CSU plans to borrow $220M for new stadium
CSU is seeking authorization to borrow $220 million to build its new on-campus stadium through bond sales, according to documents filed with the state Legislature's Capital Development Committee.
Colorado State University President Tony Frank and Chancellor Mike Martin are scheduled to make their pitch for selling the bonds to fund stadium construction to the legislative committee Tuesday morning as part of a regular review of capital construction projects planned over the next two years by the university.
Update from the meeting
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The $220 million request equals the estimated construction costs, including CSU's contribution to necessary city infrastructure, of the multi-purpose stadium. Plans call for a 36,000-seat facility, with standing-room only capacity up to 40,000, to be built on the southwest side of the university's main campus, between Pitkin and Lake streets along the west side of a reconfigured Whitcomb Street.
Frank has said he believes the university can raise up to $50 million in private funds for the project but prefers to use that money to pay off the annual bond payments rather than to offset the total cost of construction, according to the documents filed with the legislative committee. Frank had said he planned to finance up to $195 million of the project through the sale of revenue bonds while getting the go-ahead to move forward, pending approval of a finance plan, from the CSU Board of Governors on Dec. 5.
The university plans to issue the revenue bonds, designed to be paid back with new revenue produced by the facility, without using the state-intercept program that would back those bonds with the entire state budget.
That means the bonds will be sold with CSU's bond rating rather than the state's bond rating and backed by money controlled directly by the university, including tuition and fees paid by students and the state and federal funds.
A feasibility study prepared for CSU in August of 2012 estimated stadium revenue, minus expenses, of $10 million to $22 million a year. Annual income from Hughes Stadium, home to CSU's football team since 1968, was given as $6.7 million a year. Stadium critics have said even the lowest of those estimates are significantly overstated.
Interest payments on $220 million of bonds over a 30-year period would be around $10.5 million a year at a 4 percent interest rate to $13.2 million at 6 percent interest.
The Capital Development Committee still has to give the go-ahead before Frank can ask the Board of Governors at its meetings next week to approve the finance plan. But the project doesn't need to meet the same kind of scrutiny as projects funded through state-intercept bonds, state Sen. John Kefalas of Fort Collins said Monday.
"There's not a whole lot the legislature can do, because CSU has chosen not to use the state-intercept program," said Kefalas, a Democrat and one of six members of the state senate's Capital Development Committee. "Their credit rating is basically the same as the state's, so it won't make any difference in interest rates."
The motion the CDC will vote on Tuesday, Kefalas said, is basically whether or not to approve the spending authority.
Kefalas said he's not sure yet how he'll vote and said he would spend time Monday night studying the revenue projections for the stadium prepared by CSU as well as those prepared by the anti-stadium group, Save Our Stadium Hughes.
"With all due respect to everyone, to some extent this has come down to a duel of numbers; whose financial numbers do you believe to be more accurate?" Kefalas said. "It's hard to determine with 100 percent accuracy."
"Part of what I'm worried about is what happens in the worst-case scenario. I want to make sure (stadium debt) is not going to fall on the backs of the students."
CSU hopes to break ground on the project this summer and open the stadium in time for the 2017 football season.
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