The Board of Visitors approved a line of credit for up to $60 million that will allow the university to get bids from financial institutions to fund three projects on campus: the Institute for Contemporary Art, the new basketball training facility and renovations for Sanger Hall.
VCU is nearly $500 million in debt. The university must stay within 6 percent of operating expenditures to maintain compliance with the debt policy. Pam Currey, associate vice president of finance and administration, said VCU is now at 5 percent. With donor contributions already pledged for the ICA, the school can pay off the money borrowed through the line of credit.
“This is the least costly way to get funding for these projects because they’re unique and they’ll be paid off quickly, and I think that’s what sets them apart,” Currey said. “We’re not matching the financing to the life of the building, we’re matching the financing to the pledge money coming in from donors and that’s unique.”
Though there are plans to fund the entire construction of the Institute of Contemporary Arts, Currey said the credit line is inaccessible until the Board of Visitors gives the final approval for the project.
“If I want to do the ICA, I still have to go through the Board, because they gave a contingent approval,” Currey said.
Lisa Freiman, the director of the VCU ICA, said donors have already pledged $26 million of the $35 million necessary for Phase I of the building. Another $2 million is needed for Phase II of construction, she said.
Currey said donor contributions currently fund about 83 percent of the money raised and the rest are from funds the university has received through non-tuition reserves and the VCU Qatar campus relationship.
Another project the line of credit will fund is the $25 million basketball training facility. Private donors have pledged $15 million of that price over a period of time. The other $10 million will come from the portion of the student university fee that goes toward the Siegel Center, which Currey said is expected be paid off in 2016.
“The basketball training facility and the Institute for Contemporary Art is a different kind of project for VCU, we’re very fortunate in that private donors are providing the funding to build these projects in large part,” Currey said.
The final project the university plans to use the line of credit for is the $8 million renovations on Sanger Hall’s 4th floor
States typically pay for instructional space on college campuses. Virginia maintains a partnership with VCU for research space. The state agreed to pay $5.6 million of the project Currey said. Because VCU is not earning any capital this year, the line of credit will pay this in full upfront, Currey said. There is an agreement saying the state will reimburse the school for its share.
“It is updating the 1970 labs to the modern standard it is predominantly for the department of pathology,” said Brian Ohlinger, the associate vice president of facilities management.
Ohlinger said renovations of Sanger Hall will begin fall 2014 and take about a year to complete. The training facility will open by the end of June and is about a 15-month project.
Ohlinger also said construction of ICA will begin this year and be comleted by spring 2016.