2009OFA-1787

May 26, 2009

TO:

 
   

FROM:

Linda Miller

 

Sarah Bourne

   

SUBJECT:

Estimated Debt Service Savings from Education Bonding Moratorium

You asked for the estimated debt service savings in FY 10 and FY 11 that would result from a moratorium on school construction grants-in-aid, the CSUS 2020 Program and the UConn 21st Century Infrastructure Renewal Program.

The estimates are as follows:

1. A moratorium on school construction grants-in-aid for projects that would be approved during the 2009 legislative session would result in no savings in FY 10 and a debt service savings of about $ 9. 5 million in FY 11. The estimate is based on: (a) a school construction priority list of $ 516 million for the 2009 legislative session, (b) an estimated 55% of the priority list will be funded by the state (about $ 284 million), (c) all projects will be in the planning phase in FY 10 so no state funds will be paid out, and (d) about one-third or $ 95 million of the fund would be allocated in FY 11 to cover the state's share of the construction costs.

2. A moratorium on bonding for the CSUS 2020 infrastructure renewal program for FY 10 and FY 11 would result in debt service savings of $ 2. 3 million in FY 10 and $ 11. 7 million in FY 11. The estimates are based on fact that the CSUS 2020 program provides $ 95 million per year over a period of 10 fiscal years (including FY 10 and FY 11) and assume that the bonds would be issued before December of each fiscal year so there would be 1 debt service payment in the fiscal year that the bonds were issued.

3. Based on information provided by the University of Connecticut, delaying UConn 21st Century infrastructure projects scheduled to begin construction in FY 10 and FY 11 would result in debt service cost savings of approximately $ 0. 7 million in FY 10 and $ 3. 9 million in FY 11. The estimates assume that $ 28. 8 million would not be bonded in FY 10 and $ 42. 5 million would not be bonded in FY 11 (see table below). The debt service costs were estimated based on a 5% interest rate and a 20 year term of issuance.

UCONN 2000 PROJECT Scheduled for Construction in FY 10 and FY 11

 

PROJECT NAME

Total Cost

FY 10

FY 11

1

ENGINEERING BUILDING

$ 41,200,000

$ 2,000,000

$ 15,000,000

2

FLORICULTURE GREENHOUSE

$ 3,000,000

$ 1,500,000

$ 0

3

GANT BUILDING RENOVATION

$ 62,500,000

$ 4,000,000

$ 1,500,000

4

MANCHESTER HALL RENOVATION

$ 6,000,000

$ 2,500,000

$ 0

5

OLD CENTRAL WAREHOUSE

$ 10,000,000

$ 4,500,000

$ 2,000,000

6

PSYCHOLOGY BUILDING RENOVATION/ADDITION

$ 20,000,000

$ 7,000,000

$ 11,000,000

7

STAMFORD CAMPUS IMPROVEMENTS

$ 2,000,000

$ 300,000

$ 300,000

8

YOUNG BUILDING RENOVATION/ADDITION

$ 10,000,000

$ 3,000,000

$ 5,000,000

9

CLAC RENOVATION BIOSAFETY LEVEL 3 LAB - UCHC

$ 14,000,000

$ 4,000,000

$ 7,690,000

   

Total

$ 28,800,000

$ 42,490,000

We hope that this information proves useful. Please contact us if we can be of further assistance.