Minutes of the Special Meeting of the University Senate January 23, 2008
Present: P. Boye, H. Briston, C. Cherry, R. Davies, D. Falk, P. Gilkey, A. Gladhart, N. Gulley, D. Hernandez, J, Hunter*, R. Illig, P. Lambert, D. Levin, P. Lu, B. Malle, L. Middlebrook, D. Olson, M. Pangburn, A. Papailiou, E. Peterson, F. Pyle, N. Rajabzadeh, M. Redford, J. Rowell, G. Sayre, A. Schulz , L. Stephen, N. Tublitz, P. van Donkelaar, L. Vandenburgh [* denotes non-voting participant)
Excused: C. Moore
Absent: C.A. Bassett, C. Bengston, G. Berk, R. Bramhall, M. Chong*, L-S. Chou, A. Coles-Bjerre, E. Herman, C. Martinez*, A. Mathas, T. Minner, J. Newton, C. Parsons, S. Paul, P. Rounds, A. Taylor, T. Toadvine, A. Taylor, T. Toadvine,
CALL TO ORDER
A special meeting of the University Senate to discuss the new basketball arena project was called to order by Senate President Gordon Sayre at 3:09 p.m. in 150 Columbia. The meeting was for the expressed purpose of discussing and debating motions and resolutions related to the proposed new basketball arena.
Mr. John Chalmers, chairman of the Senate Budget Committee (SBC) Sub-committee on Arena Financing, provided some updates on the committee’s Final Report presented at the January 9, 2008 meeting (see http://www.uoregon.edu/~uosenate/dirsen078/09Jan08Minutes.html). Mr. Chalmers indicated there were two new developments since his January 9th report. First, the timing of the timing of Legacy Fund gift monies has changed so that the athletics department will have $44 million by June 2008, which makes a large difference in the cash flow, using the interest earned on it. The second change is that the bonds would be 30 years bonds instead of 40 year bonds. That raises the debt service requirements. During the first few years, the payments would be purely interest; principle would begin being repaid in 2011. With these changes, and using the “what if expected revenues are only 50% of what is expected”, the Legacy Fund money would run out in 2026, which still leaves a substantial amount of time to fix revenue problems. Mr. Chalmers said that ultimately the two changes do not make much of a difference to the committee’s overall financial analysis of the project.
President Frohnmayer spoke next and provided a brief update especially for persons in attendance that perhaps were not as familiar with the project. He explained that the project has had exhaustive reviews, internally and externally, and that in a project of this kind, it was natural to have projections that differ. But even the most conservative projections show the arena will not require monies from the academic part of the university. He added that the goal of the athletics department is to be self-sustaining, and not only self-supporting. He commented that the department needs not only to reduce the dependence on football facilities over time, but to provide resources for basketball. Mac Court, though it has been wonderful through the years, is hopelessly obsolete and cannot be renovated for even the short future. The president noted, too, that the project has been vetted by athletics department professionals, university administrators, OUS financial experts, two external law firms with specialties in tax/bond work, an outside consulting firm (CSL) that has done hundreds of similar projects, the financial experts at DAS, the state legislative office, the state treasurer’s office, and the state’s House Ways and Means Committee. Mr. Frohnmayer remarked all reviews deemed the project as workable. In particular, the president cited legislator Kurt Schrader, who praised the project saying, “What is better about this particular project is that is self-sustaining….Our legislative staff has super-analyzed it… pretty important to feel good about it going forward…We should have more of this going on in our state.” (See transcript of comments at http://www.uoregon.edu/~uosenate/dirsen078/Frohnmayer-2-22Jan08.pdf.)
Next, President Frohnmayer commented that the university has demonstrated its commitment to environmental building concerns to meet and exceed where economically feasible the relevant environmental building requirements. This has been done with Lillis, the Longhouse, and the new Music and Education building projects underway. Second, he commented that parking is an important part of any building project and should not be considered in isolation. He noted our obligation to encourage a variety of transportation methods, and to deal with parking issues in the context of the total university. With that said, he yielded the floor to Frances Dyke, vice president for finance and administration, to speak further on the parking issue.
Vice President Dyke elaborated on the president’s previous comments about parking in the context of the larger university community. She said the question is how to balance parking needs of the arena with those needs of the campus community and be respectful of sustainability. Ms. Dyke said that a strategic planning committee for campus parking will be announced shortly, modeled on the process used for planning strategic housing on campus. Ms. Dyke is in the process of soliciting input from the senate president, FAC, and student leaders for potential faculty and student committee members. Noting that parking is also a neighborhood problem, she has been in communication with the city since the purchase of the William’s Bakery property to provide a provisional solution. As for the intermediate need of a 600-1200 increase in spaces, the university has the capacity, using surface lots at this time (including the Romania, DMV-ODOT property), and for after hours, better use of the Research Riverfront parking lots. The university is working with LTD with regard to mass transit solutions, too. There is movement to encourage people to use alternative forms of transportation, and we are in partnership discussions with Peace Health, the city, and Northwest Christian College. Parking has been lost with current construction of the new Music and Education buildings. Lastly, Ms. Dyke said that the report from the outside consultant conducting a parking impact study is expected in March.
President Frohnmayer resumed his remarks and addressed the concern that perhaps undertaking the arena would cause the university to forgo other opportunities due to the debt ratio limitation. He said the arena will not affect most academic buildings because the bonds used for academic buildings (G bonds) are paid by the state, not by revenues earned. But even with optimistic building estimates, including those in the strategic housing plan, we would approach the limit approximately 10 years from now, and the state board could adjust ratios temporarily if needed. Thus the president felt that this concern was somewhat overblown.
The president went on to say again that he is committed to transparency in the operation of the athletics department, which is directly responsible to the president. He indicated that the relevant faculty bodies will be informed of the arena’s budget progress so that they can review it on an annual basis. Finally, the president said that the athletics department will be responsible for the debt incurred by the arena project. He asked that several documents be entered into the record: his statement regarding commitment to transparency, a letter he and Chancellor Pernsteiner sent to Ways and Means Committee co-chairpersons Kurt Schrader and Mary Nolan regarding debt repayment by the athletics department and Legacy Fund means, and a statement that academic funds would not be used for debt service (athletics would be the source of the debt), and that athletics would not be released from its self-supporting requirement (see items listed under #21 on the letters and documents page at http://www.uoregon.edu/~uosenate/dirsen078/letters078.html). In summary, the president stated that he is committed to the transparency of the budget for the arena project and its review; authority for the bonds is restricted to the athletics department revenues and funds, no academic funds will be used, and the athletics department must remain fully self-supporting. The president added that when results of the consultant’s report on parking are received, it will be shared with the senate and SBC.
Several motions and resolutions were presented and discussed, all concerned with the arena project, as follows.
Motion US07/08-11 to endorse the SBC sub committee on arena financing report. Senator Peter Gilkey, mathematics, made the following motion:
The University of Oregon Senate endorses the University of Oregon Senate Budget Committee Report of the Subcommittee on Arena Financing which was presented to the UO Senate 9 January 2008.
Senators were ready to vote on this motion with no further discussion (the report had been discussed during the January 9th meeting) and motion US07/08-11 passed unanimously.
Resolution US07/08-12 concerning the environmental impact of the arena project. Senator Christian Cherry, dance, moved the following resolution:
Whereas, the UO community has expressed a commitment to environmental sustainability, both with regard to the management of resources and use of energy, and by making these issues a focus of its academic mission. This commitment is manifest in the recent appointment of a campus sustainability coordinator, in President Frohnmayer's signing of the American College and University Presidents' Climate Commitment on March 19, 2007, and many other initiatives.
Whereas, The UO Senate wishes to emphasize that the Campus Planning Committee and the Senate have an oversight role in the planning and design of all new capital construction on campus, and that the new basketball arena is a publicly financed university facility which falls within this purview.
Whereas, The design for the new arena must comply with these state requirements for new construction:
· 1) The Oregon DAS-LEED standard of LEED 2.0 Silver certification
· 2) That 1.5% of the project cost be devoted to solar energy capture
· 3) That the building exceed current codes for energy efficiency by 20% or better
Therefore, be it resolved that:
The architects for the new arena, together with the Athletics Department and the Campus Architect, shall report to the Senate in the Spring or Fall of 2008 on the design for the new building, and the proposals for meeting the state standards.
The project should meet the LEED Silver standard as mandated by the Presidents' Climate Commitment, and should strive to exceed code by 30%.
Assessments of the environmental sustainability of the project should also account for the impact of traffic and fuel consumption associated with the arena and its events. Any parking structure built to accommodate fans' vehicles must be considered within the overall carbon footprint of the arena project.
During a brief discussion, Senator Gilkey questioned the accuracy of listing the financial impact of the resolution as “none” when building standards were mandated. Senator Athan Papailiou concurred, noting that 30% exceeds the current 20% building standard. Senator Cherry explained that the resolution is asking for a report on design measures, essentially, and that a report has no financial impact. Senator Gilkey moved to amend the financial impact statement to read “uncertain”. The motion to amend the financial impact statement passed by voice vote, with one nay vote. President Frohnmayer asked for clarification if a single report would suffice, noting that an outside architect was not subject to university reporting jurisdictions; he suggested there be an understanding that a report by any of the named individuals would suffice. Senator Cherry stated that the idea was to have collaboration among the named parties, and that he was not opposed to a single report. With the discussion concluded, resolution US07/08-12 was put to a voice vote and carried, with a single voice opposed.
Resolution US07/08-13 concerning parking issues raised by the arena project. Mr. Peter Keyes, architecture, and SBC member brought the following motion to the floor:
Whereas, the City of Eugene Code may require up to 2778 parking spaces for the proposed arena, and
Whereas, it appears that the current design for the proposed arena includes a minimal amount of new parking capacity,
Be it moved that,
(1) The Athletic Department shall make available the results of any traffic impact and parking study it has commissioned.
(2) the cost of providing any additional parking for the proposed arena (whether as a condition for approval by the city of Eugene, or as a result of further market analysis), shall be included in the base budget for the arena project, and shall not be paid through increased parking fees for university faculty, staff and students.
It was noted in the accompanying financial impact statement that the cost to the athletics department would be up to $50 million, with a saving to the university and employees in the same amount. Mr. Keyes explained that the city code requires additional parking for this arena project in the amount of 2,778 parking spaces within ¼ mile. He said there were perhaps 500 spaces near the law school, and about 600 spaces on the Romania lot. Mr. Keyes said that simply put, the resolution says that if city code requires certain amounts of parking, the cost should be borne by the arena project, not the university, per se. He noted there would be considerable political pressure not to export parking into the local neighborhood.
During a discussion period a variety of opinions were expressed, from agreement that all required parking costs should be part of the arena budget, to acknowledgment that additional parking was needed campus-wide. The question arose concerning who would use the parking facility, if built, and if it was open to all campus users, should the university bear the cost, or should there be cost-sharing. Senator Robert Illig, law, asked for more information about any talks that have transpired with the city. Mr. Chris Ramey, university architect, responded that the arena is considered part of the university (as compared with a stand alone arena) and thus the city codes are different. The proposed arena would require 400-600 additional parking spaces. He reminded senators that a transportation impact analysis – how many walk, come by bus, bicycle, cars and so forth -- is underway, and is due in March. Mr. Keyes commented that we know that parking impacts neighborhoods (as it does around Mac Court). If there is a way of mitigating the city parking code requirement and number of required spaces goes down, then the cost comes down, which is why the financial impact stated “up to $50 million”. Mr. Keyes sees a parking facility for the arena as a direct cost that should be paid for by the arena budget.
Ms. Melinda Grier, general counsel, commented that parking has to be paid for by the users; if parking at a parking facility is available to faculty, staff and students, the university would have to charge those users. Mr. Keyes noted that we currently charge faculty and students to park, but do not specifically charge basketball fans. The idea of cost sharing was mentioned when the use of a parking facility beyond basketball fans’ usage was considered, such as overnight parking for students, as well as faculty, staff and student usage during the working day. Basketball fan usage would encompass a relatively small amount of total usage, so the university should bear at least some part of the cost of a new facility. There was a suggestion to amend the motion to account for comments made during the discussion, but Senator Gilkey cautioned about the unintended consequences that often arise from amending legislation from the floor debate. Mr. Dev Sinha, mathematics, opined that there should be some negotiation of the needs of the arena and the campus.
Senator Gilkey moved to postpone action on the resolution until the March 12th senate meeting, saying that more information about the parking situation is needed, and a report was forthcoming. Senator Nate Gulley, ASUO, argued against the postponement, believing that any additional cost for parking should be borne by the athletics department. The resolution to postpone US07/08-13 until the March senate meeting was put to a hand vote and carried, with 13 senators voting in favor of postponement, and 12 voting in opposition.
Resolution US07/08-14 concerning governance issues raised by the arena project. Senator Nathan Tublitz, biology, brought the following motion to the floor:
The University of Oregon Senate urges the President and the athletic department to revise the proposed new arena project to reflect the issues raised by the January 2008 Senate Budget Subcommittee Report. The revised proposal should:
· Address and incorporate the report's 7 recommendations and furthermore seek to diminish the project's overall financial risk thereby reducing the probability of exposure of the academic budget;
· Decrease the reliance on F1 bonds to preserve the University's borrowing capacity in case future construction projects are proposed; and
· Fully incorporate standing faculty committees, including the IAC, SBC, and FAC, into the decision making and annual review process.
Senator Tublitz said he has concerns about the revenue estimates in the SBC sub-committee’s report and that of the outside consultant (CSL), noting there are differences in how one might come up with revenue projections, and questioning whether the estimates are firm enough to warrant the $200 million debt. He pointed out two areas of additional financial risk: parking (which had just been discussed) and cost overruns (citing the $10 million cost overrun for the Autzen expansion). Senator Tublitz worried that the F 1 bonds the athletics department is requesting would put us very near the limit and reduce the university’s ability to meet its commitment to build more, which seems to have been usurped by the arena project. He further commented that standing committees on campus have been stymied repeatedly when asking for information on the arena project, and when information does come, it seems to change every day; further, the CSL figures are proprietary, so there is no opportunity to assess the methodology and whether the numbers are meaningful. He ended his remarks saying that if the university is going to have an arena, it should be done in a proper way so as not to have a negative impact on the academic mission of the university.
During a discussion period, ASUO Student Senate President Emily McClain was recognized and asked how the F1 bonds would impact the Strategic Housing Plan for new dormitories, and whether the creation of new academic space would be impacted. President Frohnmayer responded that contrary to information just related, the Strategic Housing Plan (developed in consultation with faculty) has been approved by the State Board and is in the process of implementation. Projections for construction of housing are moving as rapidly as feasible, given constraints. The president added that all of previous and current construction projects already have been factored into the F1 bonds analysis. Mr. Dev Sinha, mathematics, asked how the arena project impacted the future of the Mac Court space. President Frohnmayer said it was exciting to contemplate potential uses of the real estate footprint of Mac Court, and there have been many projections for use of that space to meet a variety of needs. He noted that possible bonding for building purposes at the Mac Court site were considered in contemplating the bonding requests. Mr. Frank Stahl, emeritus biology, commented on the issue of the secretive, proprietary nature of the CSL report, citing his experiences with the Riverfront Research Park project reports, and advising that the CSL report should be read very carefully.
Athletics Director Pat Kilkenny commented on several issued raised by Senator Tublitz. First, the athletics department’s figures are a moving target and dependent in part on the many things being dealt with simultaneously. For example, the department used proforma numbers of a $150 million eventual gift, but CSL used pledges, which were changing on a weekly basis. The state treasurer recently required the department to change numbers (with the shorter debt repayment period of 30 years) that was not known at the time the IAC met, thus the new numbers came after the meeting. And lastly, regarding the propriety nature of CSL, Mr. Kilkenny stated that their methodologies are their intellectual property and tied directly to how they manage their business.
Ms. McClain spoke in favor of passing the motion. She believes that without the dependence on F1 bonds and focus on building the arena, other academically related projects, such as the housing plan, would become top priority for the campus, and that would greatly benefit students; she opined that the student experience would gain a new kind of notoriety. She added that students have various opinions about the arena: some thought the arena was great, but others needed more answers before supporting a go ahead.
Senator Lynn Stephen, anthropology, commented about the focus groups used, saying that the revenue projections are crucial to the success of the project and that focus groups give different opinions at different times. She wondered about the methodologies used. She also questioned the effect of this project on other building priorities, suggesting that a $100 million post campaign project for interdisciplinary projects on social sciences would be welcomed. Mr. Chalmers explained that the committee did gather information about how revenue projections were made. They looked at the earlier 2003 CSL Report, the athletics department report, and committee member Dennis Howard (sport marketing) was integrated in focus groups. They used that information as well as survey reports from CSL in 2007. Mr. Chalmers said his belief was the conservative CSL revenue projection was attainable if the parameters were correct. The SBC sub-committee provided an independent analysis, and although the CSL analysis was conducted using proprietary methods, the sub-committee concurred, more or less.
Senator Bertram Malle, psychology, speaking again on the issue of building priorities, asked the administration to layout the existing building projects and plans for the next 5 to 15 years. Can we do them all? Ms. Laura Hazlett, athletics, reminded the senators of the difference in funding projects with F bonds versus G bonds. President Frohnmayer responded that last summer he circulated a spreadsheet of capital construction over the past 10 years put together by Mr. Ramey. It showed $480 million of construction, ¾ of which was for academic or student processes, and that includes the Autzen stadium expansion. It included the integrated science facility, and Phase II of that building. He noted the university received G-bonding authority at the last legislative session for the new education building and music school addition. The university is planning construction of an alumni center, funded from donations, that will have facilities for use of the university community. Similarly, there is a gift donation for an Academic Learning Center which also will have a first floor open for general activities, including a 160 seat lecture facility in which we anticipate holding meetings of UO Senate. The president said they have just received ideas from faculty/staff regarding what the next five year building plan should be for campus. Ms. Dyke added that debt service for G-bonded projects is funded by the state – these are mostly academic projects – and are not part of the athletics department F bonds debt service responsibility. A ”debt service capacity study” looked at all these building projections, including the student facilities, power plant project, state energy loans, and energy savings, and took it all in to consideration.
Senator Tublitz made two points in rebuttal. Regarding the F1 bonds he said they will put us close to the university’s borrowing limit which in turn would limit our decision-making in the future. Second, since the $200 million loan is backed by the state, we as citizens and stakeholders have a responsibility to explain why we are asking for this money and where the numbers came from. Lastly, the sub-committee has not come out and endorsed the arena project, and if we do not have the numbers to endorse it, we should go back and talk about it some more.
As the discussion drew to a close, one senator explained that one could feel support or non-support depending on different parts of the motion; consequently, it was difficult to support the whole motion. President Sayre called for a hand vote on US07/08-14 concerning governance issues raised by the arena. There were 7 votes in favor of the motion, 16 votes against the motion and 4 abstentions. US07/08-14 was defeated. .
Resolution US07/08-15 concerning revenue sharing with the athletics department. Senate Vice President Paul van Donkelaar, human physiology, brought the following resolution to the floor:
Whereas, cross-subsidization within the University is a common mechanism for successful units to contribute to the overall financial health of the campus, and
Whereas, the 2004 Athletics Task Force Report endorsed by the University Senate recommended that the Athletic Department make "meaningful contributions" to the general fund to underscore the connection between athletics and academia
Be it moved that:
The Athletics Department provide a meaningful proportion of their yearly revenues to the general fund to aid the academic mission of the university if
a) revenues from the new arena exceed the 2007 CSL conservative estimate, and
b) the Legacy Fund, in combination with other event revenues, provides sufficient funds to cover the expenses of the department.
Vice President van Donkelaar began his remarks saying that a fair amount of cross subsidization occurs on the campus; that is, units that are doing well subsidize units that are not doing well, but that are important to the mission of the university. He said that the new budget model currently being considered specifically asks for a tax on each of the units that generate tuition revenue, which the Provost can use to fund initiatives. He suggested that the same idea should apply to the athletics department. In other words, if the athletics department is very successful, some proportion of that success should go to the academic side of the university to support its mission. He noted, too, that revenue sharing had already happened with the recent contributions the coaching staff made to the library, for example. This motion regards the new arena project as a potential revenue source and applies the same notion of taxing for the benefit of supporting programs funded through the General Fund.
Senator Gilkey noted the lateness of the hour and moved to postpone the discussion of the motion until the next senate meeting. The motion to postpone US07/08-15 to the March meeting passed unanimously.
The meeting was adjourned and 5:00 p.m.
Secretary of the Faculty
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