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 Presentation

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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

  • AgendaCampus Master Plan Five-Year Capital Outlay PlanState FacilitiesFunding for State FacilitiesState AppropriationsAuthorizing CampusSpace and Facilities DatabaseNon-State FacilitiesFunding for Non-State FacilitiesCombined Funding & FacilitiesEquipment FinancingPublic/Private Developments

  • Campus Master PlanShow existing and anticipated facilities necessary to accommodate a specified enrollment at an estimated target dateAre generally revised every 10 years2 - 3 year processRequires an Environmental Impact Report (EIR)Requires Trustees approval

  • State University Administrative Manualhttp://www.calstate.edu/CPDC/SUAM/Policies and Procedures for Planning, Design, Construction, Plant

    Campus responsibilities for design/constructionBuilding Official and Deputy Building OfficialForms

  • Five-Year Capital Outlay PlanAnnually campuses submit a proposed schedule for its Campus Master Plan implementation for a five-year periodIncludes both State and Non-State projectsAmendments/Revisions are allowed with Trustee approval

  • State Facilities/ProjectsInfrastructure ProjectsLibrary BuildingsAcademic BuildingsAdministration Buildings

  • Funding for State FacilitiesGeneral Obligation Bond voter approvedLease Revenue Bonds legislatively approvedAnnual funding provided by State Bonds $345 MillionFree Money for the CSU CSU doesnt pay the debt serviceHave specific encumbrance and reversion datesUtilized for Capital Renewal, Minor, and Major projects

  • Funding for State Facilities Capital Renewal ProjectsUpgrade/replace building systems (HVAC, lighting, etc.)$50 million available systemwide$2 million limit per campusMinor ProjectsUpgrade/renovate academic spaces$25 million available systemwide$400K limit per projectMajor Projects: Approx. $270 million for new construction systemwideGenerally based on enrollment projections and space entitlements

  • Funding for State AppropriationsBudget Act governsCSU Agency 6610Major Capital OutlayLine Item AppropriationsPhased Funding6610-302-xxxxStreamlined Funding6610-302-xxxxxxxx refers to bond funding

  • Funding Phased P 06/07 W 07/08 C 09/10Budget Act Section 1.8 for money lifePreliminary Plans 1 yearWorking Drawings 1 yearConstruction 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 augmentationsDOF authorizes funding by phone

  • Funding Streamlined - PWCPWC 2 years to encumber, 2 years to spendNo DOF/PWB approvals No scope charges augments

  • Budget Act Provisional LanguageProvides governing language that is different than Section 1.8ReportingProject SavingsDeadlines for money

  • Authorizing CampusCPDC issues request for Allocation Order (RAO)Resource Mgmt (F.Services) to generate A. OrderProject NumberCFIS

  • Capital Project ReportingFIRMSAccount CodesUse for reporting to Board, and Sacramento agencies

  • Space & Facilities DatabaseCampus Annually ReportsInsuranceNew Space $/SF

  • CSU - Debt Outstanding$3.61 Billion as of January 2, 2009SRB - $2.67 BillionCommercial Paper - $205 MillionAuxiliary Organization Bonds - $185 MillionState Public Works Board - $492 Million State appropriates money each year to CSU for the debt serviceOther - $64 Million

  • Non-State Facilities/ProjectsParking StructuresHealth CentersStudent UnionsStudent HousingCont. Education

    Foundation Bldgs.Recreation CentersBookstoresPublic/Private Developments

  • Funding For Non-State FacilitiesGenerally funded through Systemwide Revenue Bonds (SRB)Other Funding Sources:Auxiliary Organization Revenue BondsDonations/GiftsEnergy Incentive/RebatesBanks (Auxiliary Organizations Only)Interest Earnings from Student Fees

  • Systemwide Revenue BondsPledge of the CSU Revenue Programs

    HousingParkingStudent UnionsHealth CentersCont. EducationAuxiliary Organizations

  • Systemwide Revenue BondsProgram flexibilitySRB funds can be loaned to Auxiliary OrganizationsLoan agreement between CSU and the AuxiliaryOff-campus Auxiliary projects can be financed and the Auxiliary can retain ownership of the landCSU can issue Variable Rate debtTax-Exempt or Taxable

  • Systemwide Revenue BondsExecutive Order 994 defines the Debt Service Coverage RatiosCampus Overall coverage ratio of Net Operating Revenues required - 1.35x Debt ServiceProgram Campus 1.1x Debt Service (Housing, Parking) Existing program can subsidize new projectsStandalone Project Campus 1.1x Debt Service Auxiliary Overall coverage ratio of 1.25x Debt Service

  • Systemwide Revenue BondsCSU Debt RatingsAa3 from MoodysA+ from Standard & PoorsCSUs ratings better than the State of California (A1/A)

  • Systemwide Revenue BondsThe Trustees receive regular reports on the CSUs 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

  • Commercial PaperVariable rate, short-term borrowing, done through the CSU InstituteVariety of purposes:Bridge financing for SRB projectsPermanent financing for short-term capital projects approved by the Trustees Funding for the CP/Equipment ProgramTax-Exempt or Taxable

  • Combined Funding & FacilitiesIt is possible to combine multiple funding sources for a projectExcept State funds for a non-State facilityFunding a State facility with revenue bonds is not encouragedIt is possible to combine a State and Non-State facility into one projectAccounting must have a clear understanding of the use of space and construction costs

  • Equipment FinancingFinancing is provided through a lease, with a non-appropriation clause:Lease provided by a third-party vendorCurrent approved vendors: DLL Public Finance, Key Government Finance, Koch Financial, Providence Capital Lease provided through the CP/Equipment ProgramGenerally at tax-exempt ratesEquipment can be financed for 1-8 years$100,000 to $5 million per transactionRate is reset annually by Financing & Treasury currently 3.6%Payments are quarterlyCampus acquires equipment and then is reimbursed

  • Public/Private DevelopmentsAllows for private entities to utilize campus land for continued support of the campus missionTypical StructureCampus land is leased to an Auxiliary OrganizationAuxiliary Organization sub-leases land to a private entityPrivate entity develops land and provides a lease paymentProjects must be reviewed by the Land Development Review Committee Governed by Executive Order 747

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    *The California State University*The California State Universitywww.calstate.edu