The University got final approval from the State Board of Higher Education on Friday to sell the $200 million state-backed bonds to investors.
The board also gave the University the green light to continue with its preferred development firms – National Championship Properties, JMI Sports, Ellerbe Becket, TVA Architects and Hoffman Construction.
Arena Review
| Board member Jim Francesconi called for a full review of the arena project to determine what can be learned from the unusual development process. The report will also analyze the influence of major donors. To read past stories about the arena project, log onto dailyemerald.com and search for “basketball arena.” |
The vote was expected to be the final check point before the University could break ground on the project this summer, but a ruling by a Hearings Official last week is forcing the University to seek a conditional use permit to mitigate the arena’s impact on the surrounding neighborhood. Acquiring that permit requires public meetings and could take months to complete.
Administrators still expect the arena to open before the 2010-11 basketball season, and a letter from Hoffman Construction said the firm could have the arena open by 2010 if the permit is obtained by Nov. 30. A delay of just one month would add up to $500,000 of overtime costs in order to get the arena open on time.
The board debated the selection of the development and construction firms more than the approval of the bonds. Nevertheless, both were approved 7-0 with four abstentions.
The firms were selected by administrators and boosters years ago when the University expected to pay for the project using only donated money. Even though the University’s plan morphed and it is now using publicly backed bonds to finance the project, it is still allowed to use its hand-picked firms because of a new provision in administrative law.
The new law, which was approved in February and is known as a “sole-source” approach, allows the University to hand pick its firms in situations when “the services are available only from one contractor, or the prospective contractor has skills or experience not otherwise readily available and which are required for the performance of the services,” according to administrative rules.
Two board members, Tony Van Vliet and Dalton Miller-Jones abstained from voting in protest of the lack of an open bidding process, but they didn’t vote no because they didn’t want to derail the project.
“We’re creating an exception that can drive a truck through the spirit of the public contracting law,” said board member Jim Francesconi, who also called for a complete review of the project to analyze the development process and how the project was affected by the influence of a major donor.
Although the vote of approval is a victory for University President Dave Frohnmayer, who has pushed for a new arena for years, it’s not yet enough, he said.
“I won’t be satisfied until the arena is done on time and on budget,” he told the Emerald, adding that constructing a $200 million arena couldn’t come at a better time to boost the sluggish economy.
The legislative ways and means committee also asked the University to explain the changes in the financing plan at a June 25 meeting. The financing plan has changed slightly since the committee gave its blessing to the project earlier this year. The $200 million bonds the University received from the legislature were thought to be tax-free, but the state treasurer’s office determined there would be fewer legal conflicts if they are sold as taxable bonds.
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