Can't wait!!Go Utes!!
Who says we don't spend enough on higher education.
Great. Athletes get great facilities so we can enjoy tailgate parties and
circuses.Law schools get plush new digs.Meanwhile, what has
been done to increase the number of doctors or nurses who are desperately
needed? Or, do we really need more pampered athletes, and a larger
plague of lawyers?
So a large chunk of the $ needed were bonded. Kinda blows the utah "fan"
assertion that no tax dollars subsidize the university athletic programs out of
the water now doesn't it. It would appear that all the pac 12 money has
done is increased the expenses everywhere else. So rather than it covering the
cost it simply increased the cost beyond the money it brought in.
Duckhunter:"So a large chunk of the $ needed were bonded. Kinda
blows the utah 'fan' assertion that no tax dollars subsidize the
university athletic programs out of the water now doesn't it."No it doesn't, but your comment brings into question your familiarity
with "bond" financing. A "bond" is an instrument of
indebtedness of the bond issuer (i.e. Utah) to the holders/investors. As the
bond issuer, Utah holds the liability until the debt is paid off at some future
date. This debt is a fixed amount so the risk leans more toward the issuer.This article made no mention of tax dollars, so what happened there?
Did you read the part about Utah expecting to earn nearly TWICE the amount the
Indy-WACers are expected to take in, and then panicked?You panicked,
Ducky,The problem with your comment is leaving out the fact that
when the U raises the money expected then the Bond money get's paid back
with interest. Meaning the money for these projects won't ever come out of
tax payer pockets and if anything will only help the Utah economy.
Well said, Navel Vet and motorbike. Since you have responded to
duckhunter's inaccurate remarks with logic and reason, I doubt he will be
able to give you a counter argument.
If the Haters keep paying their taxes maybe we can build a duck pond to.
Does this mean Dr. Hill's apologists can expect the football team to
actually beat a PAC team with a winning record anytime soon...?
ekuteIf the realists keep paying their taxes maybe U can build a
duck pond to..."what?Remind U of your bottom feeding
Kudos to the U for ramping up their activities concerning facilities --- not
simply football or basketball. Can't understand why the U haters still
dwell on the use of taxes to support the U when one of the major advantages to
joining the PAC12 was revenue generation that reduced/removed the U's
dependency on tax $$ for sports programs.All of these activities
have a significant marketing impact on the U's national profile, both
academically as well as athletically. The impact is similar for BYU --- the
more positive press, the more the schools
Why this obsession with athletic facilities when there are so many other more
pressing needs? Why not have the fans donate the money that's needed for
our version of Roman Circuses.
Awesome! That PAC 12 TV money sure comes in handy.
I have posted this information many times before but it appears I need to post
it again. The University of Utah is operated as a public university but is
funded like a private university. The U has an operating budget of about $2.5
billion of which 8% comes from an appropriation from the Utah Legislature (state
tax payers). Thus the assertion that the U is almost entirely privately funded.
Bonds are repaid by debt service payments and those payments come from private
sources except where the Legislature specifically steps in, which they
don't on athletic facilities. The Legislature this year appropriated more
money to the U med school so that more doctors can be trained and graduated. It
is not true that the med school is being ingnored. The U is enjoying a
construction boom right now featuring a rebuild or replacement of a great number
of buildings on campus mostly from private sources like the new law school and
Eccles Business Center. All this activity spurs growth in the Utah economy
which benefits everyone.
DN Subcriber 2,With some additional funding not only is the U
increasing the number of med students but also the U just dedicated a new
facility for the College of Pharmacy and is starting construction on a new
Dental School Building. I believe the U is doing all it can within its recourses
to benefit the people of Utah in the field of medicine.
Spokane Ute"Awesome! That PAC 12 TV money sure comes in
handy."All that "PAC 12 TV money" and U still can't
afford to expand your cracker-box sized football stadium?LOL!
Duckhunter reveals his ignorance of bonding and fincancing long term projects by
government facilities. Bonding is a government agency's way of taking out
a mortgage. We all take out mortgages to buy or build our homes, because it
would take most of us a lifetime to save enough money to pay cash. So the U has
taken out a couple of mortgages to build things now that will be paid for with
funds they know will be coming in from the Pac 12 and future donations (based on
the long history of consistent donations from boosters). These upgraded
facilities will help attract the talent needed to consistently compete in the
Pac 12 conference so it makes sense to borrow up front when you know you have
the money coming. That money is not coming from taxes, but from the Pac 12,
donations and student fees.
Several years ago, funds were cut so that the School of Medicine had to reduce
it's number of medical students. The increase that just passed a month or
two ago, increases medical students beyond what it was before the cuts were
Mormon Ute"These upgraded facilities will help attract the
talent needed to consistently compete in the Pac 12 conference..."This is simply wishful speculation; since many other PAC 12 members are
investing even more to upgrade their facilities, where is Utah's
incremental advantage that will help the Utes attract better talent than their
PAC 12 counterparts?
Actually you utah "fans" are incorrect. As a state owned institution all
debt incurred is guaranteed by the taxpayers. Yes lint I am aware of how bonds
work and bonds issued by the university are taxpayer backed bonds. If not they
would never sell a single one of them.Also it appears none of you
read the article, res and the hc are owned by the university itself and are
"rented" to the athletic department for use by the teams. The bonds used
are general revenue bonds that are backed by the university itself, not the
athletic department, and are being financed with university revenues, NOT
athletic department revenues although those revenues MAY go toward paying the
obligations.In otherwords you guys need to do some homework.LOL!
Here's a quote right from the article."Although the
football and basketball projects have bonds, they were issued with the
understanding that half the money would be raised. Neither is covered
yet,"So only half the money is being repaid by raised funds, the
other half come from university funds and are backed by the taxpayers and
"neither is covered yet".Here is another quote for you from
a dnews article in 2011."Currently, the athletic department at
the University of Utah is subsidized $9,381,567 a year."Here is
a dnews quote from November of 2011."Utah's athletic budget
is $35 million less than half of Oregon's with about $6 million coming from
the university and student fees to make ends meet, according to athletic
director Chis Hill." chris hil ADMITS they are subsidized.Yes
linty, tax payer money funds the university, the university subsidizes the
athletic department to the tune of somewhere between 6 and 10 million dollars
per year, tax payers back the bonds which fund raising has not yet covered. The more you know.....
Y's Little Brother,The plans to expand RES have already been
drawn and released to the public. The RES expansion will happen within a time
frame. BTW, the expansion of RES will bring it to 57,000 and from the views I
have seen it will totally outshine LES. Meanwhile, trying to expand LES has its
own problems. You have a neighborhood there next to the stadium that is opposed
to any big projects. The LDS Church just shelved the construction of a nine
story building at the MTC because of neighborhood opposition. That does not
bode well when trying to do any expansion or upgrades at LES. I think you had
best worry about your own stadium. It is dated and has no where to go.
Duckhunter,The Salt Lake International Airport is owned by Salt Lake
City. The Airport is undertaking a $2 billion project to build a new terminal
that will replace the existing terminals. Revenue bonds will be sold by the
City to finance construction of the new terminal. Yes, I know how bonds work
and I have done my homework over a 20+ year career. Again, debt service
payments will be made to pay off these bonds and not one dime will come from the
tax payers of Salt Lake City or the State of Utah. Enough said.
Duckhunter:"As a state owned institution all debt incurred is
guaranteed by the taxpayers."You made that up. The debt
incurred is guaranteed by the University. Were it not so, the legislature would
have needed to have been involved. This decision was made at the local (i.e.
university) level.The university sells bonds to private citizens.
The sale of those bonds produce the revenue needed to pay for facility upgrades.
The Pac-12 will annually pore in millions of dollars to the athletic
department. From that revenue stream, the university pays off their liability
to their bond holders. Should the university default -- which is EXTREMELY
unlikely -- the bond holders eat the loss; not the taxpayers.And no,
you do NOT know how bonds work. You're just afraid to admit that you were
wrong. Pretty par for the course in your case. Typical Indy-WACer.
@navalWhat part of the university being owned by the state of utah
do you not understand? Should the university default the state, ie the taxpayers
of the state, will pay the bond holders, the bond holders will not just not get
paid. The athletic department is subsidized several million dollars
per year by the university, which in turn is subsidized by the state, despite
dutchman's frantic and emotional claims otherwise, to the tune of several
hundred million dollars per year. You can read it right in the state auditors
report. It is simple, you just use google to find it.There is also
the small fact that any revenue the university brings in belongs to the state
itself and is university is simply allowed to keep it to pay for their expenses.
The university is not a private institution, it is owned by the
state completely. Its obligations are the states obligations. Its revenues are
the states revenues. Its facilities are owned by the state.You guys
really got shortchanged on your educations up there if you cannot comprehend the
most basic facts of what a state owned university is.LOL!
Y's little brother, said:Sandy, UTSpokane Ute"All that "PAC 12 TV money" and U still can't afford to
expand your cracker-box sized football stadium?"LOL!----.. and little itty bitty wantabe BCS school from down south still
can't beat Utah. Boy was my face red! LOL x3!
Should we Utah fans question what byu is doing with the money when we pay our
Duckhunter,Under the terms of Revenue Bonds if the bonds go into
default the taxing enity (ie. State of Utah or Salt Lake City) is absolutely not
on the hook to repay the bonds. The remedy for the Revenue Bond holders is to
go to court and seek a legal judgement to get repaid. Most often it is a
bancrupcy court/judge that must adjudicate the matter and decide if and how the
bond holders get paid. For instance, if an airline builds a hangar or terminal
using revenue bonds issued by a City owned airport and then goes bancrupt as has
actually happened, the City and its tax payers are not on the hook to repay
those bonds. The bancruptcy court will decide how or if the bond holder gets
repaid. General obligation bonds are different. These type of bonds must get
voter approval and are subject to being repaid by the tax payers (schools,
libraries, fire and police stations are typically funded this way). Athletic
facilities are funded by Revenue Bonds and although the University is owned by
the State the tax payers are under no obligation to repay them.
@EkeuteNo; I could care less what they do with their money. They
sure seem concerned about what Utah does with it's money; and the Utah
program in general. I guess that angle speaks for it's self! The envy seems
to get worse all the time. I guess that's the way it goes when your program
is on the outside looking in; and always will be. Take care Guy!
@dutchmanDo you really think the state would allow the university of
utah to default on its bonds? Not that I think they will anyway but there is no
chance the state allows one of its institutions to go into default. If the
university cannot repay the bonds then the state will certainly pay them for
them, it is as simple as that.As much as you want the university of
utah to be an independent entity it is not. The state OWNS it in whole, which
means the tax payers of the state own it in whole. That is just reality.Those bonds are backed by the state, plain and simple, and the state
will make whole the debt if the university cannot. The univeristy is subsidized
by the state, the universities athletic department is subsidized by the
university several million per year which means the taxpayers of the state
subsidize the athletic program. That is simple fact. Come to grips with it.
Y's Little Brother,I just love listening to the Stadium Smack
Talk coming out of Provostan. That is all you have on us these days. You cannot
beat us in football, and you are an Indy WAC team, that has only beat a handful
of teams that finished the year .500 or better since 2009. While our stadium may
hold about 20K less than your stadium, ours is much nicer, newer, and it
doesn't take 5 hours just to leave the stadium and get home. The assoc
athletic director here at the U of U stated that the plans have been drawn up,
and that stadium expansion will be here soon. When that will be, no one knows
quite yet. However, once it is finsihed, it still will not hold as much as Rice
Eccles South down there in Happy Valley. This way you will at least still have
stadium smack to talk about, since we beat you each and every year. Thanks for
@ekuteInlike utah's athletic department which is not able to
generate enough revenue to pay for itself and is sibsidized, BYU's athletic
department is completely self funding and actually runs a surplus, that means it
turns a profit as I know your uofu education is lacking, of several million
dollars per year. That said you CHOOSE to pay tithing so if you do
not like the way it is used you can elect to quit paying it. None of us choose
to pay taxes, it is forced onto us.But what seems to be lost on you
is that I personally don't have a problem with the university of
utah's athletics being subsidized, or at least not enough to make it an
issue, I just enjoy the utah "fans" indignation over the fact that it is
subsidized because it cannot pay for itself.You so badly want to be
like your big brother BYU and actually be able to support yourselves
independently but you cannot. It simply is what it is.
Duckhunter,"You guys really got shortchanged on your educations
up there if you cannot comprehend the most basic facts of what a state owned
university is."For your information I got my Masters In Public
Administration Degree from BYU. And I am proud of that fact. It is afterall
the high powered academic institution institution we all admire, right? I can
see that educating you on Public Finance is of no use. Suffice it to say,
Revenue Bonds placed by public entities and backed by leases, concessions,
ticket sales, donors, landing fees, etc etc not often, but sometimes go into
default and they are not bailed out by the taxing enities and/or tax payers.
Why would they be? The taxing entity suffers no rating down grade and if the
politicians used tax money to bail out Revenue Bond holders there would be a
very loud public outcry and heads would roll. Besides, most Revenue Bond debt
service can be restructured with the existing revenue streams to get some or all
of the bonds repaid. I learned some of that from Lennis Knighton and Karl Snow
at BYU. LOL
Ducky,Quit while you are way behind.
motorbike Cottonwood Heights, UTDucky,Quit
while you are way behind.True story, he does seem to be leading with
his chin on every reply. You just got to love the Pavolian frantic
and emotional response Naval Vet gets out of Duckhunter every time he uses that
term.Much more effective than stealing LOL from the Happy Valley
Ducky likes playing the semantics game. Yes, the bonds are backed by the
University and hence the taxpayers when they are initially sold, but that
doesn't mean tax money is used to pay them off. In the case of these
facilities the bonds are repaid with donations and user fees. Why do you think
John Huntsman's name is on the Huntsman Center and the Rice and Eccles
names are on the football stadium. The last expansion of the football stadium
in preparation for the Olympics is another good example. Totally paid for with
private donations and revenue from the Olympics. The only way public money
would be needed for these facilities is if somehow the donations dried up and
that isn't going to happen. Sorry Ducky. Wrong again.
@Dutchman Nicely done; class is in session!
Our frantic and emotional friends on the hill are obviously having a hard time
understanding and accepting the very logical and fact-based arguments being
presented by Duckhunter.Instead of engaging in a logical discussion
based on facts, they act like kindergartners and resort to their snide little
name calling instead of logic to support their misguided opinions.
Duchman just put the duck over his knee. Well done, sir.
I enjoy the utah "fan" gang mentality. It is funny to see them all try
to leech onto a incorrect assertion made by one of their own and that they
don't even understand simply because they want it to be true. LOL!It is really simple, the university of utah is a public institution wholly
owned by the state. This makes all of its activities the responsibility of the
state and all it does is guaranteed by the state. That puts the tax payers of
the state on the line for the universities actions and it leaves the tax payers
of the state liable for the universities obligations if they fail to uphold
them.Now I will once again say I do not think the university will
fail to uphold its obligations but that does not change the fact that the
taxpayers are liable if they default.And of course none of you have
even touched the fact that the athletic department is subsidized millions per
year, chris hill publicly admitted it.The rest is simply deflection
from that point on your parts.
Typical Duckhunter comment. He is right and the rest of the posters are wrong
because they aren't smart enough to understand the situation. Followed by
the ever popular LOL!Actually I think he might be upset because he
won't be able to use one of his other favorite phrases about the U football
staff being based out of trailers. The new facility looks great and certainly
will be impressive to potential recruits.
While it is expected by just about any clear thinking person that revenue
generated by athletics should find most of it being spent on athletics. However,
this article just indicates how big a real problem the growth of college sports
has become.Bigger facilities, bigger salaries, more toys, etc. How
much of the money goes to benefit non jock students? Will the university
actually be in the black at the end of the fiscal year? If it is, it will be
unlike many of the more "successful" sports programs, which, in spite of
their giant revenues, spend more than they take in.Finally, who is
running the university? Does the AD or do coaches make more income than the
president like most "successful"programs? In fact, do they make more
than the governor? More money may translate into more athletic ops,
but the true mission of higher education will go wanting.
What part of "the University of Utah is a public institution wholly owned by
the State of Utah" do our friends on the hill not understand?It's laughable that someone who claims to have an MPA so often tries to
assert that the U is a self-contained, fully self-supported institution that
doesn't receive any funds from the state, although easily researched,
publicly available state financial statements clearly show that the state pays
hundreds of millions of dollars every year to support the U.Duckhunter is absolutely correct in stating that any bonds issued by the U to
finance facilities improvements at the U would be backed by the state if the U
defaulted on those bonds and therefore, Utah taxpayers would be ultimately
liable for any improvements not financed by private donations.
Papa Smurf UTE"you are an Indy WAC team, that has only beat a
handful of teams that finished the year .500 or better since 2009."That's truly hilarious coming from a fan of a team that was prevented
from bowling last season because they couldn't beat the only WAC team on
their schedule, and was prevented from winning a gift-wrapped PAC South because
they couldn't beat a 10-loss team at home.Our little friends on
the hill need to update their smack. The WAC no longer plays football and
everyone knows that BYU's scheduling agreement with the WAC was only a
temporary two-year fix to create a 12-game schedule on short notice.
Sorry guys, I wasn't planning on commenting again but I have to straighten
out some issues. First, I have never claimed that the U is a fully independent
institution devoid of State ownership and control. I stated and will restate
that the U is operated as a public university but it is funded like a private
university meaning that the vast majority of its funds come from private sources
and tuition charges. The relatively small appropriation in terms of the
U's total budget that the U gets from the State Legislature makes it a
bargain for the State to own and call it the State's flag ship
university.Second, the State of Utah is not on the hook for any
revenue bonds issued by the U for athletic facilities or any other type of
facility funded by revenue bonds. If that were the case the State/University
would be far better off issuing General Obligation Bonds at a much lower
interest rate. If the taxing entity is going to pick up the tab if revenue bonds
go into default, then the entity would issue General Obligation Bonds from the
get go and pay less interest.
@dutchmanWhile the university of utah might be better off with
general obligaiton bonds the reason they don't do it is because by using
revenue bonds they can bypass legislative approval to issue them. You see
depsite your attempts to make it appear as if only you understand how things
work there are a few more of us that actually get it, and we are not tainted by
your obvious bias about it. Also the university of utah is pretty
much like just about every other public university that gets funded by multiple
sources which include land grants, taxpayer dollars, tuition, private donations,
and even profits made from its economic pursuits, utah is nothing special in
that regard and it doesn't "function like a private univeristy" at
all, it is a pretty run of the mill public university. Everything it
does the state is responsible for, everything, that includes its debts,
obligations, activities, all of it. Yes we all pay for it and as I have said
multiple times all you have to do is check the state auditors reports for the
truth of it. Education can set you free.
Dutchman"I stated and will restate that the U is operated as a
public university but it is funded like a private university meaning that the
vast majority of its funds come from private sources and tuition
charges."Be honest, what percentage of the tab for
under-graduate education at the U is directly or in-directly funded by the
state?Private funding may be a big contributor to the School of
Medicine and other graduate programs, but it's a mere drop in the bucket
(mostly in the form a scholarships) for undergraduate programs, which are paid
for almost entirely by tuition charges and state funds. Of course, if you want
to argue federal grants and loans, Utah taxpayers are ultimately on the hook for
those as well through their payment of federal taxes.
Since when is the University Of Utah a burden on the state?This
whole conversation is just the haters trying to rationalize that the don't
care that Utah owns them in football and that we have some thing they want but
ekute"Since when is the University Of Utah a burden on the
state?"There's no denying that it's a burden on Utah
taxpayers to the tune of $100's of millions every year.Unfortunately for U, you don't own BYU every year, in fact, in 5 of the 8
seasons during the Bronco/Kyle era, BYU has finished with better records and
higher rankings than Utah. It's laughable that the ONLY modest
accomplishment the Utes have had since joining the PAC, is beating
non-conference foe BYU head-to-head.
Duckhunter,First, I have never said that I am the only one who knows
anything about bonding. When Revenue Bonds are issued by a public agency they
must have approval of the Legislative Body. Every Revenue Bond issued by Salt
Lake City whether by the airport, public utilities (water and sewer) or a
building authority must be approved by the City Council. Even special
assessment bonds done as a private placement through one bank must have approval
of the City Council. On the State level it would be whatever Legislative Body
controls or oversees that State agency whether that is the Legislature itself or
the Legislative Body they create and appoint. So it is not true that Revenue
Bonds are issued to avoid legislative approval.
Duckhunter"Also the university of utah is pretty much like just
about every other public university that gets funded by multiple sources which
include land grants, taxpayer dollars, tuition, private donations, and even
profits made from its economic pursuits, utah is nothing special in that regard
and it doesn't "function like a private university" at all, it is a
pretty run of the mill public university."Onze Dutchman is
simply struggling with the realiteit that Utah is a pretty run of the mill
public university and its athletic programs are even more run of the mill.
Dutchman"When Revenue Bonds are issued by a public agency they
must have approval of the Legislative Body."And why would
Revenue Bonds are issued by the U require the approval of the Legislative
Body?Because the entity that the Legislative Body represents would
be ultimately responsible for the bonds - should the U default on its
obligation, the state would step in to remedy the situation, since a state
institution defaulting on its obligations would reflect poorly on the state.Nice work on coming full-circle on who, the Utah taxpayers, ultimately
assumes the burden of any facilities at the U not funded entirely by private
donations, and even then, the taxpayers assume the burden of maintaining those
@dutchmanThis is directly from the state auditors report."These outstanding bonds are not an obligation to the Athletic Department,
but are secured bythe University’s pledging of the Stadium’s
net revenues, student building fees, and othermiscellaneous fees."So the bonds themselves are not athletic department obligations, as I
said, and instead are obligations of the univeristy itself funded by projected
stadium revenue as well as STUDENT FEES and other MISC FEES. University
obligations are tax payer obligations, plain and simple. Now it is apparent they
are going to try to pay them back without a leislative appropriation, which is
good, but ultimately that is who has the obligation if they go into default. There is some pretty good info in the auditors report, mainly explaining
how the univeristy of utah ahtletic department IS NOT self funding, does depend
on subsidies, and where that additional funding comes from.I'll
give you a hint, it is not money from the pac12 nor will it be anytime soon.
Expenses have gone up far more than projected revenue even with that pac12 tv
Duckhunter,An article recently posted in another local news web site
stated that the U of U's athletic budget is over $1 million in the black
with over $10 million coming from ticket sales. The next largest revenue source
for the U is Student Fees which are used to support the non-revenue sports as is
done at vitually every university in the country. As the U gets more and more
of its full share of Pac 12 revenue the budget will be able to grow and rely
less on student fees.One reason facilities like the Huntsman Center
and the football stadium are owned by the University and not the athletic
department is they are used for many events other than sports. In fact, sports
make up a small portion of the events held there. Graduation exercises,
concerts, special programs and community events are just a sample. However, the
athletic department pays rent for its use of those facilities so the University
doesn't subsidize athletics in that way.
A few things for you zoobies who are so up in arms about tax dollars spent on
the U to consider. First, when Brigham Young founded the U he recognized the
importance to this City and State of having a top notch educational and research
institution. Every LDS prophet since then have been strong supporters of the U
with several attending and graduating from there. Second, the positive economic
impact on the Salt Lake area and the State of Utah is in the hundreds of
millions of dollars. I think the taxpayers of the State of Utah are well
compensated for what they put into the U.
Boy, tough crowd. The Local Bonding Act, Title 11 Chapter 14, Utah Code
Annotated, requires all local governments approve all bonding including Revenue
Bonds. However, again, Revenue Bonds are paid off by the revenue streams
dedicated to pay off those bonds as identified in the bond documents. Tax
payers are not on the hook or obligated in any way to payoff these bonds in the
event of default. The taxing entity is not going to step in and pay them off to
"save face" because it does not affect their credit rating in any way.
Why does the legislative body have to approve Revenue Bonds when the tax payers
do not have to pay them off in the event of default? Because the law requires
it and because it gives the legislative body one last "bite at the
apple" when approving a project.The State of Utah can issue General
Obligation Bonds when approved by the Legislature. General Obligation Bonds do
put the tax payers on the hook in the event of default. Again, Revenue Bonds do
not. A Court of Law cannot even order the State of Utah or a local government
to make good on a Revenue Bond in default.
DutchmanYou assume way too much in claiming that the state
wouldn't step in to pay off a defaulted Revenue Bond, especially for an
institution as high profile as the flagship university of the state.Your explanation that the state simply wants a final bite of the apple when
approving a project is laughable. The approval process is obviously intended to
prevent a rogue agency from creating the appearance of a defaulted obligation by
the state. In the court of public opinion, perception carries far more weight
than the actual law.
Let's get to the real issue here: duckhunter (and others, if they truly
are different people): Why do you care?
Lonestarrunner,Yes, and public perception and outrage is against
bailing out banks and bond holders. A Court can't order it, it is not a
legal obligation to bail out Revenue Bonds, the public would not support it,
what else do you want? If you know of a case where a public agency has bailed
out Revenue Bonds in default and it was not required in the bond documents, be
my guest, enlighten me.
DutchmanYou're seriously going to argue that the State of Utah
bailing out the University of Utah would be the equivalent of the government
bailing out a bank?
Lonestarrunner,Do you have an example of a bail out of Revenue Bonds
issued by a public agency that are in default or don't you? If you are so
concerned that Revenue Bonds issued for athletic facilities at the U will
default and be bailed out using your tax dollars then you should want to know.
When and where has this happened? Educate me.
Dutchman"Do you have an example of a bail out of Revenue Bonds
issued by a public agency that are in default or don't you?"Yes, check out the $26 million in Revenue Bonds issued to finance the new
200,000-square-foot Vadnais Heights Sports Center. When revenue fell short of
covering the debt service on the bonds, the city coughed up $582,000 for its
debt service for 2012 and hundreds of thousands more to cover operating
expenses. In 2013, Vadnais Heights would owe bondholders $1.6 million, or 36
percent of its 2010 budget. To raise that much money without touching the
budget, it would have to hike property taxes by 30 percent. Likely fearing a
tar-and-feathering, the City Council voted unanimously to sever its tie to the
sports complex and not to pay the revenue bonds.(continued)
Only days later, the bond-rating agencies swooped in like avenging angels to
smash Vadnais Heights' credit-worthiness. S & P reduced the rating of
the revenue bonds from A- to CC or "highly vulnerable," a drop of 13
steps. (Moody's didn't rate those bonds.) That's understandable
since nobody knows if the investors will ever be repaid. But both Moody's
and S & P went the extra mile and downgraded Vadnais Heights' ordinary
general obligation bonds; they went from third best rating to junk status.-----Be careful what you ask for Dutchman.
The city won't immediately feel the downgrade. Its bonds will simply drop
in price enough so that their yields will reflect what the bond-rating agencies
believe are their greater risk. The problem comes when Vadnais Heights wants to
float new bonds for roads, schools, sewers and other municipal improvements. The
interest rate could top 15 percent.This example illustrates the
possible pitfalls of using Revenue Bonds to finance athletic facilities and why
the State of Utah would be extremely foolish to ever allow a state-owned
institution, such as the University of Utah, to default on such bonds.
Nightmare scenario for U:Utah floats $30 million in Revenue Bonds to
help finance the projected $60 million to expand RES.Kyle accepts a
new coaching gig at UCLA and takes his entire staff with him.His
replacement does to Utah football what Majerus' replacements did to Utah
basketball and attendance plummets to pre-MWC numbers.Revenue
pledged to pay the Revenue Bonds falls woefully short.Budget short
falls prevent the U from tapping into other school funds to make up the revenue
difference.The State of Utah refuses to bail out the U.The U defaults on the Revenue Bonds and the bond holders slap a lien on RES,
refusing to allow Utah to play football games in RES until the bond holders are
paid in full.Could it happen? Not likely.Is it possible?
scenic viewInstead of expanding RES, maybe the U could simply rent
LES. Of course, Sunday play could be an issue, if the PAC ever
decides that they absolutely have to play football games on Sunday.
@mormon uteWell unlinked, yes I know the dnews doesn't allow
links, newspaper articles are nice, but I would say the state auditors official
report to the president of the university of utah is just a bit more credible
than an unnamed "report" in some other unnamed paper.
LonestarRunner,Thanks. That is good stuff. Information we
don't often get in the comments. Vadnais Heights is a Minnesota City and I
am not familiar with Minnesota's Local Bonding Act. Some State laws
require that local governments back their revenue bonds with general obligation
bonds. Utah does not. Because Vadnais Heights got a down grade on their G.O.
bonds this may be case here where the City refused to back these lease revenue
bonds for the sports complex with their G.O. bonds but I don't know. Also,
Vadnais Heights used lease revenue bonds to fund the facility. These are a bit
different than revenue bonds that are backed by multiple dedicated revenue
streams. And to make matters worse Vadnais Heights was the entity leasing the
facility and when they got into financial trouble the City broke the lease which
dried up the bond payments. Here is a quote from an article I found online:
Continued........"Moody’s Investors Service and Standard
& Poor’s quickly chopped Vadnais Heights’ formerly double-A bond
ratings to junk after the city said it would sever its lease for the Vadnais
Sports Center, which supports payments on the $27 million of lease-backed
revenue bonds issued to build the complex."This seems to be a
very poorly structured lease revenue bond that relied heavily on the City's
ability to lease and make lease payments on the sports complex. It does raise
cautions in how these types of bonds are structured. If the University of Utah
were to issue lease revenue bonds for athletic facilities where the University
was the lease holder rather than issue revenue bonds with multi faceted
dedicated revenue streams then we should all be leary of such a bond structure,
myself included. Again, thanks for the information.
Hmmm....that is interesting stuff Lonestar. Now I doubt that utah is going to
default, they are a well run institution with a history of doing things the
properly, but of course this is about more than that and you've helped
prove it. This is about the deluded utah "fans" that somehow believe the
university of utah is an entity unto itself, that the ahtletic department is
self funding and actually turns a profit, that it is not subsidized by the state
and the taxpayers of the state, and that it is somehow different than every
other public univeristy in the country.It obviously is no different,
the state auditor himself shows they are not only NOT self funding but are
heavily subsidized, that the state is on the hook for them if they should
default, that the pac12 riches utah "fans" brag about incessantly not
only are not enough to cover their increased expenses but the expenses have
increased more than the revenue and now they are taking out debt to finance
things and that debt is placed at least partially on increase fees to students.
It appears naval saw the truth coming out and panicked.LOL!
Dutchman"Again, thanks for the information."No
problem. I don't have an issue with the U expanding their
stadium as long as it's done responsibly. Unlike some of the
posters here who think that the Utes hit the lottery with their invitation to
the PAC 12, at least you understand that bonding to fund such athletic
facilities isn't a no risk proposition, and hopefully we both understand
that either directly or indirectly such financing could impact how funds
appropriated to the U from the state are used.
Duckhunter:"It appears naval saw the truth coming out and
panicked."What are you talking about? It seems your obsession
with me had compelled you drop some disjointed comment in order to pull me
into....something I'm not even sure of. What did I have to do with your
last comment?The only "panic" I see is you. I clearly
positioned that argument as the 5th post (over on pg. 1) of this comment thread.