Wednesday, July 25, 2007
Del. State to issue $48M in bonds to fund student center
Delaware State University plans to use about $48 million in bonds to pay for a new wellness center, swimming pool and student center.
The new facilities will replace structures school officials say are outdated and undersized. DSU hopes the amenities will help recruit and retain students, who will shoulder much of the initial burden for repaying the debt through a new $200 fee each semester.
Representatives from the university detailed the projects for a state advisory board Tuesday. After the presentation, the Council on Development http://www.umes.edu/lmrcsc/del%20state%20library.jpgFinance recommended that the state issue the bonds on behalf of DSU. The school has full responsibility for repaying the debt.
The first phase of the $21.4 million wellness center, a strength and conditioning facility for student athletes, should be completed next month. DSU requested money in the state's 2008 budget to fund the second phase, which includes equipment and facilities for the general student population, employees and the public. The proposed $6 million swimming pool complex would be located next to the wellness center.
The school previously received $9.9 million from the state for the wellness center project and raised another $1.5 million on its own, said state Rep. Richard Cathcart, DSU's associate vice president of business services. DSU received $3.5 million in capital money from the state for fiscal 2008, about $13 million less than what officials requested. Cathcart, R-Middletown, said all of that money is going toward maintenance and renovation of existing buildings, meaning DSU had to find another way of financing the wellness center.
Working with the state means the bonds are issued at a competitive rate, Cathcart said.
The new student center, which is in the planning phase, would replace the Martin Luther King Jr. Student Center. Cathcart said students who took part in creating the school's master plan named an upgraded student center as one of their most important concerns. He said the current structure, which features an auditorium, lounges and a canteen, is a "very aging building in dire need of an upgrade" and that engineers deemed it costlier to renovate than to replace.
"We have surplus classroom space, but our student center is below capacity for our current enrollment and when it comes to our projected enrollment, it's not even close," Cathcart said.
Members of the council wanted to know how DSU intended to shoulder the cost of issuing bonds.
"Obviously, I assume you'll either have to increase tuition or increase enrollment," council member Fred Sears said. "I assume for a $48 million bond you don't have that kind of money sitting around."
Amir Mohammadi, DSU's vice president for student affairs and university operations and acting finance director, said the school was reallocating funds toward repaying the debt and hoped the two facilities would create new potential sources of revenue, such as increased enrollment.
"The $200 fee will create about $1.3 million [a year, based on current enrollment] to payment of the debt service," Mohammadi said.
Four members of the council approved the project. Abstaining were Sears, president of the Delaware Community Foundation, former Dover mayor James Hutchison and Richelle Vible, president of Citizens Bank of Delaware and a member of DSU's board of trustees.
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