Capital Budget Hearing - SUNY · 2018. 8. 28. · Capital Budget Hearing November 09, 2010 1 Monica Rimai, Senior Vice Chancellor Chief Operating Officer Philip Wood, Vice Chancellor

Capital Budget Hearing

November 09, 2010

1

Monica Rimai, Senior Vice Chancellor

Chief Operating Officer

Philip Wood, Vice Chancellor for Capital Facilities

General Manager,

State University Construction Fund

• Introduction

• Economic Impact/Fiduciary

Responsibility

• Update on SUNY’s Capital

Program

Educational Facilities

Hospitals

Residence Halls

Community Colleges

2

Discussion Items:

Introduction

• Higher Education is the Growth Industry in New York State • SUNY has the power to revitalize New York’s economy and enhance the quality of life in our communities • The SUNY Capital Plan is an economic development - job creation program

• Investing in SUNY capital is a win-win-win scenario for the State, SUNY and upstate communities

• Today we will update you on progress with the SUNY Capital Plan and identify opportunities for further investment

3

the Power of

Economic Impact

• Extensive and geographically diverse network of University facilities across the State provides a built-in framework for promoting economic development activities in every region of the State • Last year, SUNY educational facilities and hospital capital investments alone totaled over $728 million

4

• Approximately half, or $364 million, was for labor costs – not counting the multiplier effect • This year’s capital investment level is estimated to reach $940 million

College of Tech at Delhi – Renovate Smith Hall

Economic Impact • Given the current state of the economy, the design and construction industries are largely dependent upon public work projects • It is the State’s economic interest to support this industry and enable it to meet the demands when private sector investments resume • SUNY’s Capital Program is a significant economic engine throughout the State

5

• SUNY is experiencing: An increase in number of bidders Bids that are considerably under estimate Higher levels of competition

from Architects and Engineers 94% of the contracts awarded are to NYS firms

HSC Brooklyn – Rehab Labs

6

0

1

2

3

4

5

6

7

8

9

10

11

12

Apr 08 - Aug 08

(5 Months)

Sep 08 - Mar 09

(7 Months)

Apr 09 - March 10

(12 Months)

Apr 10 - Sept 10

(6 Months)

0

5

10

15

20

25

30

35

40

Apr 08 - Aug 08

(5 Months)

Sep 08 - Mar 09

(7 Months)

Apr 09 - Mar 10

(12 Months)

Apr 10 - Sept 10

(6 Months)

90

Projects

Construction

State University Construction Fund

Average Number of Bidders per Opportunity

April 1, 2008 thru September 30, 2010

Design

State University Construction Fund

Average Number of Statement of

Qualifications per Opportunity (1)

April 1, 2008 thru September 30, 2010

(1) Includes all procurements for which Statements of Qualifications (SOQs) are received.

16

Projects

40

Projects

22

Projects

17

Projects

63

Projects

67

Projects

22

Projects

7

0 25 50 75 100

2007

2008

2009

2010

64

75

76

92

Percent

Fis

cal Y

ear

State University Construction Fund

Percent of Bids Within Estimate

Fiduciary Responsibility

• SUNY operates and maintains the largest single system of public higher education facilities in the country • SUNY is the largest steward of State facilities • The focus of SUNY’s capital plan is investment in critical maintenance to bring SUNY’s educational facilities to a state of good repair

8

• Significant investments have been made

University at Stony Brook - Graduate Chemistry Lab Rehab

Fiduciary Responsibility

• 73% of SUNY’s educational facilities are more than 30 years old

9

0

2

4

6

8

10

12

14

Pre-1900

1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010

Millions

Millions GSF

Fiduciary Responsibility

• Almost half of SUNY’s Educational Facilities are in poor or fair condition

10

GSF Rated Poor 20%

GSF Rated Fair 28%

GSF Rated Good 42%

GSF Rated Excellent

10%

SUNY Proposal

• With additional State investment, SUNY could fully leverage the existing capital plans and take full advantage of excellent market conditions and competition

• Remove Residence Hall capital from State debt cap

• Take resulting debt cap capacity and partially reinvest in SUNY educational and hospital facilities

• Modernize the Community College Capital Program These proposals will immediately stimulate the economy, fully leverage a competitive marketplace, and bring SUNY facilities to a state of good repair

11

# of

Bldgs

Sq.

Foot(1)

Avg

Age(2)

2003-07

Funding(1)

2008-13

Funding(1)

% Increase/

(Decrease) Funded By

Projects

Managed By

Educational

Facilities 1,834 58.2 44.6 $3,132 $4,426(3) 41.3% State Fund/Campus

Hospitals 13 2.5 25.0 $419 $450 7.4% Hospital

Revenues Fund/Campus

Residence

Halls 467 19.3 34.7 $685 $573 (16.4%)

Room

Rents

DASNY/

Campus

Community

Colleges 492 18.1 42.0 $379 $458 21.0%

50% State

50% Local Local

Totals 2,806 98.1 42.4 $4,615 $5,907 28.0%

SUNY Capital Program Summary

Notes: (1) Square footage and funding expressed in millions.

(2) Average age (expressed in years) represents a straight average with no consideration given to the size of buildings or subsequent

renovations.

(3) Includes $1.1B in future appropriations for critical maintenance projects.

12

Educational Facilities Capital Investment – Critical Maintenance Addressing Backlog and Facility Renewal Needs

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

Sta

rt 2

007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

Do

llars

(M

illio

ns)

Year

Investment

Backlog

2008 – 15 Year Plan

$550M/$777M/$945M

Will Reduce Backlog to 5% of Current Replacement Value in Fifteen Years

13

14

.0

1.0

2.0

3.0

4.0

5.0

6.0

4/05 4/06 4/07 4/08 4/09 4/10 10/10

Billions

Construction Design

(1) Educational Facilities and Hospital Plans Only.

SUNY Capital Program (1)

Projects in Design and Construction

15

Critical Maintenance Strategic Initiatives

2,086 Projects

($5.1B)

224 Projects

($2.9B)

SUNY Capital Program (1)

Projects Active or Completed Since 2004

16

0

500

1,000

1,500

2,000

2,500

3,000

3,500

# Projects $ Value

In Design 302 $ 3.2 B

Under Construction 546 $ 2.4 B

Completed Projects 1,462 $ 2.4 B

Total 2,310 $ 8.0 B

SUNY Capital Program (1)

Projects Active or Completed Since 2004

(1) Educational Facilities and Hospital Plans Only

$280

$360

$220

$169 $151 $164

$246

$500 $492 $493

$710

$938

$900

$850 $825 $825 $825

$199

$269

$377

$287 $242

$225 $224

$297

$409

$464

$496

$728

$943

$912 $871 $863 $871

$0

$100

$200

$300

$400

$500

$600

$700

$800

$900

$1,000

New Contract Commitments Annual Disbursement Levels

SUNY Educational Facilities & Hospital Capital Programs :

Adjusted Annual Program Levels & Disbursement Targets

per 2010-11 Executive Budget $450 M Out-year Reduction

Millions

17

Actual Projected

Successive Changes to Educational and Hospital

Facility Bondable Spending Targets since 2008

18

$500

$728

$1,084 $1,080 $1,080 $1,130

$943 $912 $871 $863

$866

$0

$100

$200

$300

$400

$500

$600

$700

$800

$900

$1,000

$1,100

$1,200

2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15

millio

ns

of

do

lla

rs

SUCF Multi-Year Estimated Need Targets Executive Budget Reduced Targets

$62 $37 $70 $100 $96 $115 $118

$344 $285 $223

$223 $123 $116

$74 $171

$157 $177

$117 $32

$152 $341

$359

$448 $488

$561

$81

$158

$227 $296

$232

$119

$93 $260

$0

$100

$200

$300

$400

$500

$600

$700

$800

$900

$1,000

$1,100

$1,200

2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15

2003-2008 Hospital 2004-07 Critical Maintenance 2004 Strategic Initiatives

2008-2012 Critical Maintenance 2008 Strategic Initiatives 2013-18 Critical Maintenance

$ 900 M Bondable Spending Target Gap

Current Educational Facility & Hospital Capital Spending Target Gap for 2008-13 Strategic Initiatives & Long Range Critical Maintenance

$ in millions

19

Educational Facilities

SUNY Proposal: • SUNY will be requesting the next installment of $550 million for Critical Maintenance funding in the 2011-12 budget submission • Restoring the spending targets for SUNY’s Educational Facilities Capital Program will allow for an immediate increase in capital investment

20

Hospitals

• Hospital Capital is disbursed to each hospital based on its approved multi-year strategic business plan • Use of PIT structure provides cost effective access to capital markets

21

• Projects include both critical maintenance and revenue-enhancing initiatives • Each SUNY hospital pays for the principal and interest associated with the debt for its capital projects

Downstate Medical Center – Ambulatory Services Expansion

Hospitals

• Full appropriation funding is required in order to submit for Certificate of Need (CON) approval, which occurs well in advance of construction • Appropriation cycle doesn’t always match the business cycle or CON cycle

22

• Ability to pay debt service is the financial control for the program, not the availability of appropriations • Successful revenue-generating projects have been achieved at Stony Brook, Syracuse and Brooklyn

Upstate Medical Center – Vertical Expansion/Tree House

Hospitals

• More predictable access to appropriations would allow current capital plans to better support hospital operations

• Increasing appropriations for SUNY hospitals will further planning and investment in SUNY hospitals at no additional cost to New York State • SUNY will be requesting $100 million of additional State Capital appropriations for each of its three hospitals

23 Stony Brook Hospital – Exterior Modernization

Hospitals

0

100

200

300

400

500

03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11

Do

llars

in

Mill

ion

s

Fiscal Year

Hospital Funding - Capital Funding

Funding Amount

24

Residence Halls

• The Residence Hall Capital program is self-sustaining with revenues from room rents and other associated revenues paying the cost of debt service • Supported by separate Revenue Bonds, not PIT Bonds

25

• Switched to disbursement-based bonding in 2008 to utilize capital in a more efficient manner • Need more predictable appropriations which match business plans

College at Alfred – Townhouses

Residence Halls

• Ability to pay debt service is the financial control for the program, not the availability of appropriation • Residence Hall debt is State-related debt, not State-supported debt

• Removal of the Residence Hall debt from the State bond cap calculations could provide necessary bond cap relief for investment in other SUNY capital programs

• In 2008, SUNY requested $695 million in capital which was reduced to $450 million, a reduction of $245 million • SUNY will have exhausted capital appropriations by Spring 2011

26

Residence Halls

27

• Without additional capital appropriations:

No new additional Residence Hall projects can be

started

– $212M in projects in construction will stop

– $131M in projects will stop at completion of design

– $45M in new projects will not start

• SUNY will be requesting $500 million in additional Residence

Hall bonded capital and $90 million in hard dollar

appropriations in the 2011-12 budget submission which is

needed to support the program over the next two years

Residence Halls

28

0

100

200

300

400

500

600

700

800

900

03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11

Do

llars

in

Mill

ion

s

Fiscal Year

Residence Hall Funding - Capital History

Amount Requested

Amount Appropriated

Community Colleges

• All community college capital projects are planned, designed, bid and constructed under local control and authority, either by the college or the local sponsor • The program is a State and local partnership with each partner providing 50% of the cost for each project • Colleges must obtain a local sponsor resolution committing the local sponsor’s funding share to be included in SUNY’s Capital Budget Request

29

Community Colleges

• SUNY Community Colleges have a significant backlog of $411 million in deferred-capital maintenance

• The deferred maintenance is expected to grow to $807 million by 2014 and $1.3 billion by 2019

30

• The inability to secure the required 50% local match is the single largest impediment to the program

• Growth in Community College enrollment is compounding the facility dilemma as more students will be using increasingly deteriorating facilities

Academic Building – Mohawk Valley

Community College

31

Community Colleges

• The New York Community College Association of Presidents is developing proposals to address the funding gap; including:

A proposal to be submitted with SUNY’s 2011-12 budget to broaden the authorized sources of funds which can be used as the local sponsor match Initiating a study to develop proposals to modernize the capital chargeback structure including:

– Increasing the $300.00 fee which has not been changed since 1971

– Analyzing how the fee is charged and collected

– Indexing the fee to keep pace with the escalating capital

needs and costs

32

Community Colleges

Study and develop proposals to have New York State provide a larger share of capital costs in those communities without sufficient wealth to fully support its capital facility needs

• SUNY will be requesting approximately $30 million in

State capital appropriations in the 2011-12 budget submission for Community Colleges which have demonstrated local sponsor support for additional projects

• The recent change by New York State to bond its 50% share on a cash disbursement basis has created process, protocol, and resource challenges which must be addressed

33

0

100

200

300

400

500

03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11

Do

llars

in

Mill

ion

s

Fiscal Year

Community College Funding – Capital Funding

Funding Amount

Community Colleges

34

Seeks Support On:

• Bond Cap Relief for Residence Halls

• Restoration of fiscal plan targets to allow SUNY to maintain

its vast and important assets, and boost the State’s economy

• Modernization of the Community College Program

• Appropriations support for all four of SUNY’s Capital

Programs:

1

Educational Facilities $550M

Hospitals $300M

Residence Halls $590M

Community Colleges $30M