A public works board meeting Thursday will determine the fate of the majority of the funding for the demolition and reconstruction of UC Berkeley’s Campbell Hall.
The State Public Works Board will vote on whether to authorize the sale of $65.2 million in state bonds for the building, which will cover most of the project’s total budget of $73.2 million.
Demolition and reconstruction of the seismically “poor” building was approved in the 2010-11 state budget, but the project was delayed because bond sales were not held as a result of an unappealing market. After approval, the project was turned over to the state Department of Finance to determine if construction could begin immediately, which then recommended that the authorization of bonds be on the board’s agenda for its Thursday meeting.
UC Vice President for Budget and Capital Resources Patrick Lenz said the state prefers to release bonds when construction can begin immediately after a project gets funding. The projects should be “shovel-ready” at the time of bond approval, meaning all necessary planning has been completed and all issues have been resolved. If approved, Campbell Hall will begin construction in spring 2012.
Campbell Hall will rely on lease-revenue bonds, which require the campus to give the title of the building to the state until the bonds are paid off, as opposed to general obligation bonds, which go before the voters for approval and allow the campus to own a building as soon as the bonds are approved.
According to Lenz, lease-revenue bonds have become more common for the university because general obligation bonds are harder to obtain. However, he added that lease-revenue bonds are a less predictable source of funding for capital projects, whereas general obligation bonds allow the UC more security in paying for projects. A general obligation bond that included money for university projects was last approved by California voters in 2006. Of the $15 million approved, only $3 million of the bond was used for UC and CSU capital projects, while the remaining $12 million went to K-12 projects.
“Lease-revenue bonds kind of give us the roller coaster ride of never knowing how much we might get in a given year,” he said. “There is a lot more predictability when we get a general obligation bond of what you’re going to get in that period of time.”
If approved, the board would authorize around $270 million in bonds, including funding to retrofit the South Tower at UCLA and to build a science and engineering building at UC Merced. After the bond sale Thursday, the university will still have around $160 million in capital projects that have been approved by the budget and need to go to bond sale.
The $8 million difference between the budget cost and the expected bond funding is being provided for by gifts and campus equity, according to campus spokesperson Dan Mogulof. Additionally, a federal grant of $11 million separate from the project cost will fund the development of a new facility for integrated precision and quantum measurement in the basement of the new Campbell Hall.
Project costs differ based upon square footage and the services a building provides. For example, Stanley Hall, which was demolished and completed in 2007, cost $162.3 million, $88 million of which was paid for by private philanthropic support.
Lenz said that he is fairly confident that the bonds will be approved on Thursday because any issues in the project have already been worked through with the department.
“I don’t want to be too presumptuous to say this is just a rubber stamping, but we have covered all the issues,” he said. “If there were any issues or concerns, the (board) would have notified the Department of Finance, and the Department of Finance would have notified us.”