Tenn. Colleges Looking at Bonds for Capital Projects
KNOXVILLE, Tenn. (AP) — Low interest rates have leaders of Tennessee’s two higher education systems talking about a bond issue to pay for new campus construction that could total $1.5 billion.
University of Tennessee trustee and Knoxville-based developer Robert Talbott said at a trustee committee meeting that a $1 billion bond issue would cost about $58 million a year.
UT President Joe DiPietro said he hopes state lawmakers will approve a measure so bonds can be issued by next summer to take advantage of interest rates that have been around 4 percent, The Knoxville News Sentinel reported..
Board of Regents Vice Chancellor David Gregory said there is a real understanding about the needs of higher education “but there’s a lot frustration of how to get it done.”
“They’re saying, ‘We see the needs, but how do we accomplish it?’” Gregory said.
Most bonds are issued over 20 years.
UT is facing about $800 million in construction needs, and estimates of both systems have gone as high as $1.5 billion, DiPietro said.
“We’re not going to have this window very long,” he told trustees.
Officials with both systems have met recently with the Tennessee Higher Education Commission about the possibility of using bonds and are updating their building priority lists. THEC would then merge the lists and present it to Gov. Bill Haslam. Leaders at both systems hope to convince the governor to include the bond measure in his recommended budget.
Haslam spokesman David Smith said the governor favors refining a strategic master plan process for higher education building projects.
“Taking a closer look at funding alternatives will be part of the process, but working on what the master planning process looks like is the first step,” Smith said in an emailed statement.
Details are undecided, including whether matching funds would be required and how the money would be allocated.
At the top of UT’s building wish list is a renovation of Strong Hall and a second academic building on Cumberland Avenue that would include undergraduate science labs.
“It hasn’t been a recruitment issue as far as we can tell so far, but it will be,” said DiPietro, who recently toured lab facilities at Walters Life Sciences Building and contrasted it with the state-of-the-art Haslam Business Building. “It’s kind of like a dungeon there and you’re in a concrete bunker. The labs are just old.”
At the top of the Board of Regents’ list is an expansive science building at Middle Tennessee State University, where students also are using antiquated labs, Gregory said. Also on the list is an academic building at Nashville State Community College and a biology sciences building at the University of Memphis.
“It has a ripple effect of putting people to work and creating other stimulus,” Gregory said.