Board of Trustees of the University of Arkansas accepted a proposal last week to use pledged athletic department revenue to support $18 million of bonds for a new academic building.
Athletic revenues will provide $1.25 million a year for 30 years to pay debt service on lease revenue bonds. Proceeds will finance the construction of a general purpose classroom and laboratory building at the university’s main campus in Fayetteville.
Vice chancellor Jeff Long told trustees that additional revenues from football will enable the athletic department to increase its direct funding for academic efforts.
The new $1.25 million pledge will bring the total to $2.3 million a year.
Athletic revenues are expected to increase sharply from the Southeast Conference’s share of media rights and sponsorships from a new four-team college football championship structure, Long said. Arkansas is a member of the conference.
The university will also generate additional athletic revenues from a post-season bowl game beginning in 2014 that will match the football champions of the Southeast and Big 12 conferences, Long told trustees.
The academic facility is expected to cost $18 million to $25 million. It will include up to 90,000 square feet of classrooms and laboratories.
Chancellor G. David Gearhart said any costs over the $18 million of bond proceeds could be financed by reserve funds and refunding some of the university’s $1 billion of outstanding facilities revenue debt.
“This building is our most urgent need on campus,” Gearhart said. “Because of these funding sources, we will not have to use any new student tuition dollars or student fees to build this much-needed facility.”
Construction of the classroom building will begin in July 2013. It is expected to be open in 2015.
The school’s credit is rated Aa2 by Moody’s Investors Service.
The University of Arkansas’ indebtedness includes $448.5 million issued for the Fayetteville campus.