Systemwide Capital Planning A Financial Perspective CSU 101 February 26-29, 2012 Pismo Beach Elvyra F. San Juan Assistant Vice Chancellor, Capital Planning, Design & Construction Robert Eaton Senior 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
Capital Planning Campus Master Plan Existing and anticipated facilities Generally revised every 10 years 2-3 year process Requires environmental assessment 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
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 (issued through State the Public Works Board) Specific encumbrance (award contract) and reversion (pay invoices) dates Utilized for Capital Renewal, Minor Capital and Major Capital projects
Capital Planning Funding for State Facilities Infrastructure/Renewal Projects Upgrade/replace building systems Approx. $2 million limit per campus Minor Capital Projects Upgrade/renovate academic spaces $610K limit per project Major Capital Projects Enrollment projections and space entitlements
CSU - Debt Outstanding $4.56 Billion as of December 31, 2011 SRB - $3.54 Billion Commercial Paper - $66 Million Auxiliary Organization Bonds - $94 Million State Public Works Board - $767 Million State appropriates money each year to CSU for the debt service Other - $88 Million
Non-State Facilities/Projects Capital Financing 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
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
Systemwide Revenue Bonds Policy for Financing & Debt Management Trustees Resolution RFIN 03-02-02 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-)
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
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
Tax-Exempt Financing IRS Regulations Arbitrage Restrictions Spend-down Requirements Private Activity Usage Interest Earnings Released to Project at Back End of Construction Spend Construction Proceeds First Interest Earning are Estimated
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 3.50% Quarterly Payments Campus acquires equipment and then is reimbursed
Public/Private Developments Capital Financing 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
Systemwide Capital Planning A Financial Perspective Contact Information: Capital Planning, Design & Construction (562) 951-4100 http://www.calstate.edu/cpdc/ Financing and Treasury (562) 951-4570 http://www.calstate.edu/ft/