MHCC Facilities FundingPrepared for Facilities Council

and President Hay 12-9-11 DRAFT Bill Farver MHCC Admin. Serv. Dick Byers, Facilities Director Jamie Simms, Finance

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Contents

1. What are potential funding sources? 2. What are the most appropriate ways to

use each source? 3. What criteria should be used in

determining what should be funded from that source?

4. What additional information is needed to make these decisions?

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Choices

•Part 1 General Obligation Bond •Part 2 State of Oregon Funding •Part 3 Federal Government Funding •Part 4 MHCC General Fund

▫- A Current Allocation ▫- B Increased Allocation ▫- C Full Faith and Credit Borrowing ▫- D Annual capital replacement fee

Major Projects since Master Plan• Johnson controls energy efficient project • Early Childhood Center completed • Reroofing project completed• Three rooms in former ECC converted to classrooms for fall

term.• Parking fee implemented with kiosks and signage • ABS relocated to the spine; Eastern Oregon relocation to

Library Commons • Electrical upgrade ready to proceed in Dec.• New City of Gresham planning code for institutional master

planning • Remodeling of lower level to include Veterans

Program,YESS, SEED, Transitions

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Part 1. General Obligation Bond Background• Increase in property taxes for homeowners within

the MHCC district. • No GO Bond passed by MHCC since 1975. • In East County, the most recent GO Bond passed in

May 2009 for Lusted Water District• The last public-education bond passed in November

2000 by Gresham-Barlow School District. • Board has requested options for November 2012

(general election ballot). • Each $1 million raised, increases taxes on a

$200,000 home by $3.36.

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Previous Mt. Hood GO Bond Attempts

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Why now may be the right time!• Board and Presidential leadership• Double majority requirement for Bonds

eliminated in 2008 (?) • Poll to test what captures the imagination of

voters• Emergency Center for the communities

surrounding the College • Economy improving by November, 2012 (?) • Part of larger marketing, outreach efforts

(PICTF) • The College is the “Gateway to Gresham”

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Next Steps

•What is needed? ▫“Refresh” priorities with new Board and college

community▫“Refresh” estimates on selected projects▫Cost benefit analysis of seismic projects?▫Polling of likely voters ▫Build private campaign support network ▫Total cost $30,000 est. ▫Original cost estimates provided by Turner

construction and tested by a cost estimator

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GO Bond Options

•#1 Master Plan $74-$77 m•#2 Master Plan $54 to $57

m•#3 Deferred Maintenance $11 m•#4A College Bond Refinance $

8.445 m•#4B College Bond Refinance $

8.565 m•# 5 Athletic Facilities $ 5.16 m

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General Obligation Bond Option - #1 Master Plan

• Use criteria and priorities from Master Plan adopted March 16, 2010 by Board.

• Categories of projects ▫New construction▫Renewal and modernize ▫Site infrastructure (some deferred

maintenance) • Plan did not address all deferred maintenance

issues• Master Plan advocated moving in phases • Estimated costs of all fourteen phases of plan

was $227,500,000 (including “soft” costs)

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Example 1: $74 -$77 million GO Bond • Cost for homeowner? • 2010 estimates in Master Plan: complete over

five years • Expansion and Renewal of Library (seismic, 100%

expansion, exterior improvements) $25.0

• Stark St. Entrance $ .7• Student Success Center $22.0 • Technology Innovation Center

$15 - $18 (replace auto shops; provide swing space classrooms)

• Demo Industrial Technology Bldg. $ 1.3 • Modernize one existing Academic Ct. wing $10.0

(including seismic) ▫ Seismic projects trigger cost benefit analysis

PICTURES

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Example 2: $54 m. to $57 m. GO Bond • Cost for homeowner?• 2010 estimates in Master Plan: complete over

five years • Library refurbishment (much cheaper alternative) $4.5• Stark St. Entrance $ .7• Student Success Center $22.0 • Technology Innovation Center

$15 - $18 (replace auto shops; provide swing space classrooms)

• Demo Industrial Technology Bldg. $ 1.3 • Modernize one existing Academic Ct. wing $10.0

(including seismic) ▫ Seismic projects trigger cost benefit analysis

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General Obligation Bond Option - #3 Capital Projects – Deferred Main. $11 m.+

• Cost for homeowner?• Level 1: $5 million (e.g. replace siding and windows on

visual arts bldgs; upgrade library elevator; replace siding on modular classrooms; replace ceilings in parts of Academic Ctr; drainage system in baseball field; broken concrete walkways; HVAC system in modular classrooms; boiler and pumps at Maywood; modular classroom roofs; new heating and cooling in Fisheries; lighting and handicapped rails in Performing Arts; concrete roof deck)

• Level 2: $6 million Parking lots and drive surfaces repaved• Seismic projects trigger a cost benefit analysis

(required by the State) • Needed: Cost benefit analysis for selected projects:

Cost: $50,000 to $75,000 per project

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GO Bond Option - #4 Existing Full Faith and Credit

Obligations

•Refinance existing full, faith and credit obligations

•Frees up debt payments to college to support educational activities (or manage reductions)

•More recent borrowings may be easier to explain to voters (e.g. Early Childhood Center; Reroofing; Electrical)

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Cont. Existing Full Faith and Credit Obligations #4A

•Example: MHCC could recapitalize the 2008 debt that was issued to finance re-roofing of the academic center (part #1) and the College match for the construction of the Early Childhood Center.

•Amount saved $8.445 m •Cost for homeowner?

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PICTURES

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Recapitalize the 2008 debt – Interest and Principle Schedule

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2012 $221,323 2018 $492,660 2024 $497,2102013 $286,322 2019 $491,260 2025 $832,9752014 $288,723 2020 $494,460 2026 $830,0902015 $286,273 2021 $492,060 2027 $831,2302016 $288,473 2022 $494,260 2028 $831,2002017 $290,660 2023 $495,860

Total debt service cost avoidance of $8,445,039

Cont. Existing Full Faith and Credit Obligations - #4B

•Example: MHCC could recapitalize the 2011 debt that was issued to finance re-roofing of the academic center (part #2) and Electrical upgrades

•Amount saved? $8.565 m•Cost for homeowner?

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Recapitalize the 2010 debt – Interest and Principle Schedule

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2012 $221,323 2018 $447,900 2024 $450,0102013 $449,438 2019 $452,680 2025 $452,2352014 $450,860 2020 $451,912 2026 $448,9122015 $451,917 2021 $450,780 2027 $450,2252016 $452,610 2022 $449,283 2028 $450,9902017 $452,938 2023 $452,420

Total debt service cost avoidance of $8,565,828

GO Bond Option – #5 Athletic/instructional Facilities

$5,160,000

•Update, refurbish all athletic facilities •Sample: tennis courts ($205,000), athletic fields ($390,000), pool ($350,000), track ($800,000); Bleachers replacement ($?)

•Upgrade HPE ($1,200,000) ; Seismic roof ($2,215,000) – enhance for potential shelter use

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Opportunities for Athletic/instructional

•Explore expanded instructional potential• Explore park and recreation district with

surrounding jurisdictions (e.g. schools, cities)

•Explore greatly expanded community use

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PICTURES

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Part 2: State Funding

• Sources: Community College Capital Fund • State Legal obligation to funding capital projects:

▫State capital project funds must be legislatively approved and are contingent upon available state resources to repay the debt.

• State recent funding history▫$800,000 for seismic upgrades to fisheries building▫$2.5 million for construction of the Early Childhood

Center▫$3.85 million in “Go Oregon” funding for classroom &

ADA upgrades, re-roofing of athletic facilities and performing arts stage rehabilitation.

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Part 2: State Funding, Continued

•MHCC strategy with State: Developed in consultation with President and Board. Nothing currently in writing.

•MHCC priorities to State: (requests in millions)

▫ Electrical Upgrade $1.5 of $3 (now funded) ▫ Library Upgrade $4.980 of $9.978 (tier 2) ▫ General Ed, Science, Tech and Student Services $6 of

$12 (tier 3)

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Graph of Declining State Funding

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Part 3: Federal Funding

•Obama jobs bill not funded•No other opportunities currently available •As opportunities arise, priorities from other

areas will be applied.

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Part 4. MHCC Funding Options

A. Current General Fund Allocation

B. Increase Allocation and decentralize decision making

C. Full Faith and Credit Borrowing

D. Annual capital replacement fee

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Part 4A – Current Allocation

• $800,000 divided into $200,000 for operations and maintenance and $600,000 for deferred maintenance, capital purchases and improvements and emergencies

• Current spending (July – November 2011 examples) ▫New classrooms remodeling and furniture:

$125,503▫Purchase and installation of emergency

generators: $105,406 ▫Routine operations and maintenance: $320,945

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Recommendation: Current Year

•Recommendation: ask Board to approve contingency request of $231,000 for generators ($105,000) and new classrooms in former Early Childhood Center ($126,000)

•Spend balance of current unobligated funds to advance previous #1 priority – Wayfinding.

•Rationale: top priority in previous year; funds unlikely to come from other sources; ready to implement.

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Part 4B – Increase Allocation

• Permanently double allocation from $800,000 to $1,600,000

• Coordinate decisions through Facilities Council, but delegate process for recommendations to smaller subgroups

• Divide funding decisions into categories and allocate as follows: (one possible allocation method)▫ Deferred maintenance $800,000 (Dick) ▫ Operations and maintenance $200,000 (Russ)▫ Classroom and campus improvements $200,000

(Christie)▫ Health and safety projects $200,000 (Staci)▫ Athletic facility improvements $200,000 (Kim)

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Part 4C – Full Faith and Credit Borrowing

• Use ongoing stream of General Fund revenue to pay off borrowing for capital projects.

• Recent example: $6,000,000 borrowing in 2010 for updated electrical system, reroofing project, purchase of new copier fleet and remodel of space for university partnership.

▫Annual cost: $450,000 for 19 years at 3.65% true interest cost

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Part 4C – Full Faith and Credit Borrowing, Cont.

• Could apply same logic to deferred maintenance, athletic facility improvements if funding identified.

• Formula: $100,000 revenue purchases about $1.5 million in capital funds with 19 year payback.

• GO Bond (option #2) Deferred maintenance could be done for annual payment of $720,000 OR

• Athletics Upgrade (option #4) could be done for annual payment of $350,000

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Part 4D – Annual Capital Replacement Fund • Calculate deferred maintenance costs/ capital

replacement costs. • Calculate annual fee assessed on all

departmental budgets/revenue streams. • Use revenue from fee to perform annual

preventative maintenance OR fund full faith and credit bond to do “catch up” on capital projects.

• Analogous to use of technology fee and use for equipment replacement.

• Needed: Facilities Assessment Study - $200,000 to $500,000 one time only

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Questions and Comments?

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