Regents OK $1.4B Debt Plan

The Arizona Board of Regents voted last week to support a plan to issue up to $1.4 billion of bonds to finance construction at the University of Arizona, Arizona State University, and Northern Arizona University. The proposal by the three state institutions calls for the Legislature to appropriate $81 million a year for 25 years to cover 80% of debt service on the bonds, with the schools responsible for the remaining 20%.

The regents said the plan would stimulate Arizona’s lagging construction industry by repairing dozens of older buildings and would provide new facilities to meet anticipated enrollment increases.

Presidents of the three universities and local business leaders held a news conference in Tucson last week to stress the need for the program, which they said would generate 30,000 jobs.

“Arizona lags behind the national average of college graduates and the need for our state to catch up is becoming more and more pressing,” said Frances McLane Merryman, vice president of wealth strategies for Northern Trust NA. “This plan is a sound investment at a particularly good time when interest rates are low, projects are well defined, ready to go, and are critical to the institutional capacity to meet the growing needs of our state.”

UA president Robert Shelton said $525 million of the proceeds would cover previously deferred repairs, and the rest would finance construction of new facilities at campuses across the state. The state needs 30,000 new college graduates a year by 2020, he said.

Gov. Janet Napolitano has endorsed the proposal.

ASU would get $329 million for repairs and expansions, with $326 million for UA and $310 million for NAU. The Phoenix Biomedical Campus in downtown Phoenix would get $470 million to finance an expansion.

The Legislature will consider the proposal as it develops the state budget for fiscal 2009.

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