0028: FLOOR ANALYSIS (12-2-03) (12-2-03) - STATE BUILDING AUTHORITY RESOLUTION

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<TITLE>0028: FLOOR ANALYSIS (12-2-03) - STATE BUILDING AUTHORITY RESOLUTION</TITLE>

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<a name="3"></a>STATE BUILDING AUTHORITY RESOLUTION - H.C.R. <a name="1"></a>28: FLOOR ANALYSIS

House Concurrent Resolution <a name="2"></a>28 (as reported without amendment)

Sponsor: Representative <a name="4"></a>Scott Shackleton

House Committee: <a name="5"></a> Appropriations

Senate Committee: Appropriations

CONTENT

The Joint Capital Outlay Subcommittee (JCOS) has approved House Concurrent

Resolution 28, which would convey land and establish a lease agreement between the

State, the State Building Authority (SBA), and Lake Superior State University for use

of the university’s Arts Classroom Building. Approval of the resolution also would allow

the sale of bonds to finance construction of the building.

This project was first authorized for planning in Public Act 229 of 1976 and then

reauthorized in Public Act 205 of 1986. Preliminary planning documents were approved

by the JCOS on July 25, 1989. At that time, the total estimated project cost was $15.8

million. For a number of reasons, however, the project never received construction

authorization. Then, Public Act 538 of 1998 once again authorized the project for

planning. This time, however, the planning authorization and subsequent plan

approvals established a total project cost of $15.3 million, with the State’s share

totaling $8.0 million or 52% of the total project cost. These costs were included in the

construction authorization in Public Act 291 of 2000.

Since 1996, most State-funded construction projects at universities have included a

shared cost structure that is 75%-State and 25%-university financed. The 52%/48%

split on the Arts Classroom project reportedly was developed in order to match the

portions of the building used for more “academic” purposes, relative to the portion

used for more “nonacademic” purposes (theater, dance, art, etc.), with the

understanding that the State would support the academic portions, and the university

would support the nonacademic portions. On October 2, 2003, the JCOS approved a

change in the cost share for the project at 75%-State and 25%-university, and

included the change in Public Act 193 of 2003 (capital outlay appropriations for FY

2003-04). This resolution reflects the amended cost share.

This project has met all the planning approval requirements of the JCOS and the

Management and Budget Act. The estimated annual amount of rent is provided

pursuant to the requirements of the State Building Authority Act. Legislative approval

of the resolution would commit the State to make annual rental payments for the

building. The SBA then would use this rent money to pay off the bonds and satisfy the

debt obligations.

-

FISCAL IMPACT

This project represents new debt obligations by the State Building Authority of nearly

$11.5 million. Adoption of the resolution would commit the State to make annual

rental payments to the State Building Authority until the debt obligations are retired,

which will likely be between 12 and 15 years. The estimated annual rental range is

between $0.9 million and $1.2 million; a true amount of rent will be determined once

the project is complete and has been independently appraised.

<tr>

<td class="table1column1" width="38%" align="center" valign="bottom">Project

</td>

<td class="table1column2" width="9%" align="center" valign="bottom">HCR

No.

</td>

<td class="table1column3" width="18%" align="center" valign="bottom">Total

Authorized

Cost

</td>

<td class="table1column4" width="18%" align="center" valign="bottom">State

Building

Authority

Share

</td>

<td class="table1column5" width="17%" align="center" valign="bottom">Estimated

Annual

Rental

Range

</td>

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<td class="table1column1" width="38%" valign="top">Lake Superior State

University - Arts

Classroom Building

This project involves the

construction of a 64,000 sq.

ft. facility to house both fine

and performing arts

educational programs. It will

include classrooms, display

areas, and space for

rehearsals and performances

including a 900-seat

auditorium.

</td>

<td class="table1column2" width="9%" valign="top">28

</td>

<td class="table1column3" width="18%" valign="top">$15,300,000

</td>

<td class="table1column4" width="18%" valign="top">$11,474,800

</td>

<td class="table1column5" width="17%" valign="top">$875,000 to

$1,150,000

</td>

</tr>

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Date Completed: 12-2-03 - Fiscal Analyst: Mike HansenFloor\hcr28

This analysis was prepared by nonpartisan Senate staff for use by the Senate in its deliberations

and does not constitute an official statement of legislative intent.

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