The renovation of Lower Sproul Plaza overcame a major hurdle Monday when, in minutes, the UC Board of Regents approved the project as well as the hundreds of millions of dollars of debt that will come with it.
The board’s Committee on Grounds and Buildings approved the $193 million project, along with two other action items, in a single vote. The other items included approval of the 2012-13 budget for state capital improvements, certification of the environmental impact report and approval of an amendment to the 2005 Long Range Development Plan for UC Riverside.
No discussion was held on any of the action items, and the meeting adjourned minutes after it had initially been called to session around 12:30 p.m. More time was spent on coordinating all of the regents in the teleconference than on the actual meeting.
Along with the $193 million budget, the campus will use another $30 million to do additional, yet-to-be determined projects, for which the campus will not need the regents’ approval.
But the total of $223 million is just a fragment of the project’s true cost; it will end up costing UC Berkeley approximately $750 million over four decades.
The project began with the passage of the B.E.A.R.S. Initiative in spring 2010, which approved a student fee to fund the project and to improve the safety and sustainability of Eshleman Hall, the Martin Luther King Jr. Student Union building and the Cesar Chavez Student Center.
In addition to the student fee, which will pay for the majority of the project, the chancellor committed $99 million in campus contributions for the project, according to a Memorandum of Understanding in April 2010. The campus contribution will be drawn from student tuition.
The campus commonly borrows money to pay for its capital projects. In this case, the total of $223 million will be borrowed in stages over the next few years as the campus spends the money, said Erin Gore, campus associate vice chancellor and chief financial officer.
But that money is not free. Lower Sproul’s $223 million will come with another $517 million to service the initial debt. That number is spread out over the years, beginning with about $1 million in fiscal year 2014, reaching $19 million in fiscal year 2028 and tapering off to $9 million in fiscal year 2046.
Gore said these numbers represent the maximum the project can cost. Any significant changes to the financing of the project will be monitored by the Lower Sproul Fee Committee, which oversees the spending of student fees related to the project.
Despite the debt service and student fee, campus leaders are optimistic that the project is worth the cost of the new plaza, especially in light of the fact that the referendum was passed following a 32 percent fee increase for the university.
“The campus hasn’t made, and the students haven’t made, a sign capital investment recently for student purposes,” said Vice Provost for Teaching, Learning and Academic Planning and Facilities Cathy Koshland. “It says a lot about students that they voted for this referendum.”
Mihir Zaveri contributed to this report.
Victoria Pardini covers development and capital projects.