Executive Summary - 6 year plan and fiscal year budget upda…

New Residence Hall - Proposal

Other related project costs (building permit, advertising, etc.)

$ 525,000

Sales Tax (8.2 percent)

$ 2,489,000

Cost of Issuance and Capitalized Interest on Debt

$ 3,000,000

Total

$ 45,000,000

Financial Risks 1) Maintaining Occupancy in the Housing System and New Hall. The pro-forma is predicated on maintaining average annual occupancy of 89 percent in the residence halls. Mitigation: The 89 percent occupancy figure is lower than what was experienced in many recent years and should be achievable. By using this percentage, we are avoiding the overly optimistic view that New Hall would need to maintain an unrealistically high occupancy percentage. The risk of not building is having to turn away returning students and transfer students. Current facilities cannot accommodate significant numbers of additional students. Without building an additional hall, CWU would not have enough capacity to take buildings off-line to do long-term renovations on residence halls as contemplated in our Comprehensive Housing and Dining Plan. Should enrollment fall, we have additional opportunities to create academic-year conference spaces and convert double-occupancy rooms to singles that will generate some additional revenue to offset potential lost revenue. Strategically located vacant space could allow for much needed renovations or deferred maintenance projects. 2) Interest Rate Risk or Cost of Borrowing. The interest rate used for planning purposes is 4.5 percent. If the actual interest rate at the date of the bond sale is substantially higher, the annual debt payments would increase as well. Mitigation: CWU’s bonding advisors have suggested that the actual rate currently available could be as low as 3.9 percent. By planning at a higher borrowing cost we have a reasonable buffer worked into the projections for interest rate increases between now and March-April of 2018. 3) Project Costs. The anticipated total cost of the project, including costs of issuing the bonds and carrying costs (capitalized interest) is $45 million. If total costs increase, for any reason, the annual debt service would increase as well. Mitigation: CWU has received approval from the State of Washington to contract the project as “design build,” which should mitigate risks. The Architectural/Engineering and Construction team are selected based on qualifications, cost and past performance, rather than low-bid alone. CWU will vet the project cost with the establishment of a GMP (Guaranteed Maximum Price) prior to construction start.

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