Related articles:

Universities' building plan a good idea

Health Care
Dependable Health Services
Physical Therapists Mechanical
Komatsu Equipment Co
Resident Field Mechanic Trades/Construction
RANCHO RESORT
MAINTANANCE POSITION Health Care
CENTRAL ARIZONA COLLEGE
DIRECTOR OF HEALTH INFORMATION MANAGEMENT Administrative & Professional
Tucson Urban League
CEO/President Construction
West-Press
Printing Sales and Marketing
Everready Glass
Sales Reps

During his inauguration as the University of Arizona's 19th president Oct. 26, 2006, Robert N. Shelton pledged "We will be a top-10 public research university. And all of the people of Arizona will be the beneficiaries of this achievement."

Referring to the UA as a student-centered research university, Shelton said one of the institution's essential missions is to expand its role as a "central engine of economic development."

"Our modern obligation is to accomplish three important objectives for Arizona's economy: produce a well-educated work force and entrepreneurs; create and transfer new technologies to the private sector; and serve as a resource center for Arizona's business community."

Legislative approval of a $1.4 billion long-term financing plan forwarded by the state's three public universities would put the UA closer to Shelton's vision.

This gutsy proposal is billed as an "economic stimulus plan," most likely as a selling tool to appeal to a notoriously tight legislature during weak economic times.

The finance package is spread among the main campuses of the three state universities, as well as the Phoenix Biomedical Campus and Arizona State University's Polytechnic campus, home of its College of Technology and Innovation.

For UA, the spreadsheet includes the planned buildings for Social and Behavioral Sciences, Environmental and Natural Sciences, and Engineering Research; Centennial Hall renovations; and much needed maintenance and infrastructure renewal. These buildings are not new ideas, but have been planned and are almost ready for the dirt to be turned. They are incorporated into the UA's existing, main campus.

The plan would allow the universities to bond for these new buildings, and new buildings can lead to new revenue. For example, the UA recently built its BIO5 and a medical research building, which enabled the institution to secure a huge — $50 million — grant from the National Science Foundation in January.

Bonding during an economic downturn is not frivolous or risky, but is instead a proven investment. The package requires that the universities repay 20 percent of the bonds, which Shelton said will come from private donors and from overhead costs in new and transferred grants attracted by the new buildings. Research grants all include an "overhead" budget line that goes to the hosting institution of about 45 percent of the grant.

In the plan, payback is scaled. The state will not begin payments on the debt service until 2010, when the state is predicted to be recovering from its economic doldrums. Full participation won't begin until fiscal 2012, when the economy is expected to be stabilized.

Spreading the costs over a longer period — it would be funded by 25 to 30 years of debt service — means new residents and new taxpayers would be helping to pay off the debt.

That the finance plan would be an economic stimulus is not merely public relations. The universities rightly say that Arizona's economy has been overly dependent on construction — and is hurting because of the housing downturn — and that this bond package would serve a two-fold economic purpose.

In the short term, plan promoters — university officials and business groups — say it would create about 14,438 construction-related jobs. Economists can debate the multiplier effect, but the universities project that the indirect impact would be another 16,660 jobs and additional spending by now under- and unemployed workers.

The projected dollars would be $1.9 billion added to the gross domestic product (GDP) during the construction phase and a projected $1.4 billion in household income, with a combined state and local tax revenue of $140 million. We are always skeptical of economic projections; however, even if these numbers are not fully realized we see the overall impact as positive.

Allowing the universities to take their building plans off of the shelf today, when construction activity is slow, would mean taking advantage of competitive building opportunities — construction companies need the work. Likewise, we must be realistic about increasing prices of construction materials. Cement is not going to be cheaper in the future.

The long-term economic view acknowledges that Arizona — and our region — needs an educated workforce and a more diversified economy. This capital improvement plan would help accommodate the expected increase in student enrollment and could be an impetus for that more diversified economy.

Arizona State University Economics Professor Dennis Hoffman, who was the moderator at the March 14 growth forum "Decision at the Crossroads," presented a report in January that analyzed Arizona's public debt and found that is is lower relative to national standards.

He concluded that low interest rates and the construction slump will reduce construction costs and that conditions are ideal for public investment using debt financing.

The proposal should be viewed with some caution in terms of the whole state budget.

With the possibility of bonding for public K-12 school construction also on the table at the Legislature, which we have supported, we encourage the Legislature to look at it with a prudent eye and not overencumber the state with debt.

Shelton told the Star last week that the universities could sit back and do nothing, but to serve the students and the community and to be the powerhouse research university he forsees, they must have the best research infrastructure. He's right.

The universities should be given the right to bond for these projects because they serve the immediate and future needs of our state.