The State Board of Higher Education sent the University sailing through its first check-point on its mission to secure funding for the basketball arena project on Friday by allowing it to request a $200 million bond from the Oregon Legislature.

The two final checkpoints the University needs to pass are securing the bonds from the legislature during its February meeting and receiving final approval from the State Board of Higher Education. The University has other hurdles before construction could begin, though, including securing property near the old Williams’ Bakery lot on Franklin Boulevard, which could require the use of eminent domain.
If all goes as planned, administrators could break ground on the project, using the $200 million bond to pay for construction, as early as fall 2008.
But even though the board members who spoke on Friday showed overall support of the project, the discussion included at least a shimmer of skepticism.
Board members made it clear they needed to see audited arena revenue projections and proof that the donors to the Oregon Athletics Legacy Fund actually want their money to be used as a financial backbone to the athletic department rather than to pay for the construction before they fully endorse the University’s funding plan.
The legacy fund is the investment pool that Phil and Penny Knight’s $100 million donation established, and it’s intended to provide financial stability to the athletic department. Proof of how those funds will be used should be ready before the board’s December meeting, and the revenue projections for the arena established by the athletic department are currently being vetted by consulting firm CSL International. That report is expected to be released sometime in December.
There was also a call to clarify the use of public money to pay for a private non-profit organization to build the arena – in this case, it’s National Championship Properties that has been established to design and construct the building.
“My question is to maybe elaborate on the relationship with National Championship Properties,” said board member Paul Kelly Jr., pointing to a statement in the board’s information packet that said current Oregon University System rules do not “specifically contemplate that arrangement,” but new rules are being drafted for the board to consider early next year.
“I’m wondering where this gets resolved, at what stage in the process, because it sounds clear that the University is going down the road with NCP,” he said.
Oregon University System Chancellor George Pernsteiner said that since 1995 the board has been considering revisions to OUS rules, including one that affects how the University would use National Championship Properties. The fact that those rule changes should be completed as late as February 2008 is “fortuitous timing,” Pernsteiner said.
The board also heard from some of the faculty’s most vigilant and concerned members about the plan. A letter addressed to the board highlighted 10 questions that the board should be aware of before approving the plan, including why original estimates about how much revenue a new arena could generate were so much lower than current estimations, and what the legal implications of issuing bonds for a project that will be constructed by the private firm National Championship Properties are.
But the letter was only briefly discussed and not in detail. Frohnmayer, who saw the letter for the first time Friday morning, said, “We have exhaustively considered every single question that I remember reading in that letter, and not nearly recently, but some of them over the period of several years, and many of them over a number of intensive weeks. And to the extent that has not happened we will use that as a cue card for further review.”
Board member Dalton Miller-Jones asked Frohnmayer if the funding model had been “cautiously paraded” to faculty.
The Faculty Advisory Council, the Intercollegiate Athletic Committee and a subcommittee of the University Senate’s budget committee have or will provide input into the plan, Frohnmayer said.
“I think it’s really important that issues that are perceived to be a threat to the academic mission, that’d be fiscally, be addressed in a forthright way,” Miller-Jones said, “which I know (Frohnmayer) and (his) team are perfectly capable of doing.”
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