FAYETTEVILLE — The University of Arkansas at Fayetteville wants to issue up to $141,015,000 in bonds to finance construction of buildings and renovation of facilities.
UA officials propose to use the bonds’ cash to pay for 15 projects, including building five structures to be completed between 2011-13.
Projects also include renovating dormitories and the Arkansas Union, modernizing the 42-year-old science building and fixing up classrooms.
Building a football operations center that Athletic Director Jeff Long announced last week also is among the projects.
“A first-class university, which we are, needs firstclass facilities,” campus Chancellor G. David Gearhart said.
Gearhart is to ask the University of Arkansas System board of trustees Friday to approve a resolution saying that UA intends to issue the bonds. The university would use student fees, room fees and donations to cover most of the annual payments.
The bond issue must be reviewed by the Arkansas Higher Education Coordinating Board and approved by UA trustees, both of which could happen in April.
The bonds would push UA’s debt above $586 million, by far the highest in theUA System, with $445.8 million in long-term debt, system spokesman Ben Beaumont said. The university pays $38 million annually to service the debt, which would not be paid in full until 2039.
The proposal is the secondhighest request ever by a UA System institution, Beaumont said. In 2004, the University of Arkansas for Medical Sciences, which is based in Little Rock, entered into a $150 million bond issue for a new hospital and capital improvements, Beaumont said.
Most of the UA-Fayetteville bonds would have 30-year terms, Don Pederson, vice chancellor for finance and administration, said in an e-mail. The time period and amounts of the bonds can change, he said.
“The campus is very dependent on bonds for capital costs,” Pederson said. “Arkansas does not provide capital funds to the extent that a growing and research campus needs to function effectively.”
Gearhart pointed out that enrollment at the Fayetteville campus has grown quickly, reaching 21,406 last fall. Next year, he expects to enroll about 23,000 students. The bond issue is needed to pay for improvements and expand facilities to accommodate the influx of students, Gearhart said.
The largest amount of money would be spent on aproposed football operations center, which officials said will help the university stay competitive regionally. Its construction is estimated to run $35 million.
Gearhart said officials already have $15 million in private donations for the center, and he is not concerned about the athletics department’s ability to pay from its own revenue.
Other large projects include:
Renovating and building an addition to Vol Walker Hall to accommodate the entire Fay Jones School of Architecture. The projected cost is $32.8 million.
Fixing up and building an addition to Ozark Hall for geosciences, the Graduate School and Honors College, at a projected cost of $27.1 million.
Enhancing student housing at Futrall, Pomfret, Humphreys and Yocum halls. That projected cost: $24.28 million.
In fiscal 2009, the university instituted a student facilities fee. The fee, now $6, gradually increases every year until it will reach $10 per credit hour in 2013.
Money from that fee has made it possible for the university to begin a capital-improvement campaign estimated $220million, officials said.
Since fiscal 2009, the state has approved UA issuing bonds for 10 projects, adding more than $53 million to the school’s debt, according to the state Department of Higher Education.
The school’s debt burden went from 12.5 percent of net tuition and fees two years ago to 16.1 percent in fiscal 2010, according to a report from the university.
That rate is still well under the 25 percent limit set by the Higher Education Department. Each public university must have a revenue source for construction, which can includegrants, tuition and fees, according to an e-mail from Jim Purcell, director of the Higher Education Department.
UA has sound financial practices, a profitable athletic program and a strong fundraising base, he said.
Any tuition increase for next fall will not be based on a change in the debt the university pays annually on its bonds, said Pederson. The university has the capacity to pay additional debt because of enrollment growth, he said.
“We’re in really good shape financially,” Gearhart said. “We have the cash flow to be able to do this.”
Front Section, Pages 1 on 01/27/2011