Historic Kingsbury Hall will play a role in securing some $23.5 million for a new housing complex at the University of Utah that will serve as the Olympic Village during the 2002 Winter Games.
A short-term, lease-hold interest in the 68-year-old landmark would be collateral for a state bond that would provide up-front funding for the Salt Lake Organizing Committee's fee for use of the housing during the Games.Kingsbury Hall was renovated in the mid-1990s using $15 million in private and university funds.
Simply stated, the Utah State Building Ownership Authority would bond for approximately $23.5 million, ultimately to be repaid by SLOC in a complex lease-revenue bond arrangement.
Although it is common practice under lease-revenue bond agreements to place state agency real estate holdings in a cross-collateral pool, the selection of Kingsbury Hall struck a nerve with some regents.
"It does put it in the squirrely category. It's a high-profile choice," said regent Chairman Charlie Johnson during the board meeting Friday at Snow College. "I wish they would have chosen something more obscure."
Some regents suggested alternatives such as the university-owned golf course and the Park Building.
Kingsbury Hall was selected because its value is comparable to the proposed bond issue, said Tom Nycum, U. vice president of administrative services.
The new student housing complex could not be considered because it will back the U.-issued revenue bond for housing, which is a separate transaction. The $121 million revenue bond issue will go to market early next month.
A number of state agency properties are held in a cross-collateral pool to back debt incurred by the state, including the Scott M. Matheson Court House and the club house for the Wasatch Mountain State Park Golf Course. Initially, the U. wanted SLOC to pay a $28 million user fee up-front to facilitate construction of the new housing complex. But SLOC's revenues are expected to come in at the conclusion of the 2002 Winter Games so organizers sought a different funding strategy.
The $23.5 million bond represents a discounted $28 million. In other words, it represents the $28 million user fee in 1998 dollars.
The regents approved the lease-revenue bond resolution Friday, which in essence insulates the U. from default if the SLOC revenues do not materialize. The bond is to be repaid using interest generated by SLOC funds. State financial advisers say legislation and contracts that will identify specific SLOC revenue streams - as yet unnamed - will help ensure payment.
The regents agreed to the resolution with the caveat that the final agreement includes language to ensure university-owned properties will be returned to the school in good condition, minus reasonable wear and tear during the Games.
Regent Ian Cumming, half-joking, said the facilities would be used by "hyperactive, testosterone-charged Olympians who could trash the place."
The State Building Ownership Authority, which will issue the bond, is expected to act on it later this summer.