A Financial Perspective

Transcription

1 Systemwide Capital Planning A Financial Perspective CSU 101 March 6-9, 2011 Monterey Elvyra F. San Juan Assistant Vice Chancellor, Capital Planning, Design & Construction Robert Eaton Director, Financing and Treasury Systemwide Capital Planning A Financial Perspective Agenda Campus Master Plan Five-Year Capital Outlay Plan State Facilities Funding for State Facilities Non-State Facilities Funding for Non-State Facilities Combined Funding & Facilities Equipment Financing Public/Private Developments Contact Information 1

2 Capital Planning Campus Master Plan Existing and anticipated facilities for a specified enrollment at an estimated target date Generally revised every 10 years 2-3 year process Requires Environmental Impact Report (EIR) Requires Board of Trustees approval Capital Planning Five-Year Capital Outlay Plan Proposed schedule submitted annually Includes both State and Non-State projects Amendments/Revisions are allowed with Board of Trustees approval 2

3 Capital Planning State Facilities/Projects Infrastructure Projects Library Buildings Academic Buildings Administration Buildings Capital Planning Funding for State Facilities Typical funding provided by State Bonds General Obligation Bonds Lease Revenue Bonds Specific encumbrance (award contract) and reversion (pay invoices) dates Utilized for Capital Renewal, Minor Capital and Major Capital projects 3

4 Capital Planning Funding for State Facilities Capital Renewal Projects Upgrade/replace building systems Approx. $2 million limit per campus Minor Capital Projects Upgrade/renovate academic spaces $600K limit per project Major Capital Projects Enrollment projections and space entitlements CSU - Debt Outstanding $4.49 Billion as of December 31, 2010 SRB - $3.38 Billion Commercial Paper - $131 Million Auxiliary Organization Bonds - $104 Million State Public Works Board - $806 Million State appropriates money each year to CSU for the debt service Other - $73 Million 4

5 Non-State Facilities/Projects Student Housing Parking Structures Student Unions/Recreation Centers Health Centers Continuing Education Auxiliary Operations (e.g. Bookstores, Real Property) Public/Private Developments Funding for Non-State Facilities Primary Sources Systemwide Revenue Bond (SRB) Program Commercial Paper (CP) Program Other Funding Sources Donations/Gifts Energy Incentive/Rebates 5

6 Systemwide Revenue Bonds Pledge of Gross Revenues Student Housing Parking Student Unions Health Centers Continuing Education Auxiliary Operations (if Auxiliary has SRB debt) Systemwide Revenue Bonds Program flexibility Tax-Exempt or Taxable SRB funds can be loaned to Auxiliary Organizations Legal Authority to issue variable rate debt 6

7 Systemwide Revenue Bonds CSU Policy for Financing i and Debt Management Board of Trustees Resolution RFIN Executive Order 994 Debt Service Coverage Ratios Minimum Benchmarks Systemwide 1.45x Campus Overall 1.35x Campus Program and/or Standalone Project 1.10x Auxiliaries Overall or Standalone Project 1.25x Systemwide Revenue Bonds CSU Debt Ratings Aa2 from Moody s A+ from Standard & Poor s CSU s ratings better than the State of California (A1/A-) 7

8 Systemwide Revenue Bonds Debt Capacity Measure of how much debt an institution can support at a given credit rating level November 2007 BOT report CSU had additional Debt Capacity of $4.5 Billion through 2012 Ceiling, not a Target Commercial Paper Variable rate, short-term borrowing through the CSU Institute Variety of purposes Bridge financing for SRB projects Funding for the CP/Equipment Program Permanent financing for short-term capital projects approved by the Trustees Tax-Exempt or Taxable 8

9 Commercial Paper Supported by Bond Anticipation Notes (BANs) Authorized by Board of Trustees Concurrent with SRB Authorization Issued by CSU Provides Security for Commercial Paper Same Amounts and Interest Rates as Commercial Paper SRB / Commercial Paper Approval Process Financial Evaluation by Financing and Treasury Schematic Approval Board of Trustees Committee on Campus Planning, Buildings, and Grounds Financing Approval Board of Trustees Committee on Finance 9

10 Tax-Exempt Financing IRS Regulations Arbitrage Restrictions Spend-down Requirements Interest Earnings Released to Project at Back End of Construction Spend Construction Proceeds First Interest Earning are Estimated Combined Funding & Facilities Possible to combine multiple funding sources for a project Except State funds for a non-state facility Funding a State facility with revenue bonds is not encouraged Possible to combine a State and Non-State facility into one project Accounting must have a clear understanding of the use of space and construction costs 10

11 Equipment Financing Vendor Financing Standardized Documentation Pre-Approved Vendor List Commercial Paper Equipment Program Generally at tax-exempt rates 1-8 years $100,000 to $5 million per transaction Rate is reset annually currently 3.20% Quarterly Payments Campus acquires equipment and then is reimbursed Public/Private Developments Private entities utilize campus land for continued support of the campus mission Governed by Executive Order 747 Projects reviewed by the Land Development Review Committee Typical Structure: Campus land is leased to an Auxiliary Organization Auxiliary Organization sub-leases land to a private entity Private entity develops land and provides a lease payment 11

12 Systemwide Capital Planning A Financial Perspective Contact Information: Capital Planning, Design & Construction (562) Financing i and Treasury (562)