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University of Kansas touts projects, defends bonding deal

February 9, 2016

TOPEKA, Kan. (AP) — The University of Kansas turned to a Wisconsin agency to secure financing for new student housing and new science labs because it needed to move quickly, university officials said Tuesday, as the school sought to answer Republican lawmakers’ allegations that it went rogue.

University officials also told legislative committees that the school likely avoided millions of dollars in additional costs by securing financing last month for its central district development project rather than waiting to obtain the Legislature’s approval this spring. The project includes a new science building to replace outdated labs, housing for 1,200 students, a new student union building, a new power plant and parking.

“This is a crucially important and exciting project for the university and the state,” Chancellor Bernadette Gray-Little told the House Appropriations Committee.

The House committee and the Senate Ways and Means Committee had hearings because some Republican lawmakers are upset that the project and its financing weren’t approved by the GOP-dominated Legislature.

The relationship between the university and lawmakers has sometimes been rocky. The Legislature has grown more conservative, and the school is perceived as a liberal bastion.

“I would hope, regardless of what happens with this, that we can have a better relationship, but this does nothing but divide KU from the Legislature,” said Sen. Michael O’Donnell, a Wichita Republican.

The House expects to debate budget legislation Wednesday that includes a provision that restricts the university’s ability to spend tuition dollars and student fees. The Senate is considering a proposal that could put the central district project on hold by forcing the university to cover costs with private donations for two years.

“KU is flying the Starship Enterprise through our statutes, trying to avoid a transparent process that’s accountable to taxpayers and students both,” said Rep. J.R. Claeys, a Salina Republican.

The university formed a nonprofit corporation which then went to Wisconsin’s Public Finance Authority to issue the bonds.

The university plans to lease the buildings from the nonprofit corporation, paying the nonprofit an annual payment of nearly $22 million so that it can pay off the bonds over 30 years at 3.76 percent interest. The university plans to use fees and tuition dollars to make its lease payment.

The project includes a new dormitory for 500 students that is supposed to open in the fall of 2017, in time to avert a campus housing shortage. The new science building would have 280,000 square feet of space and new labs that would replace facilities in two, decades-old buildings.

“The truth is that many high schools have better basic science facilities,” Gray-Little told the House committee. “They must be replaced.”

University officials said they preferred to have the bonds issued by the Kansas Development Finance Authority, but learned in September that the state agency couldn’t do so without specific legislative approval. The university worried that delays would increase borrowing costs, special counsel Jeff Gans said.

“There were a number of timing issues that we were sensitive to,” Gans told the Senate committee. “We really needed the project to get started.”

The Kansas Board of Regents, which oversees the higher education system, signed off on the financing in November.

“We want to be partners with you in this, in higher education,” board Chairman Shane Bangerter told the House committee.

He added: “We certainly are not in the business of trying to go behind this Legislature.”

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This story has been corrected to show that the House committee’s hearing was Tuesday, not Monday.

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Online:

Kansas Legislature: http://www.kslegislature.org .

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Follow John Hanna on Twitter at https://twitter.com/apjdhanna .

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