SEMO: Bonds saved millions of dollars
Sunday, February 19, 2006
The House speaker has charged Southeast was irresponsible in approving the plan without state funding in place.
Southeast Missouri State University saved millions of dollars in construction costs for the River Campus arts school by issuing bonds that allowed the project to get underway even while state financing remained in limbo, school officials said.
Without the bonds -- handled through the Missouri Development Finance Board -- the university would be saddled with a more expensive project because of the rising cost of key building materials such as concrete and steel, school president Dr. Ken Dobbins said.
Missouri House Speaker Rod Jetton has charged that Southeast officials acted irresponsibly in approving the bond plan without state funding in place to help retire the debt.
But Dobbins said he and school regents acted responsibly in moving ahead with the financing plan in 2002 and 2003.
Construction began last year to develop the arts school campus on the grounds of a former Catholic seminary overlooking the Mississippi River in Cape Girardeau. School officials expect the project to be finished by the summer of 2007.
The project would have been stuck on hold if the university had decided to wait until the legislature approved all of the requested funding, Dobbins said. The legislature still hasn't approved all the money the university has requested.
A two- or three-year delay could have added as much as 25 percent or nearly $10 million to the $38 million construction price tag, he said.
Engineering and architectural work and furnishings will put the total cost in the $50 million range, school officials estimate.
Lawsuits added $8 million
School officials, having already experienced expensive delays in the project as a result of lawsuits filed by Cape Girardeau businessman Jim Drury, didn't want to experience any more cost increases. Those lawsuits, which unsuccessfully challenged the city of Cape Girardeau's involvement in the project, added about $8 million to the project cost, Dobbins estimated.
Dobbins said the university expects the state to eventually come through with its share of funding.
The university's board of regents approved the bond plan in 2002. Bonds totaling more than $36 million were issued in 2003, clearing the way for architectural and engineering work to proceed.
The design and planning work took about a year and a half to complete. At that point, the university obtained construction bids and later awarded contracts.
River Campus Board of Managers member Dennis Vollink said steel and concrete costs have climbed by more than 10 percent a year the past several years.
The rebuilding of the Gulf Coast in the aftermath of hurricanes Katrina and Rita has added to the cost of building materials, said Vollink, who heads Drury Southwest, a Cape Girardeau-based construction/development firm.
The state office of administration factored in inflation under a formula that allowed the school to increase its funding request from $11.95 million to $17.2 million. But Dobbins said the school couldn't request even more state money because that inflationary amount is locked in once a school starts expending state funds on a particular project. Southeast has spent some of the money from an earlier state appropriation of $4.6 million, he said.
That would have made it even harder to hold up construction, Dobbins said.
With no opportunity to increase the amount of state funding, he said, the university would have had to raise more money or scale back the project.
Dobbins said the university has raised more than $11 million in private donations for the project. The city of Cape Girardeau has pledged $8.9 million in tax money. The federal government has kicked in about $7 million. The state has provided $4.6 million.
Southeast is waiting for the final piece of funding -- $17.2 million from the state -- to help retire the bonds.
If lawmakers don't approve the request, Dobbins said the university will raise student fees to generate the needed revenue.
Dobbins said issuing bonds was the best approach.
"We protected the state's investment. We protected private donors, and we protected the city's investment," he said.
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