requests were
approved. They would add about $64
million in debt, at a cost of about $6 million per year.
The Committee next looked at the
preliminary 6-year capital plan, beginning with the proposed 2003 supplemental
request. The items to be requested in
2003 include:
Translational
Research Building 37 million
Jones
Hall 8
Heritage
District UMM 9
IT
Teaching/Tech Design 3
Res
& Outreach Centers 2.5
Vet
Diagnostic Lab 1.5
Mr.
Berthelsen then reviewed the items in the 2004 and 2006 capital request and the
very short list for 2008. All three
requests include $80 million in HEAPR funds (Higher Education Asset
Preservation and Replacement) for health and life safety, building systems
(plumbing, electrical, etc.), and utilities.
The only other item on the 2008 request is possible funding for
University acquisition of the State Department of Health building for the
The tables listing the proposed
capital projects also included estimated debt service cost and estimated net
operating costs. Professor Speaks asked
if anyone had any idea about the source of funding for the operating costs once
a project is approved. They do a
four-year projection of building operating costs, Mr. Berthelsen said, and
those costs are part of the biennial budget planning. So they are fully or partially funded in the
biennial budget request, Professor Speaks asked? They are, Mr. Berthelsen said. Professor Speaks noted that there had been
conversations with Dr. Maziar about the biennial request and the capital
request; the link between them appear to be the
building operating costs. Mr.
Pfutzenreuter agreed and said the operating costs never get funded.
Does anything lead to decreased
operating costs, Professor Konstan asked?
Not really, Mr. Berthelsen replied.
Facilities Management is continually working on projects to make buildings
more efficient (for example, they may add air conditioning to a building, which
saves money because window units are no longer needed), or may improve
air-changing efficiency (but may also change air more often). The University is committed to meeting its
standards of care when a building is newly-opened or renovated, which usually
means increased operating costs.
Legislators believe the University
should take buildings off-line when new ones are built, Professor Campbell
observed; does that ever happen? It
does, Mr. Berthelsen said, and legislators were provided a report. The growth in space at the University, given
all the building, was much less than expected.
Professor Speaks inquired about the
$80 million in HEAPR requests. Mr.
Berthelsen commented that before the last request the University had never
requested that much money; it had usually sought about $30 million. The University proposes to keep the total
request at about $250 million, Mr. Pfutzenreuter explained, but has moved away
from requesting funds for new buildings to requesting money for renovation and
renewal.
Professor Speaks reported that the
Capital Projects Subcommittee is being asked to review one-page case statements
providing the rationale for each of the projects proposed for the 2004 capital
request, how the projects would mesh with academic priorities and the
President's plans, and to report to this Committee its recommendations on which
items should be a high priority.
Professor Campbell inquired about a
project not on the list: the move of
English to Pillsbury Hall. Mr.
Berthelsen said that would probably be on the 2008 list because there are a
number of dominoes that must fall before that move could be made.
Professor Campbell wondered where
the space for new buildings in the future would be found, especially if the
University gives up much of the land adjacent to Mariucci Arena for a football
stadium. Mr. Pfutzenreuter said he would
be glad to review with the Committee the land available on and around the
campus and discuss thoughts on land acquisition. Is it too late to plan for academic space in
any joint-use stadium, Professor Speaks asked?
Such space is absolutely under consideration, Mr. Pfutzenreuter
said. They have talked to Recreational
Sports and the Dean of the
Is the stadium a fait accompli,
Professor Speaks asked? Mr.
Pfutzenreuter said he believes with 100% certainty that there will be a
predesign process. If he were a wealthy
betting man, he would bet on when, not if, there is such a stadium.
The Committee also briefly discussed
possible future uses of the University golf course for other University uses.
The Committee then moved on to an
off-the-record discussion of the politics of the biennial request.
Professor Speaks adjourned the
meeting at
--
Gary Engstrand