Legislative Update No. 16
REBUILDING, RENEWING AND ENHANCING
THE UNIVERSITY OF CONNECTICUT
Table of Contents
I. UCONN 2000: THE UPDATE
II. ACTIVITIES COMPLETED OR UNDERWAY:
- PLANNING, DESIGN AND MANAGEMENT
- CONNECTICUT CONTRACTOR SUMMARY
- PRIVATE FINANCIAL SUPPORT
- PREVAILING WAGE COMPLIANCE REPORT
IV. CURRENT PROJECT STATUS – PHASE II (as of April 2003)
V. CURRENT PROJECTS FUND SOURCES: PHASE I (as of April 2003)
VI. CURRENT PROJECTS FUND SOURCES: PHASE II (as of April 2003)
|The Biology/Physics Building opened in January and will be dedicated in May. The 145,000 square-foot building features state-of-the-art labs, two 150-seat classrooms and a rooftop research greenhouse.|
|ABOVE: Jason Ucci, graduate student, works on his research in a new lab in the Biology/Physics Building.BELOW: Peter Lemaire, graduate student, performs an experiment in one of the new labs at the Biology/Physics Building.|
This is the sixteenth 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 progress report, which was filed on January 15, 1999.
21st Century UConn will continue the transformation of the University and its campuses. The program represents an endorsement and recognition of UCONN 2000’s achievements and of the University’s management of the program.
The impact of UCONN 2000, as articulated by President Austin last month to the Appropriations Committee of the General Assembly, is well documented. We are slowing the “brain drain”, as academically talented students are choosing to come to UConn rather than go out-of-state. Since 1995: freshman enrollment has increased 58%; minority freshman enrollment has grown 61%; average SAT scores have risen almost 40 points; and, nearly 400 valedictorians have joined the student body. And, total applications to the University have increased 4,047 over last year as of the end of March, a remarkable 28 percent.
UCONN 2000 also has enhanced our ability to generate additional revenue from such sources as private giving and research support. Since 1995, UConn’s endowment has nearly quadrupled, from $50 million to $195 million. Research support at Storrs has grown from $56 million in FY 1996 to $90 million this year.
In December 2002, the Legislative Program Review & Investigations Committee of the Connecticut General Assembly issued the final report on its review of UCONN 2000 construction management. The report is a very positive assessment of the University’s management of the UCONN 2000 construction program. The Committee concluded that the program has been well managed, incorporating industry best practices and, overall, producing quality facilities on time and on budget. There were no proposals for legislative changes, and the three programmatic recommendations are already underway. It is enormously gratifying to the University that the legislature’s investigative arm has independently verified that management of the program to date validates the 1995 and 2002 decisions to make this extraordinary capital investment. Findings from the report include:
- The University process for managing the UCONN 2000 construction program incorporates industry best practices for controlling costs, schedule and quality.
- The bulk of UCONN 2000 construction work has been completed without significant delays or cost overruns.
- The University’s pre-qualification process permits it to screen out contractors unsuited for particular projects or with poor performance records. It also can protect against over reliance on any one company to perform work.
- The amount of Department of Labor enforcement activity and prevailing wage violations cited have not been unusual, given the size, scope of work, duration, and budget of the UCONN 2000 program.
- The University of Connecticut has ensured to the extent possible all its contractors comply with all employment laws, including the federal immigration laws, and has responded appropriately to complaints regarding the hiring of illegal aliens.
- Assuring compliance with safety regulations is an ongoing, daily process that requires commitment from all parties, resource management, accountability, and follow-up. Employees, contractors, owners, and insurers all have a strong financial interest in making safety a priority on construction projects. The University of Connecticut stresses safety as its highest priority in its manuals and construction documents provided to contractors on UCONN 2000 projects.
- State labor and contracting laws do not mandate a union/nonunion preference in awarding public works projects. The University’s labor relations policy for the UCONN 2000 program, in accordance with state laws, is neutral in this respect to awarding work to contractors and subcontractors. In fact, an analysis of the 39 major UCONN 2000 projects completed or in progress indicates about half were awarded to union and half to nonunion general contractors and construction managers, both in terms of number of projects and dollars awarded.
The University has demonstrated its ability to manage, oversee, and administer the UCONN 2000 program in a responsible, efficient and productive manner. It intends to maintain this success, and make improvements for optimal performance as the UCONN 2000 program transitions into 21st Century UConn and builds upon its great success.
UCONN 2000: ACTIVITIES COMPLETED OR UNDERWAY
- PLANNING, DESIGN AND MANAGEMENT
- At the April 15, 2003 Board of Trustees meeting the Board approved the FY 2004 Capital Budget. The list of projects and their FY 2004 funding is as follows:
Projects Amounts Deferred Maintenance & Renovation Lumpsum $15,000,000 Equipment, Library Collections & Telecommunications 16,123,000 Residential Life Projects: East Campus North Renovations 5,710,000 Grad Dorm Renovation 3,000,000 North Campus Renovation 2,986,000 Towers Renovation 19,500,000 West Campus Renovation 500,000 School of Pharmacy/Biology (New) 30,000,000 Student Union Addition 5,000,000 Torrey Life Science Renovation 2,181,000 TOTAL $ 100,000,000
The University has begun an update of its 1998 Master Plan. In view of the campus’ extensive physical change resulting from the UCONN 2000 investment and the forthcoming 21st Century UConn initiative, it is necessary to update this plan so that the University can manage its resources most effectively to optimally leverage change from a physical and financial perspective. By doing so, the University will properly assimilate the proposed 21st Century UConn projects into the campus context. The plan will update the existing condition baseline to reflect the current physical plant, assess current and projected space needs relative to available facilities, assess the overall parking and transportation system including its financial and operational aspects, and refine the campus’ physical composition to advance improvements already in place. The consultants for this update are JJR of Ann Arbor, Michigan.
- The Law School Library has experienced an on-going series of leaks since opening in 1996. This project’s construction, which predates UCONN 2000, was managed by the Department of Public Works. Corrections undertaken did not resolve the situation, so the University hired its own consultant, Hoffman Architects of New Haven to investigate and prepare solutions to the problem. Their investigation revealed many construction defects and a potential structural issue. The University is working with the Office of the Attorney General, the Department of Public Works, the original project architects, and the firms involved with its construction to have the defects corrected.
- Design activities are underway for the Cogeneration/Central Chilled Water Facility. This facility will produce electricity for the Storrs campus, and the secondary waste heat will provide heating, hot water and cooling for the campus. The bid process was undertaken as a prerequisite to determine 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 Board of Trustees to endorse proceeding with the project. A contract award has been given to Select Energy. The project will be financed through Catapillar Financial Services Corporation using a lease agreement charging an interest rate of 4.3%. Savings generated by the facility will pay the debt and debt service.
- The Board of Trustees, at its January 14, 2003 meeing, approved the Environmental Impact Evaluation (EIE) for the construction of the apartments to be developed as part of the Storrs Center Redevelopment. This project will provide for 500 to 1,000 beds of apartment style housing. Two potential sites were 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 University continues standardizing building systems and system components within its overall building and renovation program, (e.g., electrical circuitry, panel boxes, etc.). This process will reduce the number of replacement parts UConn needs to inventory, speed repairs, improve the level of maintenance and lower overall costs.
- Renovations and installation of sprinklers for Towers, Grad, and East Campus North (Holcomb, Whitney & Sprague) residence halls are in design. The project is supported by a combination of special obligation bonds to be repaid by the University and UCONN 2000 funds. The construction manager for the project is Whiting Turner of New Haven.
- Construction documents have been completed for the new School of Pharmacy/Biology building. This building will include 120,000 square feet of space for teaching and research for the Pharmacy program and 80,000 square feet of research space for the Biology program. Also included in the project is a consolidated 26,000 square foot animal care facility for the research programs in this area of the campus. The architect for the project is Davis, Brody, Bond of New York City. Gilbane of Glastonbury is the construction manager for the project. Construction began in November 2002.
ABOVE: Site work began in December 2002 on a new building for the School of Pharmacy, which will provide teaching and research space for the Pharmacy program and research space for the Biology program. ABOVE: Construction began in January 2003 on an addition to the William Benton Museum of Art. The $3 million expansion is scheduled to be completed by this fall.
- The construction documents have been completed 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 began in January 2003.
Construction is underway on renovations to the Neag School of Education’s Gentry building. The project scope includes a 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 January 2004.
ABOVE: Construction on the Neag School of Education’s Gentry Building began in May. Interior renovation, exterior improvements and a 20,000 square-foot addition are included in the project. It is scheduled to be completed this fall.ABOVE: Renovations and an addition to the former School of Business will transform the facility into a Center for Undergraduate Education, providing a centralized location for academic support for undergraduate students and instructional support for faculty members and graduate students.
- Construction is underway on renovations to the former School of Business as well as a 20,000 square foot addition. This project will transform the 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. The facility will house 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. 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.
- Construction is underway on the Student Union Building, which includes major renovations and additions to the current facility. This project will expand the range and quality of activities in the campus core for students. Included are a food court, 500-seat theatre, student activity meeting space, a ballroom, and a central post office for all student mail. The facility also will provide new space for each of the campus’ cultural centers. Implementation of the project will be phased over several years. The architect for the project is 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.
Additions and renovations to the Student Union will expand the range and quality of activities in the campus core. Included in the expansion are a food court, a 500-seat theatre, student activity meeting space, a ballroom, and a central post office for student mail, as well as space for each of the campus’ five cultural centers.
- Construction has begun on 504 beds of apartment style housing and 468 beds of suite style housing north of the Northwest Quad Dorms. Floor plans are similar to those at Hilltop Apartments and Hilltop Suites. Funding is from special obligation bonds to be repaid by the University from room fee revenue. Completion 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 undertook additional investigation to ensure that if any more of such waste material is located in this site, it will be removed.
ABOVE: More than 500 beds of apartment style housing will be provided when Charter Oak Apartments open in August. ABOVE: Also expected to be completed in time for the fall semester are 468 beds of suite-style housing, which are located just north of the existing Northwest Quad dorms.
- North of the Towers Dorm complex, the University is building a centralized complex to house some of the University’s fraternities and sororities. The complex will provide housing for 300 students. The design/build team is led by Capstone Builders. Construction has started 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.
- Construction has begun on a new central dining facility at the Towers Dorms to replace the existing six small dining facilities and provide dining for the Greek Housing Complex. Completion is scheduled for August 2003, in time for the start of the fall semester. Funding comes from a combination of UCONN 2000 and Dining Services operating funds. The construction manager is FIP of Cheshire.
ABOVE: A centralized village to house many of the University’s fraternities and sororities is being constructed north of the Towers Residential Complex. The village will provide housing for 300 students in six buildings. ABOVE: A new central dining facility adjacent to the Towers Residential Complex will replace dining facilities in each existing building and also provide dining for the Greek housing complex.
- Renovations to locker rooms, training facilities, and coaches’ offices for the basketball teams were completed on October 14, 2002. Construction began in April 2002. Funds for the project were from a combination of private fundraising and UCONN 2000. The architect for the project was Jeter Cook & Jepson of Hartford. The construction manager was O&G Industries of Torrington.
- Construction is underway for renovations at the Law School that will provide for the phased renovations of 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 will be complete in June 2003.
- Construction continues on the Waterbury Downtown campus project, which will relocate the Waterbury regional campus from its Hillside location to East Main Street. 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 University, under the authority set forth in UCONN 2000, manages the project. O&G Industries of Torrington is the construction manager for the project. The new campus is on schedule to open for the Fall 2003 semester.
- Construction is complete on a new building for the School of Engineering’s Information Technology program, with approximately 94,000 gross square feet of classrooms, research lab, and office space. The 350-seat lecture hall will be complete in June 2003. The architect for the project was Burt Hill Kosar Rittlemann of Washington, D.C. The construction manager is O&G Industries of Torrington.
- Installation of new exterior signage has been completed at the main campus and the Health Center. The law school and regional campuses will have new signs beginning in Summer 2003. 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.
- Construction was completed on the Biology/Physics project in January 2003. The University terminated the original contract with HRH/Atlas on the project on February 4, 2000. Construction 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 was the construction manager responsible for the completion of the project.
- Public Act 99-241 called for, among other things, information regarding use of Connecticut owned businesses on UCONN 2000 program projects, including those owned by women and minorities (“set-aside” contractors). Since FY 1996, construction and related contracts for the UCONN 2000 program totaled $769.5 million. Twenty-three percent of this total, or $177.6 million, has gone to “set-aside” general contractors, contracted architects and engineers, and subcontractors. In this period, Connecticut businesses have accounted for $636.3 million or 82.7% of the total contracted dollars. Small business participation has amounted to $97.1 million and minority-and women-owned participation has accounted for $80.4 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 U.S. Bank N.A.). The University’s Board of Trustees on November 10, 1995 and the State Bond Commission approved the Master Indenture of Trust 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, 1997 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 (1) March 26, 2003 96,210,000.00 2003 Series A (2) (1) The DSC 2002A bonds provided $994,688.03 directly to the Office of the State Treasurer.(2) Note – the DSC 2003 bonds face amount of $96,210,000 together with an additional $3,790,000 of original issue premium, totaled $100,000,000 available for Projects.
The eighth series of UCONN General Obligation DSC bonds issued total $814,637,146.50 in face value. Project funding to date totals $812,000,000 available for UCONN 2000 Project spending. The balance, together with accrued interest and net original issue premium, funded the costs of issuance.
On March 26, 2003 The University issued $96,210,000 face amount of the University of Connecticut Debt Service Commitment Bonds 2003 Series A, at a very favorable true interest cost of 3.97%, the lowest in the history if the program, with a 10.5 Years Average Life and with very favorable call redemption terms of 2013 @ Par. The 2014 through 2023 maturities carried MBIA bond insurance.
- Project Authorizations
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-Phase I; Underground Steam & Water Upgrade Completion-Phase II; 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 U.S. Bank N.A. as successor to State Street Bank & Trust as Trustee (“the Special Obligation Master Indenture”). The Board of Trustees approved the Master Indenture 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 $72,180,000 of construction for the 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.
- Credit Ratings
Since the inception of UCONN 2000, the University’s bond issues have experienced several credit rating 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. A high quality 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). However, during August 2002, both Moody’s and Standard & Poor’s put a negative outlook on the Debt Service Commitment bonds.As of April 1, 2003, the UCONN 2000 General Obligation Debt Service Commitment bonds were rated “AA” by Standard & Poor’s; “Aa2” by Moody’s Investors Service; and “AA-” by Fitch Investors Service. Also the University’s Special Obligation Bonds not secured by SCRF were rated “AA-” by Standard & Poor’s and “Aa3” Moody’s Investors Service. Fitch Investors Service does not rate the Special Obligation bonds not secured by SCRF. The Special Obligation Bonds Series 1998-A carry a Special Capital Reserve Fund and are rated “AA-” by Fitch, “Aa3” by Moody’s, and “AA” by Standard & Poor’s. In addition to the underlying credit ratings, “AAA” rated municipal bond insurance secures certain maturities of several of the above bond issues. 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 an “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 an “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: Moody’s upgraded UCONN 2000 General Obligation DSC Bonds to “Aa2” from “Aa3”. 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. Moody’s upgraded UConn’s SFR 1998-A Bonds, which are secured by the State SCRF, at this time to “Aa3” from “A1”.
- 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’s 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.
- March 2003: During tougher economic times the rating agencies confirmed the University’s General Obligation DSC bond ratings as follows: Fitch “AA-“; S&P “AA”; and Moody’s “Aa2”. Moody’s also confirmed UConn’s Special Obligation and Foundation bond ratings at “Aa3”. Holding the credit ratings was a victory during this time, in light of Moody’s February 2003 move of the State General Obligation bonds, and consequently the University’s DSC and SCRF security bonds, to Watchlist for possible downgrade.
- Future Bond Issues
The University anticipates offering a Debt Service Commitment Bond issue during Spring 2004 to fund an expected $100 million of UCONN 2000 Projects. The passage of 21st Century UConn allows for $1.3 billion of additional securities backed by the State’s Debt Service Commitment, phasing in during fiscal year 2005. Generally, the University plans on issuing a series of new money Debt Service Commitment bonds about every twelve months.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.
- Debt Service
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 April 2003, debt service totals $814.6 million of principal and $413.7 million of interest (including capital appreciation bonds). As of April 30, 2003 there will be $674.2 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 April 30, 2003 there will be $199 million of principal outstanding. All other things equal, 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 State Treasurer’s Office and do not flow to the University or to the Trustee Bank.Fiscal Year End June 30, 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.
Progress toward Campaign UConn’s $300 million goal continues and as of February 28, 2003 more than $237 million (79% of the goal) has been raised. The Campaign is the largest ever undertaken by a public research university in New England and seeks to raise $75 million for merit and need-based scholarships, $75 million for faculty support, and $150 million for program support for UConn.
Since 1995, the number of donors to the University has grown to approximately 40,000 annually. Program support from this investment has resulted in, among other things, a total of 65 endowed faculty chairs University-wide. In fiscal year 2002, more than $22 million was disbursed through the UConn Foundation, including $5.6 million for scholarships, $5.4 million for faculty support, and $4.3 million for program support and facilities enhancement.
Although the state of Connecticut matching endowment gift program continues, the University is experiencing delays in receiving matching funds for endowment gifts received since calendar year 2000. The University and the UConn Foundation believe it is extremely important for the state to fulfill its commitment to those who have collectively contributed millions of dollars based on the expectation of the state match. Future private support, as well as fulfillment of existing donor pledges, may be in jeopardy if the state fails to match gifts timely; therefore, the release of state matching funds is a high priority for the University.
An anonymous donor committed $1.4 million to establish the Lockean Distinguished Chair in Mental Health Education within the School of Medicine at the UConn Health Center.
An anonymous donor committed $300,000 to endowment for the Learning Mentorship Program Fund, which provides academic mentorship in science and technology coursework for freshmen and sophomore students in the School of Engineering. The same donor also gave $200,000 to the School’s endowment for the BRIDGE Program, a five-week intensive residential summer readiness program.
Dr. Paul Mali committed $50,000 to establish the Paul and Mary Mali Endowed Scholarship fund to provide financial support for full-time students enrolled in the Biomedical Engineering program within the School of Engineering.
William Martin Hait committed $100,000 to the School of Pharmacy Endowment for the 21st Century to provide financial support for faculty, scholarships, and programmatic enhancements.
Michael E. McPhee committed $125,000 to establish the Michael McPhee Engineering Fund to provide general support to the School of Engineering.
Alan R. Bennett, ’69, committed $150,000 to create the Alan R. Bennett Faculty Fellowship in Political Science Fund in the College of Liberal Arts and Sciences.
The Annie E. Casey Foundation, one of the nation’s leading private institutions dedicated to building better futures for children in the United States, committed $220,000 to the School of Social Work to fund the Family Reunification Evaluation program in Connecticut. A hallmark of this program is the close collaboration between Casey Family Services and its state partners in helping families achieve family goals and objectives, recruiting and training foster families, and collaborating with other community resources.
A $330,000 gift from the Northeast Utilities Foundation to the University of Connecticut’s Neag School of Education will provide scholarships for students enrolling in the Teacher Certification Program for College Graduates (TCPCG). The full-time master’s degree program is being offered for the first time at UConn’s Stamford campus.
In January 2003, the University submitted the first Prevailing Wage Compliance Report, covering July 1, 2002 through December 31, 2002. These compliance reports will now be included in the six month UCONN 2000 reports. The attachments referred to below cover the period of January 2003 through April 2003 and respond to the requirements of subsection (f) of section (7) of Public Act 02-3, an Act Concerning 21st Century UCONN, by providing the following information:
- The names and addresses of contractors and subcontractors performing repair, addition, alteration and new construction on the university’s campuses in the previous six months.Attachment A (Download or open as an Excel spreadsheet) of this report provides the list in alphabetical order. There is no sub grouping of contractors or subcontractors, as the nature of their business makes each interchangeable with the other as business opportunities become available.
- The extent to which the listed contractors and subcontractors have been in compliance with the provisions of part III of Chapter 557 and provisions of Chapter 558 [of the Connecticut General Statutes having to do with the payment of prevailing wage rates].This information is in Attachment B (Download or open as an Excel spreadsheet) and is based on information from the State of Connecticut Department of Labor, Wage and Workplace Standards Division, Contract Compliance Unit. Please note also that the Legislative Program Review and Investigations Committee report regarding UCONN 2000 Construction Management indicated that, “The amount of Department of Labor enforcement activity and prevailing wage violations cited have not been unusual give the size, scope of work, duration, and budget of the UCONN 2000 program.”
- Any actions taken by the University to cooperate with the Labor Department in the enforcement of said provisions [in item (2)].Attachment C of this report lists support initiatives by the University.
CURRENT PROJECT STATUS: PHASE I (As of April, 2003)
CURRENT PROJECT STATUS: PHASE II (As of April, 2003)
CURRENT PROJECT FUND SOURCES: PHASE I (As of April, 2003)
CURRENT PROJECT FUND SOURCES: PHASE II (As of April, 2003)