Two campuses in the University of Arkansas System received the go-ahead Tuesday to move forward with separate bond issues.
The Arkansas Higher Education Coordinating Board approved the economic feasibility of two revenue bond issues: up to $113 million for the University of Arkansas, Fayetteville and up to $7.5 million for the University of Arkansas at Little Rock.
A college or university meets economic-feasibility standards if it can devote a maximum of 25 percent of student tuition and fee revenue -- not including unrestricted scholarship expenditures -- for "educational and general projects," or if it can set aside revenue from annual building use fees, which must total at least 120 percent of the school's annual debt service for auxiliary projects, said Tara Smith, the deputy director of the Department of Higher Education.
The UA board approved both bond issues during its May meeting in Little Rock.
The Fayetteville university plans to take the bonds to the market in mid-July, while UALR plans to do so in mid- to late September, officials with each university said.
UA-Fayetteville will use the proceeds for mostly new construction, but some renovations of older buildings, said Mark Rushing, assistant vice chancellor of university relations.
The largest amount will go for construction of new residence halls on the south side of campus, a $74 million project that will add 200,000 square feet, 710 beds and academic space.
"The new residence halls are needed to accommodate enrollment growth, especially in the number of students in our incoming freshmen class which has grown dramatically since the last new residence hall was built," Rushing said. "There are also large numbers of sophomores who would like to live on campus if possible."
In the past five years alone, the university has grown by 10.8 percent, with 27,194 students in the fall 2016 semester, Higher Education Department data show.
Two other projects -- expansion of the Pat Walker Health Center and the second phase of construction for the Library Storage building -- are estimated to cost $10 million each, Rushing said.
UA is adding another 20,000 square feet to the health center, which will have an acute care medical clinic, expanded counseling and psychological services, and classrooms and consultation rooms for wellness and health promotion.
The library project will allow UA to store 2.2 million items in a high-density storage system -- room for about a decade of growth for the university libraries, he said.
The rest of the projects are: renovation and expansion of Kimpel Hall, construction of the Civil Engineering Research and Education Center, renovation and expansion of the Sigma Alpha Epsilon fraternity house, intramural sports facilities, south campus steam and utility systems, and other capital improvements.
University administrators expect the newest bond issue to raise UA's annual debt service payments by $6.1 million a year, he said. Repayment will be over a 30-year term at an interest rate not to exceed 5.5 percent. UA is currently spending $62.2 million, which includes the university and Razorback Athletics, annually in debt service payments.
UALR's bond issue will finance a "basic renovation" of the university's 50-year-old, 17,250-square foot physics building, which administrators have estimated will cost $3.5 million. It will also help pay for new roofs on two of UALR's largest buildings -- the Donaghey Student Center and University Plaza -- along with exterior painting in the plaza, all estimated to cost about $1.5 million for each project.
The university will hold on to the remaining $1 million in a reserve fund until the university nails down actual costs for the three prioritized projects, said Steve McClellan, vice chancellor for finance and administration.. He is hoping to use that money for other deferred maintenance needs on the campus.
It will pay back the debt over a 25-year period at an interest rate of no more than 5.5 percent using tuition and fee revenue.
The Little Rock university currently has an annual debt payment of $9,620,368, McClellan said. UALR's administrators are expecting to pay up to $512,875 more annually, raising its annual debt payments to $10,133,243, he said.
Metro on 06/28/2017