UC Board of Regents committees approved preliminary funding for a new UC Merced campus facility and a 100-year bond at the board’s meeting Wednesday.
The UC regents’ Committee on Grounds and Buildings approved $1.36 million in funding from UC Merced campus funds to support the development of the campus’s Downtown Center project. In addition, the UC regents’ Committee on Finance approved the issuing of a taxable 100-year “century” bond that is not to exceed $500 million plus financing costs. This bond will fund high-priority needs of the UC Davis, UC Irvine, UC Riverside, UCSF and UC Santa Cruz campuses.
An action item approved at the meeting will allow UC campuses to receive the 100-year taxable borrowing bonds in one or more series of payments, not exceeding a 5.5 percent interest rate.
“Interest rates are near their all-time lows,” said UC Chief Financial Officer Nathan Brostrom during the meeting. “One good thing about century bonds is that they really don’t count against (the UC system’s) debt capacity.”
According to UC spokesperson Dianne Klein, should the interest rate exceed 5.5 percent, the bond will not be issued, as it would no longer be advantageous.
Campuses will be issued the bonds as long as they maintain sufficient revenue to pay off what they borrow from the university and must also meet related requirements of each specific approved use. The use of the bonds must also comply with university policies with respect to capital projects, real estate transactions and environmental review.
Although the specific uses of funds for each campus have yet to be authorized, each campus reported its intended uses to the UC regents, with the most common uses being deferred maintenance and capital renewal.
Also approved at the regents meeting was the preliminary funding for UC Merced’s downtown project.
“We’ve looked for one and a half years for renovation spaces near the main campus, and all have enormous cost and lots of downsides,” said UC Merced Chancellor Dorothy Leland at the meeting. “That’s why we’ve decided to go downtown.”
The downtown project proposes the construction of approximately 75,000 gross square feet of campus administrative offices in the downtown area of Merced and the possible addition of 25,000 gross square feet of mixed-use space, including retail.
Leland said at the meeting that Merced was badly hit by economic recession and that a more significant university presence in the city will help small retail.
The preliminary funding of $1.36 million, however, will only fund the development of the project’s design. UC Merced intends to request the full budget for the project — an estimated $40 million — this summer to be funded through a combination of campus reserves and external financing. Construction is expected to begin in early 2016.
At the meeting, the regents also approved other action items, including a five-year extension of the “life-safety” component of the Berkeley Campus Fee and the approval of an encroachment agreement between UC Davis, the city of Davis and the Union Pacific Railroad Company to create a water pipeline to deliver treated surface water to the city’s northern limits.
Staff writer Anna Sturla contributed to this report.
Contact Elaina Provencio at [email protected].