University of Vermont trustees unanimously approved a $78 million bond resolution for the school’s largest ever capital project on Friday.
The total estimated cost of the project is $104 million. The university will use the bond, plus $26 million in hoped-for private donations to build a Science, Technology, Engineering and Mathematics (STEM) academic center and laboratory.
David Daigle, chair of the board’s Budget, Finance and Investment Committee, said the university’s plans for the new STEM building is “the highest strategic priority” for UVM.
The project known as the STEM Complex is central to the university’s commitment to deepening its academic programming for the physical sciences and engineering. The STEM facility is a necessary investment in the college’s bid to remain competitive in the sciences, according to UVM documents.
“A new STEM facility is not an extravagance or an excess, it is absolutely essential,” officials wrote.
According to the university, the STEM Complex will include three projects:
Replacement of the existing Cook Physical Science Building that was constructed in 1969 with a new classroom/office building encompassing 78,000 square feet;
A partial renovation of Votey Hall constructed in 1962 and home to the School of Engineering;
The construction of a new laboratory building of approximately 113,000 square feet.
The university will use funds on hand to cover the $26 million yet to be raised in private donations, according to Richard Cate, vice president for finance, and UVM’s treasurer.
Daigle said the University of Vermont Foundation has pledged to make fundraising for the STEM Initiative “a high priority item.”
The college would divert some unencumbered assets to fund the difference, Cate said. UVM would have $30 million in remaining reserves.
If not all the anticipated fundraising goals are met and some of the university’s assets being fronted are not paid back, Cate said, the school would still have its “rainy day fund intact.”
Rich Bundy, CEO of the University of Vermont Foundation, said fundraising for the STEM Initiative has been strong.
“I would say from our perspective we have been pleasantly surprised by our donor response to this strategic initiative,” said Bundy. An initial feasibility report showed that the university would be lucky to raise $5 million for the project. Since that time, the amount raised has bumped up from $3.2 million to $4.1 million with a pledge from the Pizzagalli Foundation promised by Jim Pizzagalli, the past chair of the UVM board.
About $17.6 million is expected at this point, Bundy said. While some of the anticipated gifts are “a little more speculative,” he told the trustees that donors have responded positively to the project and the “pipeline is very strong.”
“Every indication is the college should be able to raise the full $26 million,” he said.
Debt service payments will go up by about $4 million a year, as a result of the project, Daigle said.
The university’s debt ratio limit is 5.75 percent. The issuance of the debt for the STEM Complex would push the school’s debt ratio up to 5.04 percent.
The university’s total debt level is $460 million. The $78 million bond will increase the UVM debt load “close to another 20 percent.”
“While some people might say we have room to do more, my own view is we really don’t after we’ve done this,” Daigle said.
The trustees adopted a separate resolution for the $26 million non-debt portion of the STEM project. The sources of funding included: $7 million from the Capital Project Pre-funding Account, $6 million from the proceeds of the University of Vermont Medical Center Affiliation Agreement, $3.2 million from current commitments secured by the UVM Foundation, and $9.8 million of unencumbered, unrestricted University net assets, according to documents from the university.
The university’s net assets will be replenished, as the UVM Foundation receives funds dedicated to the STEM project, officials said.
