USF Board of Trustees Finance & Audit Workgroup Special Meeting NOTES Tuesday, October 6, 2015 Tampa Campus - Marshall Student Center, Room #3707

Transcription

1 USF Board of Trustees Finance & Audit Workgroup Special Meeting NOTES Tuesday, October 6, 2015 Tampa Campus - Marshall Student Center, Room #3707 I. Call to Order and Comments The meeting of the Finance and Audit Workgroup was called to order by Chair Hal Mullis at 8:35 am. The following members and liaisons were present: Hal Mullis, Stephanie Goforth, Scott Hopes, Brian Lamb, John Ramil, Judy Genshaft, Roy Binger, Alan Bomstein, Carl Pacini and Ninon Sutton. The following additional Trustees were also in attendance: Jozef Gherman, Stan Levy, Steve Mitchell, Debbie Sembler, Greg Teague, Nancy Watkins, and Jordan Zimmerman (phone). Chair Mullis noted that all trustees were encouraged to attend this special meeting. II. Public Comments Subject to USF Procedure No requests for public comments were received. III. New Business Action Items a. USF Tampa On-campus Grocery Store Project Nick Trivunovich, Vice President and CFO, addressed the Workgroup seeking approval of the parameters for an On-campus Grocery Store Project and the parameters for the Ground Sublease Agreement and requesting the Florida Board of Governors approves the parameters for the Project and terms of the Ground Sublease Agreement under the Public-Private Partnership Guidelines. Based on student surveys, the number one request on the Tampa campus is for a grocery store. This would be the first grocery store on campus in the nation. The University entered into a public procurement ITN process for a grocery store on the Tampa campus. The ITN was publicly posted for a five-week period. Invitations to participate were sent to Winn-Dixie, Whole Foods, and Trader Joe s. In anticipation of BOG P3 guidelines which address financial strength of partners, the ITN gave a priority to those grocery store chains with at least $25B in annual revenues. The Intent to Award was issued for Publix Supermarkets, Inc. on 09/21/15. Publix is one of the best companies in Florida, the US, and the world. The ground lease would be a 20-year term with six 5-year renewals (50-year total term). Ground rent would be $130K annually. The project will consist of up to a 28,800 square foot on-campus grocery store along with appropriate parking, lighting, security and site infrastructure to be located at the southeast corner of Fletcher Avenue and North Palm Drive on an approximately 3 acre parcel. This store would be larger than initially intended as we asked Publix to include areas for students to sit and eat.

2 The project enhances student success by providing alternate food service opportunities and by reducing the need for students to leave campus for grocery items. Also, Publix has agreed to conduct at least 2 job fairs per calendar year on campus for available employment/internship opportunities. Brian West, a Publix Representative, was introduced. Trustee Hopes asked how we arrived at the $25B in annual revenues priority in the ITN. Mr. Trivunovich responded that we wanted to get the top grocery store chains in the nation. Trustee Hopes noted that only one response was received. Trustee Hopes asked how we arrived at the annual amount ($130K) for the ground lease. Hilary Black, Senior Associate General Counsel, explained that Colliers International prepared an appraisal report and the amount is within the range provided. Colliers valued/compared based on other big box chains. Trustee Hopes noted that the lease is based on the square footage of the building. Mr. Trivunovich stated that USF has no costs involved in preparing the site. Publix will provide the paved parking lot and lighting. Trustee Hopes asked if Publix will be paying rent on the parking lot. Mr. Trivunovich responded no, only on revenue generating space. President Genshaft stated that the location of the grocery store will provide access to 15,000-18,000 students who live in proximity to that area of campus. This is a great asset for those living close to campus. Trustee Hopes made a motion to approve the parameters of the project as presented and to send to the BOG for approval. Trustee Goforth seconded the motion. The motion passed. b. USF Sarasota-Manatee: Property Disposition Dr. Sandra Stone, USF Sarasota-Manatee Reginal Chancellor, presented the property disposition request. This proposed transaction was initiated by the Sarasota-Manatee Airport Authority (SMAA) to enhance public safety through the acquisition of properties in the Federal Aviation Administration (FAA) designated Runway Protection Zone around the Sarasota- Bradenton International Airport. The USFSM bookstore property is comprised of 1.79 acres, four buildings (18,059 GSF) and related site improvements. The purchase price of $850K was based on an average of two property appraisals prepared independently by USF and SMAA, as required by the state of Florida. USFSM requests BOT review and approval of the proposed transaction. This approval will allow for the appropriate legislative and executive actions necessary for this parcel to be sold to SMAA and for the USFSM campus to receive a fair market-value payment in return. $0 state capital outlay funding is being requested for this transaction. SMAA has agreed to pay full appraised value for the parcel and any appropriation to USFSM to compensate for the sale of the parcel will be fully offset by the SMAA payment to the state treasury at closing of the sale. USFSM will relocate the bookstore onto existing property. There will be no disruption of services to students. There is a two-year grace period from the time of sale to having to be all out/off of the property.

3 USFSM has no other property in the runway protection zone. A motion was made to approve the proposed transaction as presented. The motion was seconded. The motion passed. c. FCC Incentive Auction Tom Hoof, Chief Marketing Officer, addressed the Workgroup seeking authorization for the University to participate in the upcoming FCC incentive auction. USF operates one of the public broadcast television stations (WUSF) in Tampa/St. Petersburg. The auction is expected to be held on or about March 29, Participation in the upcoming auction may provide a significant source of revenue. A brief video was played which described broadband spectrum and the incentive auction process. If the University is authorized to participate in this auction it may choose to reject any offer without penalty. If the University chooses not to participate in the auction or rejects all offers then the FCC may move WUSF to another frequency as determined by the FCC. Tampa Bay is one of the few areas with two PBS TV stations. WEDU is the primary PBS affiliate offering 75% PBS programming, WUSF offers 25%. PBS programming can be accessed via WEDU and other delivery methods like Apple TV. WUSF reaches a diverse audience - 73% of Hispanic Households, 69% of African American Households. If WUSF s broadcast license is forfeited in the upcoming FCC Channel Auction the following would be possibilities for the University: 1) the television facilities can be redeveloped to provide an outstanding learning experience for students, and excellent video and digital production capabilities for USF and the Tampa Bay region. Providing a great learning experience for our students is key video content is not going away, it is increasing. Mobile devices are today s delivery system. 2) Create cost efficient content and production management. 3) Entice a local Television Station to move their facilities to the WUSF Facilities (station would rent facilities from USF). WUSF radio would not be affected by any of this. Also post auction, the University would develop cutting edge learning opportunities for our students by partnering with an existing local production company like HSN; generating revenue from our production facilities (there are limited commercial production facilities in the Tampa Bay region); and generating content development to enhance the brand reputation of the University - content can be developed by our production facilities and can be delivered via a variety of digital means across a variety of channels. Mr. Trivunovich gave a brief presentation on WUSF TV s financial position for FY2012- FY2015. WUSF TV has incurred operating losses for FY2013 thru FY2015 largely due to depreciation on capital expenditures. Net cash flow was negative for FY2015 ($755K) due to operations not being as strong as they had been and a principal loan payment. WUSF Radio had positive cash flow for this same time period. Mr. Trivunovich also reviewed WUSF s outstanding Foundation loans. WUSF TV has an outstanding loan (for equipment) balance of $716K due September 2016; WUSF FM has an outstanding loan balance of $730K due November 2020.

4 Mr. Trivunovich noted that we are researching the tax effects of a sale and getting an opinion to verify. Trustee Watkins stated that the existing report by Greenhill (part of the background materials) says there should be no UBIT (unrelated business income tax) on sale proceeds. Trustee Goforth asked if any students would be displaced by the forfeiture of our FCC license. Mr. Hoof stated that WUSF has several interns who will not be affected. Steve Prevaux, General Counsel, provided additional information on the auction. This is the first FCC incentive auction process, but the 101 st FCC auction. An incentive auction is a voluntary, market-based means of repurposing much-needed spectrum for flexible use, including mobile services. (i.e. sale of licenses). This process provides a high degree of flexibility in a voluntary market based approach allows participants to reject all offers without penalty; optional sale of spectrum usage rights; channel share; move to VHF (new tower reimbursement); stay on air as repacked ; self-determination of walkaway price(s). Participation does not guarantee sale. The FCC is expected to announce the timeline for the auction on 10/12/15 and is expected to accept applications Nov/Dec Then the Quiet Period runs until auction ends (no further public meetings re: auction bid, bid pricing, bid strategy etc.). The auction is expected to begin on 03/29/16. In preparation for the auction, USF has retained an outside valuation expert to determine value of spectrum usage rights and reasonable walkaway price and retained outside legal counsel to represent USF in Incentive Auction process through to conclusion. USF management is also working on post-auction planning (whether sale or no-sale). The firm of Bond-Pecaro has been retained to assess the valuation of our spectrum. Tim Pecaro, was introduced and gave some remarks about the Tampa market. He stated the potential for USF is significant - WUSF is very desirable. The FCC is seeking spectrum across the country. This is the last spectrum auction for the foreseeable future by FCC for TV. Trustee Zimmerman stated that the auction is a great opportunity and something that should be explored. It is also a good time to consider selling the radio station as well, while there is still value (which is becoming less and less each day). Trustee Watkins, BOT liaison for this project, explained that leadership (President and Provost) needs to decide if WUSF TV still serves an academic purpose. Sam Bell, member of WUSF Advisory Board, was called on for comment. Mr. Bell reported that the Advisory Board supports joining in the auction, but not going dark (off the air). Keep the channel through channel sharing or moving down on the spectrum. Keep WUSF on the air. This is in the best interest of the University now and in the future. UF and FSU will keep their TV channels. Major research universities need their TV stations. Trustee Hopes stated that he agreed with Mr. Bell. Trustee Hopes would like to know how many of the top 100 universities have TV stations. Chair Mullis asked Trustee Watkins, BOT liaison for this project, to make a motion. Trustee Watkins moved that USF participate in the FCC Incentive Auction, reserving the right to postauction channel sharing. Trustee Watkins shall represent the BOT in all aspects during the

5 FCC mandated quiet period. Trustee Ramil seconded the motion. The motion passed by majority. Trustee Hopes voted no. d. Florida Institute of Oceanography 1. Annual Report Dr. William Hogarth, FIO Director, presented the annual report required by the BOG Regulation for Academic Infrastructure and Support Organizations. The regulation also requires approval of AISO Annual Reports by the BOT of the host institution. FIO is in good budget shape. Unfortunately the capital funding request in FY to replace the R/V Bellows was not successful. The request has been resubmitted for FY FIO and its member institutions have committed $3M to reduce the total $6M PECO request. Replacement of the Bellows is critical. Safety issues are major concerns, which can lead to decommission of the R/V Bellows and loss of service and revenue. FIO should receive approximately $26M over the next years under the RESTORE Act, however, funds cannot be used for vessel replacement. The vessel is needed for researchers to compete for RESTORE Act funding. Dr. Hogarth highlighted the teaching and learning that is facilitated by FIO. At the request of the FIO Director, FIO s operational processes were audited by the host institution, USF. USF s Audit & Compliance s overall conclusion was that there was an adequate system of internal controls in place to meet their audit objectives. President Genshaft thanked Dr. Hogarth for his great work at FIO. A motion was made to approve FIO s annual report. The motion was seconded. The motion passed. 2. Academic Infrastructure Support Organization (AISO) Renewal Dr. Hogarth presented the item. In accordance with BOG Regulation , Academic Infrastructure Support Organizations (AISO) must be approved for an additional five years by the BOG. Using a PowerPoint presentation, Dr. Hogarth reviewed the Five Year Programmatic Evaluation; AISO Renewal; Memorandum of Understanding (MOU); Strategic Plan; and Recommendation for Host Institution. FIO operates on a $3M budget and brings in $20M-$30M in research funding per year. All members are happy with USF as the host institution. Trustee Hopes made a motion to approve the renewal of USF as host institution and approve the MOU, strategic plan, and the 5-Year Programmatic Evaluation/Review. Trustee Lamb seconded the motion. The motion passed. e. Amendment to DBA Market-Rate Conversion Proposal Provost Wilcox brought an item for the Workgroup s consideration that was not on the agenda - an amendment to the DBA Market-Rate Conversion proposal item approved by the BOT on 09/16/15. The Doctor of Business Administration (DBA) at the USF Muma College of Business is an innovative, AACSB accredited terminal degree targeted to managers and professionals with extensive business experience and who normally hold a Master s degree. Currently, the DBA program is offered on a cost-recovery basis. This request moves the

6 program to a market-rate to ensure compliance with auditing of any additional revenues that may exceed costs as a result of late enrollment growth beyond projections. No E&G funding is used to support this program, and tuition rates will not increase. Trustee Lamb made a motion to approve the amendment to DBA Market-Rate Conversion Proposal as presented. Trustee Ramil seconded the motion. The motion passed. Trustee Hopes abstained from voting as he is in the initial DBA cohort. IV. Adjournment Having no further business, Chair Mullis adjourned the Finance and Audit Workgroup meeting at 10:45 am.

7 Office of the General Counsel M E M O R A N D U M TO: FROM: RE: Dr. Cindy Visot Hilary Black Memorandum required under Florida Statute Section regarding voting conflict of interest DATE: October 8, 2015 To avoid an actual or potential conflict of interest, Trustee Scott Hopes disclosed his status as a student in the DBA program and has abstained and will abstain from voting on the motion affecting this program. This memorandum shall be filed with the minutes of the October 6, 2015 Finance and Audit Workgroup Meeting and with the minutes of the upcoming October 13, 2015 Board of Trustees Meeting.