systemwide capital planning a financial perspective
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Systemwide Capital Planning A Financial Perspective. Elvyra San Juan , Assistant Vice Chancellor, Capital Planning, Design & Construction Robert Eaton , Director, Financing and Treasury. Agenda. Campus Master Plan Five-Year Capital Outlay Plan State Facilities - PowerPoint PPT PresentationTRANSCRIPT
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Systemwide Capital Planning A Financial Perspective
Elvyra San Juan,Assistant Vice Chancellor, Capital Planning, Design & Construction
Robert Eaton,Director, Financing and Treasury
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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
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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
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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
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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
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State Facilities/Projects• Infrastructure Projects• Library Buildings• Academic Buildings• Administration Buildings
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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
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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
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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
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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
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Funding – Streamlined - PWC• PWC– 2 years to encumber, 2 years to spend• No DOF/PWB approvals • No scope charges augments
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Budget Act Provisional Language• Provides governing language that is different
than Section 1.8• Reporting• Project Savings• Deadlines for money
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Authorizing Campus• CPDC issues request for Allocation Order (RAO)• Resource Mgmt (F.Services) to generate A. Order• Project Number• CFIS
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Capital Project Reporting• FIRMS• Account Codes• Use for reporting to Board, and Sacramento
agencies
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Space & Facilities Database• Campus Annually Reports• Insurance• New Space $/SF
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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
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Non-State Facilities/Projects• Parking Structures• Health Centers• Student Unions• Student Housing• Cont. Education
• Foundation Bldgs.• Recreation Centers• Bookstores• Public/Private
Developments
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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
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Systemwide Revenue Bonds• Pledge of the CSU Revenue Programs
Housing ParkingStudent Unions Health CentersCont. Education Auxiliary
Organizations
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Systemwide Revenue BondsProgram 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
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Systemwide Revenue BondsExecutive 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
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Systemwide Revenue BondsCSU Debt Ratings
• Aa3 from Moody’s• A+ from Standard & Poor’s• CSU’s ratings better than the State of California (A1/A)
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Systemwide Revenue BondsThe 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
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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
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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
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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
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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