NEWS

State may hold off on spending spree for college buildings

Diane Dietz
Statesman Journal
The horticulture program greenhouses at Chemeketa Community College in Salem on Tuesday, May 9, 2017.

The college and university presidents came like they do every spring of odd-numbered years to ask the Legislature for bonding authority for new buildings on their campuses — only this year the result was slightly off kilter.

The state’s seven universities recently asked members of the Ways and Means Capital Construction Committee for $284 million for new buildings and renovations the state would have to pay off over the coming 20 or 30 years. The state’s 17 community colleges asked for $44 million the state would pay off over a similar stretch.

When it comes to bonding authority, the universities and colleges are accustomed to getting most of what they ask for. Even when general fund dollars are short — like through the Great Recession of 2007 through 2009 — bond-funded projects continued from the University of Oregon to Eastern Oregon University and in between.

Over the past 10 years, the state has taken on $1.13 billion in debt so universities can have new classrooms, laboratories, and offices  — and now the debt load is catching up with the state.

The state will have to pay $193.8 million just to service university construction-related debt in 2017-2019, up by 69 percent in two, two-year budget cycles.

And the state will pay $32.1 million to service to service the community college construction debt in 2017-2019, up 93 percent in two, two-year budget cycles.

A graph of the growing debt so impressed House Speaker Tina Kotek, she warned school officials that rapid increases can’t continue. The proposed projects are nice, she said, but “we end up paying a long-term debt that I don’t think we can afford,” she said.

The key phrase at the Capitol this week is “cost containment.” Lawmakers say they are looking everywhere to save money — and it may mean that some projects are turned down when ordinarily the answer would be yes.

The horticulture program greenhouses at Chemeketa Community College in Salem on Tuesday, May 9, 2017.

The lawmakers also wanted to see that the colleges and universities are taking care of the buildings they’ve got. Rep. John Huffman, R-The Dalles, said that session after session the deferred maintenance on college campuses have mounted — and yet the state keeps adding new construction.

“I know that new buildings sparkle and glitter, but, at some point, I want to make sure we’re getting control of our deferred maintenance,” he said.

Public hearings on the university and college requests are set to continue at 1 p.m. Friday at Hearing Room F.

The state doesn’t have to stop borrowing because it has too much debt. Oregon has “very strong creditworthiness,”  according to the ratings agencies. Fitch gives the state  AA+, Moody's Investors Service Aa1 and  Standard & Poor's AA+.

But the Legislature is $1.6 billion short of balancing the state budget for the coming biennium, and if the Democratic majority wants to raise taxes, they’re convinced they have to make a good faith showing of cutting costs for Republicans and their business-oriented backers to go along.

The state has spent a lot on construction over the past 10 years, but it’s not enough to keep up with similarly sized higher education systems in Maine, New Hampshire, Missouri and Virginia, UO Chief Financial Officer Jamie Moffitt told lawmakers.

Taken together, Oregon universities fall under the average of 150 square foot of education real property per student, according to the Sightlines consultant the universities hired to make comparisons.

“We are looking at an aging and older infrastructure,” Moffitt said.

The cost of debt service for building projects at the state's 17 community colleges is going up sharply.

Still, the state’s college and university presidents have ideas — some of them grand — for improvements on their campuses and various levels of political muscle to get what they want.

Chemeketa Community College, for example, wants $6 million in state bonding authority to build a $17 million, 40,000-square-foot Chemeketa Agricultural Complex.

The project would serve Marion County agriculture, which is a $600 million a year industry,  Chemeketa President  Julie Huckestein told lawmakers.

The new building would consolidate the college’s agricultural and horticultural programs, which are now spread out in three modular buildings and a series of outdoor sheds, she said.

The complex would include the classroom and office building, storage, greenhouse, hoop houses, learning and research gardens, and an incubator farm.

The college hopes to share the building with the OSU Extension Service, Marion-Polk Food Share and maybe even the Marion County Soil and Water Conservation District.

“Hopefully, our end result is to save taxpayers money,” Huckestein said.

Western Oregon University, meanwhile, wants $7.7 million in bonding authority to help with an $8.2 million, 65,000 square foot remodel of the old Oregon Military Academy. The newly refurbished building would house admissions, financial aid, veterans services and service learning and career development.

Those are modest “asks” compared with the landscape-scale dreams that two of the state’s major universities are pursuing outside of the usual capital projects channels.

The UO is seeking $100 million to launch one of three 70,000 square foot research buildings planned for the Penny and Phil Knight Campus for Accelerating Scientific Impact, which is across Franklin Boulevard from the campus. The Knights are giving the university $50 million each year for 10 years to make the campus a reality — when it was announced in October 2016, it was the largest philanthropic gift ever given to a public, general purpose university.

The plan is to hire 30 new top-flight researchers and their teams to pursue applied or so-called translational research in the life sciences.

The UO’s goal is to have the first building in use within three years, and the university is asking the Legislature to chip in.

The university hired itself a legislator, former Sen. Chris Edwards, who stepped down last fall after a decade in the Legislature, to help the university get the Knight project under way.

The cost of servicing debt for new buildings at the state's seven universities is going up sharply.

Oregon State University, meanwhile, is seeking bonding authority to begin building out its 132-acre campus — part on an old pumice mine, part on an old landfill — in Bend, which OSU likes to refer to as the eighth public university in Oregon.

Inside the regular funding channels, the university is asking for $11 million to put in utilities, a storm water system, roads, parking lots and pathways.

Outside the channels, in House Bill 2782, Bend lawmakers are seeking $70 million for an academic building, a student success center, housing, a fitness center, athletic fields and an innovation hub.

OSU envisions 5,000 students at the Bend campus (up from 1,000 now), which would make the new university about the size of WOU.