Legislative Update No. 15
REBUILDING, RENEWING AND ENHANCING
THE UNIVERSITY OF CONNECTICUT
Table of Contents
I. UCONN 2000: THE UPDATE
II. ACTIVITIES COMPLETED OR UNDERWAY:
|ABOVE: Gov. John G. Rowland signs 21st Century UConn into law at a ceremony at South Campus on Aug. 26, 2002, as Sen. President Kevin Sullivan, House Speaker Moira Lyons, House Minority Leader Robert Ward, and other legislators look on.BELOW: The new Biologicial Sciences Building, scheduled to open in January 2003, will be the tallest, and one of the largest, buildings on campus. The structure houses high-tech classrooms, offices, and research laboratories for students, faculty and staff in the departments of ecology and evolutionary biology, physics, molecular and cell biology, and other areas.|
This is the fifteenth in a series of semi-annual reports to the Governor and the General Assembly pursuant to the provisions of Sections 10a-109 through 10a-109y of the Connecticut General Statutes, originally An Act to Enhance the Infrastructure of the University of Connecticut, now known as UCONN 2000. These reports have been issued each October and April since passage of UCONN 2000 on June 7, 1995. The law also required a four-year report, which was filed on January 15, 1999.
21st Century UConn, a $1.3 billion program that will continue the transformation of the University and its campuses, was approved on August 13, 2002 by the General Assembly and signed into law by Governor John G. Rowland at a ceremony at the main campus in Storrs on August 26th. The $1 billion UCONN 2000 program is unprecedented in the nation. 21st Century UConn is an equally remarkable commitment to the continuation of the program; it represents an endorsement and recognition of UCONN 2000’s achievements and of the University’s management of the program.
UCONN 2000 and its successor, 21st Century UConn, provide the means for the University to attract a high-achieving and increasingly diverse student body, high quality faculty, and funding from both private donors and grants. Connecticut has long ranked tops among states in the ratio of residents who leave their home state for college. UCONN 2000 has helped the University do its part in stemming the “brain drain.”
The University, ranked the top public university in New England by U.S. News & World Report, has seen incredible growth since the UCONN 2000 legislation was adopted in 1995: freshmen enrollment at Storrs is up 58 percent, and freshman minority enrollment is up 61 percent. Since 1995, SAT scores have risen nearly 40 points and 394 valedictorians and salutatorians have enrolled.
Annual gifts to UConn have increased dramatically, from $8.2 million in 1994 to $43.3 million for Fiscal Year 2002; and endowment assets have grown from $50 million to $197 million.
The UCONN 2000 program already has resulted in more than two dozen new buildings, including a new chemistry building, new ag-biotech buildings, School of Business, the Marine Sciences Building in Avery Point, the downtown Stamford campus, new music building, new residence halls including Hilltop Apartments, Hilltop Suites and South Campus and two new parking garages (one of which is funded by special obligation bonds issued under the authority of UCONN 2000 and to be paid off by the University).
There have also been renovations to Babbidge Library, the Wilbur Cross Building, the Gant Complex, the old chemistry building – now the College of Liberal Arts and Sciences Building – Wood and Storrs Halls, the student recreation center, and many residence halls including Northwest, which has a new cafeteria, and Mansfield Apartments, which house graduate students.
The new, expanded UConn Co-op, located on Hillside Road adjacent to the Harry A. Gampel Pavilion, is scheduled to open in late October. The Biology/Physics Building, located on North Eagleville Road, is expected to be open in time for the spring semester. And a new building in the center of campus that will house several departments associated with computer engineering will open during the spring semester.
The Student Union, already under reconstruction, will be completed in 2004. North Campus Apartments and housing for sororities and fraternities will open next September. And a new pharmacy/biology building will be constructed as well. At present, all remaining project funds for the remaining two and one-half years of UCONN 2000 are dedicated to projects under construction or, in the case of Pharmacy/Biology, in the final stage of design.
The UCONN 2000 program has also been responsible for millions of dollars of infrastructure improvements including a new steam plant, new chiller plants, and sprinklers for the residence halls and has enabled the University to fund the equipment so critical to attracting top-notch researchers and grant funds.
Still, much remains to be done. 21st Century UConn is designed to allocate $1 million to address remaining significant infrastructure needs at Storrs and the regional campuses. In addition, the initiative provides $300 million for infrastructure improvements at the UConn Health Center to support the medical and dental education programs, as well as research activities.
UCONN 2000: ACTIVITIES COMPLETED OR UNDERWAY
- PLANNING, DESIGN AND MANAGEMENT
- At the April 16, 2002 Board of Trustees meeting the Board approved the FY 2003 Capital Budget. The listing of projects and their corresponding FY 2003 funding are as follows:
Projects Amounts Deferred Maintenance, Renovation Lumpsum-GF $30,000,000 Equipment Replacement/Upgrade 20,000,000 Technology Quadrant Phase II (Engineering) 15,120,000 Student Union Addition 10,000,000 Gentry Renovation 2,000,000 Avery Point Renovation 3,000,000 Residential Life Projects: Alumni Quadrant Renovations 9,000,000 East Campus North Renovations 2,000,000 Shippee/Buckley Renovations 7,000,000 North Campus Renovations 1,880,000 TOTAL $100,000,000
- At its June 25, 2002 meeting the Board of Trustees approved the Capital Budget Plan for the final two years of UCONN 2000, FY 2004 and FY 2005.
Projects Amounts Deferred Maintenance, Renovation Lumpsum-GF $19,835,000 Equipment Replacement/Upgrade 35,312,000 Residential Life Projects 31,696,000 School of Pharmacy/Biology (New) 51,153,000 Student Union Addition 7,500,000 Avery Point Undergraduate Renovations 2,323,000 Torrey Life Science Renovations 2,181,000 TOTAL $150,000,000
The closing of the ten-year Capital Budget cycle of UCONN 2000 will encompass final funding of projects already authorized. These include a re-direction of funds between the Torrey Life Science and Pharmacy/Biology projects, which will increase the amount of new research space for the biological sciences while focusing Torrey renovations to address basic building systems and safety issues. New space for biology in the Pharmacy/Biology and Biology/Physics building will now total approximately 220,000 square feet.
- Bids have been received for the development of a Cogeneration/Central Chilled Water Facility. Such a facility would produce electricity for the Storrs campus, and the secondary waste heat would provide heating, hot water or cooling for the campus. The bid process was undertaken as a prerequisite to determining the feasibility and advisability of moving to cogeneration. Independent analysis projected the potential for significant energy cost-savings, and data from the bid process informed a cost/benefit analysis that led the University’s Board of Trustees to decide to proceed with cogeneration. A notice of award has been given to Select Energy, a Connecticut company, with the next step being the negotiation of the design component of the project.
- An Environmental Impact Evaluation (EIE) is being prepared in contemplation of the construction of Graduate Student Apartments. This project would provide for 500 to 1,000 beds of apartment style housing. Two potential sites are being evaluated: one, west of the University’s Northwood Apartments and the other, east of the Storrs commercial block on Route 195. Baystate Environmental Consultants was hired to conduct the EIE. As part of the evaluation of the latter site the cumulative environmental impact of the Storrs Center redevelopment project will be examined. The draft EIE has been completed and is being circulated for comment.
- As part of the overall building and renovation program, the University continues the process of standardizing building systems and system components (e.g., electrical circuitry, panel boxes, etc.). This process will reduce the number of replacement parts the University needs to inventory, speed repairs, improve the level of maintenance and lower overall costs.
- Construction documents are being prepared for the new School of Pharmacy/Biology building. The project involves the construction of a 120,000 square foot building for teaching and research for the Pharmacy program and the creation of an 80,000 square foot building of research space for the Biology program. Also included in the project is a consolidated animal care facility for the research programs in this area of campus. The animal care facility is 26,000 square feet. The architect for the project is Davis, Brody, Bond of New York City. Gilbane, of Glastonbury, is the construction manager for the project. Construction will begin in November 2002.
- The construction documents are being finalized for an addition to the Benton Museum. This $3.2 million project is funded through a combination of UCONN 2000 funds and private gifts. Arbonies King Vlock of Stony Creek is the architect for the project. Gilbane, of Glastonbury, is the construction manager for the project. Construction activities are scheduled to begin in January 2003.
- At the April 16, 2002 Board of Trustees meeting the Board approved the FY 2003 Capital Budget. The listing of projects and their corresponding FY 2003 funding are as follows:
LEFT: The new, expanded UConn Co-op, on Hillside Rd. adjacent to Gampel Pavilion, is scheduled to open in late October.
RIGHT: Rendering of the planned addition to the William Benton Museum of Art.
- Construction has begun on renovations to the Neag School of Education’s Gentry building. The project scope includes complete renovation of the building’s interior, exterior improvements of the façade and roof, and a 20,000 square foot addition to the building. The architect for the project is Svigals Associates of New Haven. Gilbane, of Glastonbury, is the construction manager on the project. It is anticipated that construction on the project will be complete in December 2003.
- Construction has begun on renovations to the former School of Business building as well as a 20,000 square foot addition. The purpose of this project is to transform the old facility into a new Center for Undergraduate Education that will provide a centralized location for academic support for students as well as instructional support for faculty members and graduate students. Functions included in the facility will be the First Year Experience program (special seminars and activities for incoming freshmen), Career Services, the Institute for Teaching & Learning, the Study Abroad program, the Urban Semester program, the Center for Community Outreach, the Instructional Research Center, Honors Program, and the Learning Research Center. Due to competing needs, the budget for the project has been reduced to $11 million. The architect for the project is Svigals Associates of New Haven. It is anticipated that construction will be completed in September 2003. The construction manager for the project is Gilbane, of Glastonbury, Connecticut.
Construction has begun on the Student Union Building project, which will include major renovations and additions to the current facility. The primary goal of the project is to expand the range and quality of activities available to students in the campus core. Included in the project will be a food court, 500-seat theatre, student activity meeting space, a ballroom and a central post office for all student mail. This facility also will provide new space for each of the campus’ cultural centers. Implementation of the project will be phased over several years. The architects for the projects are Cannon Associates of Boston. Konover Construction of West Hartford is the project’s construction manager. The first phase of the project, which includes the theatre, is scheduled for completion in December 2003.ABOVE: Interior renovations and an addition to the Neag School of Education’s Gentry Building have begun. The work is scheduled for completion in December 2003.ABOVE: The former School of Business Building is being transformed into a new Center for Undergraduate Education that will provide academic support for students and instructional support for faculty and gradaute students in a centralized location.BELOW: Major renovations have begun on the Student Union Building. Students will have access to a wide range of activities in the campus core upon completion of the project. The first phase, including a 500-seat theatre, is scheduled for completion in December 2003.BELOW: Renovations to the Alumni Quad were undertaken during the summer of 2002 and were completed by the start of the fall 2002 semester. The project included installation of sprinklers wh9ch were also installed in Shippee, Buckley, East Campus, and North residence halls.
- Renovations and installation of sprinklers for Alumni Quad, Shippee/Buckley, and East Campus North (Hicks and Grange) were completed for the start of the fall 2002 semester. The project was funded from a combination of funds from special obligation bonds to be repaid by the University and UCONN 2000. The construction manager for the project was Whiting Turner of New Haven.
- Construction has started on a new central dining facility at the Towers Dorms. This facility will replace the current six small dining facilities and provide a dining facility for the new Greek Housing Complex. The completion date is August 2003, in time for the start of the fall semester. Funds for the project come from a combination of UCONN 2000 and Dining Services operating funds. The construction manager for the project is FIP of Cheshire.
- Construction has begun on 504 beds of apartment style housing and 468 beds of suite style housing to be located north of Northwest Quad Dorms. The floor plans for the units are similar to those at Hilltop Apartments and the Hilltop Suites. Funding for the project is from special obligation bonds to be repaid by the University from room fees revenue. Completion of the project is scheduled for the start of the Fall 2003 semester. The design build firm is JPI of Irving, Texas. Early in the construction a pocket of solid waste material was found on site. The material has been removed, and construction has continued. The University has begun further investigation to ensure that if any more waste material is located in this area of campus it will be removed.
- Construction is underway on renovations to locker rooms, training facilities and coach offices for the basketball teams. Construction began in April 2002 with completion set for October 14, 2002. Funds for the project are coming from a combination of private fund raising and UCONN 2000. The architect for the project is Jeter Cook & Jepson of Hartford. The construction manager is O&G Industries of Torrington.
- North of the Towers Dorm complex, the University is building a centralized complex to house the University’s fraternities and sororities that will provide housing for 300 students. The Environmental Impact Evaluation for the project was approved by the Board of Trustees on May 30, 2002. The design/build team is led by Capstone Builders. Construction on the project has begun and is scheduled for completion for the start of the Fall 2003 semester. The project budget of $12 million is funded through special obligation bonds to be repaid by revenue from fees paid by fraternity and sorority members.
ABOVE: Ground was broken in September behind North Campus for an apartment-style residential complex and a village for UConn fraternities and sororities. The two complexes will add nearly 1,000 beds to campus.BELOW: The School of Engineering’s Information Technology building will include space for classrooms, research labs and offices, as well as a 390-seat lecture hall. Phase II of the Agricultural Biotechnology Building has been completed.
ABOVE: The second building provides research and incubator space.BELOW: The greenhouse facility.
- Construction is underway for renovations at the School of Law that will provide for the phased renovations of Law School facilities including the old Library Building. The architect for this project is Allan Dehar Associates of New Haven. The construction manager is Dimeo Construction of New Haven. The first phase of the project will be complete in March 2003.
- Construction continues on the Waterbury Downtown campus project, which will relocate the Waterbury Regional campus from its present Hillside location to East Main Street. The existing academic programs and additional Bachelor of Business and MBA programs will be offered in the new facilities. The architect for the project is Jeter Cook & Jepson of Hartford. Although not part of UCONN 2000 funding, legislation provides that the project will be managed by the University under the authority set forth in UCONN 2000. O & G Industries of Torrington is the construction manager for the project. The new campus is scheduled to open for the Fall 2003 semester.
- Construction has been completed on Phase II of the Agricultural Biotechnology facility. A $7,770,682 Department of Energy Grant and $3,000,000 from UCONN 2000 funded this second phase of the project, that included construction of a second building (approximately 16,000 sq. ft.) and a new greenhouse facility (approximately 14,000 sq. ft.) as provided in the original project and the Master Plan. The facility provides research and incubator space. Architects for the project were Svigals Associates of New Haven, and the construction manager was Turner Construction of Milford. Construction was completed in July 2002.
- Construction is underway on a new building for the School of Engineering’s Information Technology program, with approximately 94,000 gross square feet of classrooms, and research lab and office space, and a 350-seat lecture hall. The architect for the project is Burt Hill Kosar Rittlemann of Washington, DC. The construction manager for the project is O & G Industries of Torrington. The main building will be completed in January 2003 and the lecture hall in June 2003.
- Installation of new exterior signage has been completed at the main campus and the Health Center. The law school and regional campuses will see their new signs beginning in November 2002. The purpose is to incorporate signage that will provide a unified look and better directional information to visitors at all of the University’s campuses.
- Phase II of the Wilbur Cross renovation was completed in July 2002. This project locates all business functions relating to student services in one central, customer-friendly location. Functions include financial aid, bursar, registrar, dining services, residential life, and services to students with disabilities. The project’s contractor was Aspinet Construction of Avon. As part of the rejuvenation of one of the campus’ most important old buildings, a new slate roof is being installed along with masonry repairs and window replacement.
- Construction was completed in September 2001 for the second parking garage, located next to the Gampel Pavilion. The cost of the project is borne by a special obligation bond issued under UCONN 2000 authority. Revenue to support the debt service will come from parking and transportation fees. The facility contains 1,547 parking spaces and 53,000 gross square feet of retail space for the UConn Co-op. The Co-op space was completed in October 2002. The contractor for the project was Manafort Brothers of New Britain.
Construction activity continues on the Biology/Physics project after the original contractor was terminated by the University on February 4, 2000. These activities resumed when the University and Liberty Mutual, the Surety that held the payment and performance bond for the project, came to a fronting agreement whereby the Surety agreed to pay the University $25,350,000 to complete the project. Grounds for the termination included: unqualified general contractor staffing, removal of key personnel, unauthorized substitutions, subcontractor mismanagement, schedule-failure to comply with contract requirements, failure to prosecute the work, subcontractor payment irregularities, inadequate staffing/manning, change order processing failures, disregard for University property, refusal/delay in allowing document review, failure to timely provide general conditions documents, inadequate quality control, and inadequate safety supervision. Turner Construction of Milford is the construction manager on the project. It is anticipated that the project will be completed in December 2003.
Public Act 99-241 called for, among other things, information on the use of Connecticut-owned businesses on UCONN 2000 program projects, including those owned by women and minorities. Since FY 1996, construction and related contracts for the UCONN 2000 program totaled $640.6 million. Twenty-six percent of this total, or $165 million, has gone to set-aside general contractors, contracted architects and engineers, and subcontractors. In this period, Connecticut businesses have accounted for $533.1 million or 84% of total contracted dollars. Small business participation has amounted to $89.8 million and minority-and women-owned participation has accounted for $74.8 million.
Phase I Debt Service Commitment Bond Issues Completed
Section 10a-109 of the Connecticut General Statutes empowers the University to issue General Obligation Bonds secured by the State’s Debt Service Commitment (sometimes referred to as “Debt Service Commitment Bonds” or “DSC Bonds”). These Bonds are issued pursuant to the General Obligation Master Indenture of Trust, dated as of November 1, 1995, between the University of Connecticut, as Issuer and Fleet National Bank of Connecticut as Trustee (now State Street Bank & Trust). The Master Indenture of Trust was approved by the University’s Board of Trustees on November 10, 1995 and by the State Bond Commission on December 21, 1995. UConn’s Board of Trustees and the Governor approve the subsequent Supplemental Indentures for each bond issue. The University and Office of the State Treasurer, working in conjunction, manage the Debt Service Commitment Bond sale process. University General Obligation Debt Service Commitment Bonds issues to date are summarized below:
Date of Issue Par Amount General Obligation Bond Issue Phase I February 21, 1996 $ 83,929,714.85 1996 Series A April 24, 1991 124,392,431.65 1997 Series A June 24, 1998 99,520,000.00 1998 Series A April 8, 1999 79,735,000.00 1999 Series A Phase II March 29, 2000 $130,850,000.00 2000 Series A April 11, 2001 100,000,000.00 2001 Series A April 18, 2002 100,000,000.00 2002 Series A
The seven series of DSC bonds issued total $718,427,146.50 in face value, of which $712,000,000 was available for UCONN 2000 Project spending. The balance, together with accrued interest and net original issue premium, funded the costs of issuance.
On July 1, 2002, the Ninth Supplemental General Obligation Debt Service Commitment Indenture became effective authorizing $100,000,000 of bond proceeds for UCONN 2000 Project financings. This brought total authorized DSC bond proceeds for Project spending to $812,000,000.
To date, 47 projects have been authorized to receive General Obligation Debt Service Commitment bond proceed funding: Agricultural Biotechnology Facility Completion; Agricultural Biotechnology Facility; Alumni Quadrant Renovations; Avery Point Marine Science Research Center-Phase I; Avery Point Marine Science Research Center-Phase II; Avery Point Renovation; Benton State Art Museum Addition; Business School Renovation-Phase II; Central Warehouse New; Chemistry Building; Deferred Maintenance & Renovation Lump Sum-Phase I; Deferred Maintenance & Renovation Lump Sum Balance-Phase II; East Campus North Renovations; Equipment, Library Collections & Telecommunications-Phase I; Equipment, Library Collections & Telecommunications Completion-Phase II; Gant Plaza Deck; Gentry Renovation; Heating Plant Upgrade; Hilltop Dormitory Renovations; Ice Rink Enclosure; International House Conversion/(a.k.a. Museum of Natural History); Litchfield Agricultural Center-Phase I; Mansfield Apartments Renovation; Mansfield Training School Improvements; Monteith Renovation; Music Drama Addition; North Campus Renovation; North Superblock Site & Utilities; Northwest Quadrant Renovation-Phase I; Northwest Quadrant Renovation-Phase II; Parking Garage-North; Pedestrian Walkways/(a.k.a. Fairfield Road Pedestrian Mall); School of Business; School of Pharmacy; Shippee/Buckley Renovations; South Campus Complex; Stamford Downtown Relocation-Phase I; Student Union Addition; Technology Quadrant-Phase IA; Technology Quadrant-Phase II; Towers Renovation; Underground Steam & Water Upgrade-PhaseI; Underground Steam & Water Upgrade Completion-PhaseII; Waring Building Conversion; Waterbury Property Purchase; White Building Renovation; and the Wilbur Cross Building Renovation.
Trustee-Held Construction Fund
Prior to June 1998, all Debt Service Commitment Bond proceeds were deposited with the Office of the State Treasurer and treated like State bond proceeds, including payments made to vendors through the Office of the State Comptroller. Subsequently, the Office of the Attorney General opined that the University, and not the State, issues UCONN 2000 bonds. Accordingly, upon advice of bond counsel and in conformity with the Master Indenture of Trust, Debt Service Commitment Bond construction fund proceeds were deposited to the Trustee Bank and disbursed as directed by the University pursuant to the Indenture. Bond proceeds for cost of issuance are still deposited with the Office of the State Treasurer, and disbursed through the Office of the State Comptroller.
The Indenture of Trust provides that the University is authorized and directed to order each disbursement from the Construction Account held by the Trustee upon a certification filed with the Treasurer and Trustee. The Indenture provides that such certification shall be signed by an Authorized Officer of the University and include certain disbursement information. Once the Authorized Officer certification filings are made, the University can directly disburse payments.
University Special Obligation Revenue Bonds Secured by Pledged Revenues
UCONN 2000 also authorizes the University to issue Special Obligation Revenue bonds. Unlike the University’s General Obligation Debt Service Commitment Bonds that are paid from the State’s General Fund, the Special Obligation Bonds are paid from certain Pledged Revenues of the University as defined in the particular bond series indenture.
A Special Capital Reserve Fund may be established for University Special Obligation bond issues only if the Board of Trustees determines that the Special Obligation bond issue is self-sufficient as defined in the Act. The self-sufficiency finding by the University must be submitted to and confirmed as not unreasonable or arbitrary by the State Treasurer prior to issuance of the bonds. Once approved, the Special Capital Reserve Fund is funded at issuance by the University to meet the minimum capital reserve requirement. However, subject to notification by the University on or before December 1, annually, if this amount falls below the required minimum capital reserve, there is deemed to be appropriated from the state General Fund sums necessary to restore each such Special Capital Reserve Fund to the required minimum capital reserve.
Student Fee Revenue Bonds have been issued pursuant to the Special Obligation Indenture of Trust, dated as of January 1, 1997, between the University as Issuer and State Street Bank & Trust as Trustee (“the Special Obligation Master Indenture”). The Master Indenture was approved by the Board of Trustees on November 8, 1996.
On February 4, 1998, the University issued $33,560,000 of University of Connecticut Student Fee Revenue Bonds 1998 Series A (“SFR 1998-A Bonds”) with a final maturity of November 15, 2027. The Special Obligation First Supplemental Indenture was also dated January 1, 1997 and authorized the issuance of bonds up to a principal amount not to exceed $30,000,000 for construction of the South Campus Residence and Dining Hall, plus amounts necessary to fund a Special Capital Reserve Fund (“SCRF”) and provide for costs of issuance. The University managed the issuance and sale of these bonds and realized a favorable true interest cost over the term. Debt service for these bonds is paid from the student Infrastructure Maintenance Fee instituted in 1997 and other Pledged Revenues as further defined in the Indenture of Trust. Such Pledged Revenues also help support future operation and maintenance costs for facilities built or expanded through UCONN 2000.
On June 1, 2000, the University issued $89,570,000 of the University of Connecticut Student Fee Revenue Bonds 2000 Series A (“SFR 2000-A”) pursuant to the Special Obligation Master Indenture, and the Special Obligation Student Fee Revenue Bonds Second Supplemental Indenture dated as of May 1, 2000. Bond proceeds funded $87,000,000 of construction for the Hilltop Dormitory, Hilltop Student Rental Apartments, and Parking Garage South and also provided for capitalized interest and costs of issuance. The $89,570,000 SFR 2000 Bonds were defeased in substance on February 27, 2002, as further described below, and are no longer reflected as outstanding debt on the University’s financial statements.
On February 14, 2002, the University issued $75,430,000 of the University of Connecticut Student Fee Revenue Bonds 2002 Series A pursuant to the Special Obligation Master Indenture and the Special Obligation Student Fee Revenue Bonds Fourth Supplemental Indenture, dated as of November 16, 2001. Bond proceeds funded Alumni Quadrant Renovations, Shippee/Buckley Renovations, East Campus North Renovations, Towers Renovations (including Greek Housing), and North Campus Renovations (including North Campus Student Suites and Apartments).
On February 27, 2002, the University issued $96,130,000 of the University of Connecticut Student Fee Revenue Bonds 2002 Refunding Series A pursuant to the Special Obligation Master Indenture and the Special Obligation Student Fee Revenue Bonds Third Supplemental Indenture, dated as of February 1, 2002. Bond proceeds were used to take advantage of favorable market conditions to advance refund and defease in substance all of the $89,570,000 of Student Fee Revenue Bonds 2000 Series A bonds outstanding. Proceeds were deposited with the Trustee bank in an irrevocable escrow fund sufficient to satisfy future debt service and call premiums on the prior issue.
ABOVE: The extension of Bolton Road, connecting Route 195 with Hillside Road, will be completed by early November. The new road is expected to lead guests to the Nathan Hale Inn and Conference Center while easing the traffic burden on area residents. ABOVE:The historic Farwell Barn, located near Horsebarn Hill, is being restored. Work to return the more than 80 year-old barn and silo to its original post and beam style is expected to be completed by early November.
Since the inception of UCONN 2000, the University’s bond issues have experienced credit rating category upgrades. The capital markets have recognized the tangible benefits to the State’s economy of meeting the infrastructure and educational goals of the program, as well as the University’s success in implementing them. An improved credit rating not only provides the State and the University with less expensive access to the capital markets but also supports the State’s quality reputation among investors. During fiscal year 2002, the University marked a milestone with the achievement of the high-grade credit rating category from Moody’s Investors Service for both its General Obligation and Special Obligation bonds (“Aa2” and “Aa3”, respectively).
As of March 2002, the UCONN 2000 Debt Service Commitment bonds were rated “AA” by Standard & Poor’s; “Aa2” by Moody’s Investors Service; and “AA-” by Fitch Investors Service. In addition to the underlying credit ratings, “AAA” rated municipal bond insurance secures certain maturities. Also the University’s Special Obligation Bonds (Non-SCRF) were rated “AA-” by Standard & Poor’s and “Aa3” Moody’s Investors Service. Fitch Investors Service does not rate the Special Obligation bonds. Highlights of the University’s credit rating history are shown below:
- February 1996: the first issue of the University’s General Obligation Bonds secured by the State’s Debt Service Commitment carried underlying ratings of “A1” by Moody’s Investors Service, “AA-” by Standard & Poor’s and “AA-” by Fitch.
- February 1998: the first issue of UCONN 2000 Special Obligation bonds depended upon the State’s SCRF credit rating. An underlying “stand alone” credit rating was not available for this nascent program. At the time of issuance, the State SCRF enhancement allowed the bonds to obtain a “AA-” rating from Standard & Poor’s, “AA-” from Fitch Investors Service, and “A-1” from Moody’s Investors Service. The bonds were subsequently covered by municipal bond insurance and upgraded to a “AAA” at Fitch and Standard & Poor’s and “Aaa” at Moody’s Investors Service.
- October 1998: Standard & Poor’s upgraded the UCONN 2000 General Obligation DSC Bonds and the UCONN SFR 1998-A (SCRF) bonds to “AA” from “AA-“.
- March 2000: Moody’s upgraded UCONN 2000 General Obligation DSC Bonds to “Aa3” from “A1”.
- June 2000: the University achieved a milestone with its first underlying Special Obligation Bond “stand alone” credit rating of “AA-” (S&P), and an “A1” (Moody’s).
- February 2001: UCONN 2000 General Obligation DSC Bonds were upgraded to “Aa2” from “Aa3” by Moody’s. In April 2001, the General Obligation DSC 2001 Series A bonds were sold without any bond insurance security enhancement on any maturity, another successful first-time accomplishment for the UCONN 2000 bond program. UConn’s SFR 1998-A Bonds, which are secured by the State SCRF, were upgraded at this time to “Aa3” from “A1” by Moody’s.
- January 2002: UConn’s 2000 Special Obligation Bonds (Non-SCRF) were upgraded to “Aa3” from “A1” by Moody’s. This graduated UConn’s Special Obligation bonds to Moody’s “high-grade” bond category and impacted the underlying credit on all outstanding Special Obligation Student Fee Revenue Bonds. (The $33.6 million Special Obligation Student Fee Revenue Bonds Series 1998-A bonds which are secured by the State’s SCRF already carried the “Aa3” rating.) This high rating was assigned a stable outlook and represented a positive judgment by the capital markets regarding UConn’s financial strength, real and potential growth as an institution, and management.
August 2002: Reflecting the outlook changes for the State’s General Obligation Bonds, Moody’s and Standard and Poor’s both moved their outlook from “stable” to “negative” for UCONN 2000 General Obligation DSC Bonds while retaining their respective credit rating levels at “Aa2” and “AA”. Fitch took no action. In a sign of confidence for the University’s management and growth potential, Moody’s and Standard & Poor’s kept UConn’s Special Obligation Bond ratings levels and stable outlook unchanged.
Future Bond Issues
The University anticipates offering a Debt Service Commitment Bond issue during Spring 2003 to fund an expected $100 million of UCONN 2000 Projects. Generally, the University plans on issuing a series of new money Debt Service Commitment bonds about every twelve months.
The passage of 21st Century UConn allows for the eventuality of future bond issues secured by the State’s Debt Service Commitment, phasing in during Fiscal Year 2005.
Additionally, the University could issue Special Obligation Revenue bonds for certain projects that have a financial self-sufficiency capacity, and/or if aggregate pledged revenues are sufficient to meet requirements of the Special Obligation Indenture. Depending on market conditions and other factors, the University also might issue either General Obligation or Special Obligation refunding bonds in the future.
The State General Fund pays the debt service on the University’s General Obligation Debt Service Commitment Bonds. The University pays the debt service on the Special Obligation Student Fee Revenue Bonds from its own resources. For all the UCONN 2000 General Obligation Debt Service Commitment securities issued since the program’s inception in 1996 to October 2002, debt service totals $718.4 million of principal and $368.2 million of interest (including capital appreciation bonds). As of October 31, 2002 there will be $610.6 million of principal outstanding. For the UCONN 2000 Special Obligation Student Fee Revenue securities debt service amounts to $205.1 million of principal and $179.8 million of interest over the course of the maturity spectrum, and net of defeased bonds. As of October 31, 2002 there will be $201.2 million of principal outstanding. The Special Obligation bonds incur proportionally more interest expense because they are generally issued for terms of up to thirty years compared to twenty years for the Debt Service Commitment bonds.
UCONN 2000 Bond Proceed Investments
The investment of Tax-exempt bond proceeds is heavily regulated by the Internal Revenue Service, the relevant Indentures of Trust with bondholders, Connecticut law, and other regulatory mechanisms. In addition to meeting those requirements, the University’s general investment policy is to balance an appropriate risk-return level, heavily weighted towards safety of assets, with estimated cash flow needs and liquidity requirements. The University is also mindful that the rating agencies, bond buyers, and bond insurers often weigh the quality of an issuer’s investment portfolio.
To date the University has directed the Trustee Bank to invest any Debt Service Commitment construction fund proceeds in the State Treasurer’s Short Term Investment Fund (“STIF”) which is “AAA” rated and offers daily liquidity and historically attractive risk-adjusted yields. The DSC Cost of Issuance account, a much smaller account, is held and invested by the State Treasurer’s Office.
Similarly, the University has directed the Trustee Bank to invest all the Special Obligation new money bond proceeds in dedicated STIF accounts, with the exception of the 1998 Special Obligation Special Capital Reserve Fund which is invested in longer term “AAA” rated federal agencies’ fixed income Investment Obligations as defined in the Special Obligation Indenture of Trust.
The Special Obligation Student Fee Revenue Refunding Series 2002-A proceeds, other than the cost of issuance and debt service accounts that are invested in STIF, are held by the Trustee Bank in an irrevocable escrow fund, which is invested in U.S. Treasury State and Local Government Securities (“SLGS”) and cash pursuant to the Escrow Agreement.
UCONN 2000 Bond Proceed Investment Earnings
The Debt Service Commitment bond proceeds investment earnings are retained by the Office of the State Treasurer and do not flow to the University or to the Trustee Bank.
Fiscal Year 2002 UCONN 2000 Special Obligation Student Fee Revenue Bonds investment earnings amounted to approximately $1.1 million (cash basis). The Student Fee Revenue Bonds investment earnings are part of the Pledged Revenues and are directly retained by the Trustee Bank to pay debt service on the bonds, and may also be used to flow to other Trustee bond accounts, if necessary, pursuant to the Indenture of Trust.
The investment earnings on the Special Obligation Student Fee Revenue Series 2002-A Escrow Account flow to the irrevocable escrow and are used by the Trustee Bank to meet debt service payments on the defeased bonds.
The University of Connecticut Foundation, Inc. reported at the close of fiscal year 2002 on June 30, 2002, that a total of $43.3 million gifts were received.
Progress toward Campaign UConn’s $300 million goal continues on target, with $202.3 million already raised. The Campaign, which began in July 1998 and concludes in June 2004, is the largest ever undertaken by a public research university in New England. It seeks to raise $75 million for merit and need-based scholarships, $75 million for faculty support, and $150 million for program support. Since the Campaign began, a total of 292 endowments have been established, including 62 in the past fiscal year alone, highlighted by the creation of two faculty chairs in the School of Business and three at the Health Center.
The state of Connecticut’s matching endowment gift program continues to have a significant impact in raising private support for the University. The legislature authorized during its 2002 session a $10 million bond issue to provide funding for the state matching endowment funds.
Sandra Dobrowolsky ’81 and Steven Perlman committed $200,000 to establish the Dobrowolsky Family Day of Pride Scholarship Fund. This prestigious scholarship will provide financial support to help recruit and retain academically talented students for the University.
Mrs. Jan Youngblood Hall pledged $125,000 to establish the John M. Hall Memorial Athletic Scholarship Fund in memory of her late husband. The scholarship will provide financial support for student-athletes participating in varsity intercollegiate athletics in the University’s Division of Athletics.
Sudhakar V. Shenoy ’73 committed $100,000 to provide additional seed money within the School of Business for a number of important initiatives in technological entrepreneurship.
The estate of Alice Norian is providing more than $440,000 for the Armenian Studies Program within the School of Social Work. The funds will be used to support a lecture and student-faculty exchange program.
The estate of Samuel “Sy” Birnbaum is providing $250,000 to fund the Ida, Louis and Richard Blum/Samuel “Sy” Birnbaum Endowed Chair in Psychiatry at the UConn Health Center.
The Gary A. Epling Scholarship was established in memory of the former professor and head of the Chemistry department. It will provide financial support for students enrolled in the College of Liberal Arts and Sciences with priority consideration given to students with a major or minor in Chemistry.
The Spirer/Dueker Humanitarian Achievement Endowment Fund was established to provide financial support to full time students at the University who have engaged in humanitarian activity promoting the public good during the preceding twelve months. Thus far, $11,000 has been contributed.
The William Gasparrini, Sr. Family Trust Fund for Italian Studies was established with a $25,000 commitment to provide financial support for programs at the College of Liberal Arts and Sciences, Department of History, for Italian Studies program.
The Nugget Fund was established with a commitment of $25,000 to provide financial support for programs in the Department of Geology and Geophysics within the College of Liberal Arts and Sciences.
The Lander Family Scholarship Fund was established with a $25,000 commitment to provide financial support for undergraduate students enrolled in the Marketing Department in the School of Business.
Private support plays a critical role in providing the “margin of excellence” expected of a nationally recognized flagship university. Thanks to the generosity of our donors, these gifts are having a lasting impact by making more scholarships available to attract and retain the best students, by providing support to attract the best scholars to supplement our corps of excellent faculty, and by supporting programs and new initiatives.