Arizona University Systems Push $1.4B Construction Plan

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DALLAS - Amid a growing threat of recession, Arizona's three university systems are proposing a $1.4 billion bond-financed construction program to provide an immediate economic boost while improving the state's long-term employment prospects.

Officials from the University of Arizona, Arizona State University, and Northern Arizona University predicted the bond program would create 31,000 jobs as campuses throughout the state added buildings or refurbish aging structures.

The proposal comes as lawmakers are struggling to cut spending amid a $3.1 billion shortfall in revenue for the current and upcoming fiscal years. Legislative leaders gave the proposal a cool reception, some fearing the new debt could hamper the state's ability to respond to a longer recession.

State Treasurer Dean Martin said last week that Arizona has been in a recession since last October.

Under the proposed plan, the universities would pay 20% of the debt service on the projects for the next 25 years. The state would begin paying its share of the debt service in 2010.

The plan's details were outlined by the Associated General Contractors and the universities, building on the framework for an economic stimulus proposal that was included in Gov. Janet Napolitano's 2008-09 budget recommendation.

"Some economists suggest you cut your way out a recession by slashing budgets - and services," said John Haeger, president of Northern Arizona University in Flagstaff, in a written comment on the plan. "Other economists propose you spend your way out of a recession. This plan takes the forward-looking approach of investing in economic recovery."

The proposal was endorsed by the Flagstaff Forty, a group of business professionals who promote economic initiatives.

"We believe a strong infrastructure is critical to a strong educational system, a positive business climate, a strong economic structure and necessary for Arizona to climb out of this economic downturn expeditiously," according to a resolution signed by Bruce Nordstrom and Dean Pickett, president and vice president, repectively, of the Flagstaff Forty.

In the Phoenix area, Roc Arnett, president and chief executive of East Valley Partnership, praised the plan as a generator of graduates for the workforce as well as an immediate economic stimulus. The East Valley suburb of Tempe is home to Arizona State University. The partnership's board is likely to vote on the proposal this week.

The stimulus plan projects that more than 14,400 jobs would be created just in construction. Resulting increases in consumer spending are expected to generate another 16,600 jobs

"Arizona's economy is too dependent on housing and construction, and the state does not have sufficient strength in other areas to offset the decline," said Haeger, who specializes in the history of economic change. "The quickest way to jump-start Arizona's economy is to reverse the sharp decline in the construction industry."

The largest proposed outlay - $470 million - would fund the University of Arizona's medical school campus in downtown Phoenix. That would include a $190 million medical education building, a $165 million research building shared with ASU, and $115 million in infrastructure and core support facilities.

The proposal also includes $327 million for construction at the University of Arizona's main campus in Tucson, as well as $329 million for ASU and $311 million for Northern Arizona University. NAU anticipates annual debt service of $6 million.

UA's projects include $131 million in maintenance for a number of buildings, as well as various heating, ventilation and mechanical systems. New facilities include a $90 million environment and natural science research building, a $70 million engineering research facility, and $44 million social and behavioral science office and classroom building.

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