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Last Updated: Oct 16th, 2008 - 13:33:17 |
No news was good news Monday when Auraria representatives met with staff of the state treasury office to discuss plans for continued funding for the new science building.
While the state had previously promised funding, the current worldwide financial crisis and Governor Bill Ritter's announcement of a hold on all new state-funded construction had raised concerns that the science building could be affected.
"We are moving forward with everything as if it is on track," Dean Wolf, executive vice president of the Auraria Higher Education Center, said on the phone after the meeting.
Funding for the science building, the new part for which ground was broken December 2007 with completion slated for 2009, has seen several setbacks.
Several months after building began, the state reassessed its budget and announced it could not fully fund the building as previously committed.
Metro officials then scrambled to find alternatives and in May Governor Bill Ritter signed two laws that would allocate money for higher education building projects, including the Auraria Science Building.
One law dedicated 50 percent of the money paid to the State for natural gas leases to higher education construction projects, and the other allowed schools to borrow money using Certificates of Participation, until enough money from leases comes in that the COPs can be repaid.
In June, the state approved four months of bridge funding for the science building intended to last until the state treasurer issued the COPs, State Treasury Director of Initiatives Mary Wickersham said.
Wickersham said that the decision on whether to issue COPs to Auraria or not will be made Nov. 6.
"The state treasurer will decide to whether or not and exactly how to issue the COPs, depending on her current market analysis and consultations with business leaders and state legislators," she said.
Three weeks ago bank interest rates were at 4.75 percent, when the banks stopped lending money due to the current economic crisis.
"Since no banks are borrowing or lending money right now, it was impossible to say what the rate is currently," Wickersham said.
She added that she estimates that last week interest rates may have risen as much as one to 5.75 percent. This is due to the nervousness among the banks toward lending money, "but until lending resumes no one can know."
If the interest rate goes too high, the Treasurer could rule to borrow less money, and thus fund only the buildings that it could afford, or even delay the purchase of COPs to wait for a better price, Wickersham said.
In that case, Wickersham said, the science building would probably receive continued temporary funding because the project was already underway.
Auraria needs close to $65 million to complete the science building, said Wolf.
Wickersham told Wolf to expect the planned temporary funding and the COPs to be issued Nov. 6 and to continue with the project as was planned earlier in the year.
"Science building construction is currently on schedule and on budget," Wolf said. "But in this volatile market right now, who knows what will happen?"
"The market is out of the state's control too," said Auraria Chief Financial Officer Sandra Sales.
If the COPs are not issued, the science building could be put on hold, but the meeting seemed very upbeat, she said.
"The state treasurer is still moving forward with the Nov. 6 closing of the COPs," Sales said.
Right now the campus needs $11.3 million to continue construction for November, Sales said, and a combined $3.4 million for construction in December and January to encumber contracts.
Bridge money should keep the project on track through those months if the COPs are not issued, Sales said.
"The state treasurer doesn't want to wait till past November or December," she said. "But the state's intention is to get this project done."
Project's estimated total cost: $111 million
Auraria's share of the cost: $22 million
Money needed as of October 2008: $65 million
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Science Building timeline:
2004: The first plans drawn up
2006: Plans finalized
2007: Legislator approves the building and initially places Metro fourth on the state's higher education funding priority list
November 2007: One month before the planned groundbreaking, state announces funding cut in half, drops Metro to No. 21 on priority list
March 21, 2008: After state revenue projections forecast $700 million shortfall, Colorado legislators cut Science Building funding to $0
May: Gov. Bill Ritter and Colorado legislators sign law to fund higher education, borrowing money against the state's projected natural gas revenues
June: State's capital development committee gives Metro four months of temporary funding until COPs can be issued
October 31, 2008: Projected date when Metro should receive additional $11.3 million in temporary funding
November 6, 2008: Date planned for State Treasurer to purchase nearly $200 million in COPs to be given to 16 Colorado's Higher Education construction projects, including the Auraria Science Building.
Fall 2009: Scheduled date of completion for new building.
Fall 2010: Old Science Building scheduled to reopen after renovation.
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~Definitions~
Certificate of Participation: allows Colorado's higher education institutions to borrow money for construction projects backed by the state's projected natural gas revenues.
Bridge funding: temporary funding for a project to "bridge" the gap between expired funding and future funding.
Mineral Leases: Payments, or rent, from companies to the government, split 51 to 49 percent between Federal and State, for the right to exploit natural gas reserves.
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