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Systemwide Capital Planning A Financial Perspective Elvyra San Juan, Assistant Vice Chancellor, Capital Planning, Design & Construction Robert Eaton, Director,

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Presentation on theme: "Systemwide Capital Planning A Financial Perspective Elvyra San Juan, Assistant Vice Chancellor, Capital Planning, Design & Construction Robert Eaton, Director,"— Presentation transcript:

1 Systemwide Capital Planning A Financial Perspective Elvyra San Juan, Assistant Vice Chancellor, Capital Planning, Design & Construction Robert Eaton, Director, Financing and Treasury

2 Agenda Campus Master Plan Five-Year Capital Outlay Plan State Facilities Funding for State Facilities State Appropriations Authorizing Campus Space and Facilities Database Non-State Facilities Funding for Non-State Facilities Combined Funding & Facilities Equipment Financing Public/Private Developments

3 Campus Master Plan Show existing and anticipated facilities necessary to accommodate a specified enrollment at an estimated target date Are generally revised every 10 years 2 - 3 year process Requires an Environmental Impact Report (EIR) Requires Trustees approval

4 State University Administrative Manual http://www.calstate.edu/CPDC/SUAM/ Policies and Procedures for Planning, Design, Construction, Plant Campus responsibilities for design/construction Building Official and Deputy Building Official Forms

5 Five-Year Capital Outlay Plan Annually campuses submit a proposed schedule for its Campus Master Plan implementation for a five-year period Includes both State and Non-State projects Amendments/Revisions are allowed with Trustee approval

6 State Facilities/Projects Infrastructure Projects Library Buildings Academic Buildings Administration Buildings

7 Funding for State Facilities General Obligation Bond – voter approved Lease Revenue Bonds – legislatively approved Annual funding provided by State Bonds ≈ $345 Million “Free Money” for the CSU – CSU doesn’t pay the debt service Have specific encumbrance and reversion dates Utilized for Capital Renewal, Minor, and Major projects

8 Funding for State Facilities Capital Renewal Projects Upgrade/replace building systems (HVAC, lighting, etc.) $50 million available systemwide $2 million limit per campus Minor Projects Upgrade/renovate academic spaces $25 million available systemwide $400K limit per project Major Projects: Approx. $270 million for new construction systemwide Generally based on enrollment projections and space entitlements

9 Funding for State Appropriations Budget Act governs CSU – Agency 6610 Major Capital Outlay Line Item Appropriations Phased Funding 6610-302-xxxx Streamlined Funding 6610-302-xxxx xxxx refers to bond funding

10 Funding – Phased – P 06/07 W 07/08 C 09/10 Budget Act – Section 1.8 for money life Preliminary Plans – 1 year Working Drawings– 1 year Construction – 1 year to secure a proceed to bid, and 2 additional years to encumber (3 total) 2 years to spend encumbered funds or you lose them (revert) PWB – Public Works bond approves preliminary plans, scope charges augmentations DOF authorizes funding by phone

11 Funding – Streamlined - PWC PWC– 2 years to encumber, 2 years to spend No DOF/PWB approvals No scope charges augments

12 Budget Act Provisional Language Provides governing language that is different than Section 1.8 Reporting Project Savings Deadlines for money

13 Authorizing Campus CPDC issues request for Allocation Order (RAO) Resource Mgmt (F.Services) to generate A. Order Project Number CFIS

14 Capital Project Reporting FIRMS Account Codes Use for reporting to Board, and Sacramento agencies

15 Space & Facilities Database Campus Annually Reports Insurance New Space $/SF

16 CSU - Debt Outstanding $3.61 Billion as of January 2, 2009 SRB - $2.67 Billion Commercial Paper - $205 Million Auxiliary Organization Bonds - $185 Million State Public Works Board - $492 Million State appropriates money each year to CSU for the debt service Other - $64 Million

17 Non-State Facilities/Projects Parking Structures Health Centers Student Unions Student Housing Cont. Education Foundation Bldgs. Recreation Centers Bookstores Public/Private Developments

18 Funding For Non-State Facilities Generally funded through Systemwide Revenue Bonds (SRB) Other Funding Sources: Auxiliary Organization Revenue Bonds Donations/Gifts Energy Incentive/Rebates Banks (Auxiliary Organizations Only) Interest Earnings from Student Fees

19 Systemwide Revenue Bonds Pledge of the CSU Revenue Programs HousingParking Student UnionsHealth Centers Cont. EducationAuxiliary Organizations

20 Systemwide Revenue Bonds Program flexibility SRB funds can be loaned to Auxiliary Organizations Loan agreement between CSU and the Auxiliary Off-campus Auxiliary projects can be financed and the Auxiliary can retain ownership of the land CSU can issue Variable Rate debt Tax-Exempt or Taxable

21 Systemwide Revenue Bonds Executive Order 994 defines the Debt Service Coverage Ratios Campus – Overall coverage ratio of Net Operating Revenues required - 1.35x Debt Service Program – Campus – 1.1x Debt Service (Housing, Parking) – Existing program can subsidize new projects Standalone Project – Campus – 1.1x Debt Service Auxiliary – Overall coverage ratio of 1.25x Debt Service

22 Systemwide Revenue Bonds CSU Debt Ratings Aa3 from Moody’s A+ from Standard & Poor’s CSU’s ratings better than the State of California (A1/A)

23 Systemwide Revenue Bonds The Trustees receive regular reports on the CSU’s Debt Capacity Debt capacity is a measure of how much debt an institution can support at a given credit rating level November 2007 BOT report – based on the ratio of Debt Service to Total Resources, the CSU has additional Debt Capacity thru 2012 of $4.5 Billion

24 Commercial Paper Variable rate, short-term borrowing, done through the CSU Institute Variety of purposes: “Bridge” financing for SRB projects “Permanent” financing for short-term capital projects approved by the Trustees Funding for the CP/Equipment Program Tax-Exempt or Taxable

25 Combined Funding & Facilities It is possible to combine multiple funding sources for a project Except State funds for a non-State facility Funding a State facility with revenue bonds is not encouraged It is possible to combine a State and Non-State facility into one project Accounting must have a clear understanding of the use of space and construction costs

26 Equipment Financing Financing is provided through a lease, with a non-appropriation clause: Lease provided by a third-party vendor Current approved vendors: DLL Public Finance, Key Government Finance, Koch Financial, Providence Capital Lease provided through the CP/Equipment Program Generally at tax-exempt rates Equipment can be financed for 1-8 years $100,000 to $5 million per transaction Rate is reset annually by Financing & Treasury – currently 3.6% Payments are quarterly Campus acquires equipment and then is reimbursed

27 Public/Private Developments Allows for private entities to utilize campus land for continued support of the campus mission Typical Structure Campus land is leased to an Auxiliary Organization Auxiliary Organization sub-leases land to a private entity Private entity develops land and provides a lease payment Projects must be reviewed by the Land Development Review Committee Governed by Executive Order 747

28 www.calstate.edu


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