DALLAS — The University of Texas System Board of Regents yesterday approved two projects worth a total of $270.8 million that will finance the construction of an on-campus hotel and conference center as well as the expansion of Royal-Memorial Stadium, home of the Texas Longhorns, which won college football’s national championship last month.
Included in the projects’ financing would be a total of $192.5 million of revenue financing system bonds. However, the approval by the regents did not include the authorization to issue debt.
“Typically, we get our bond approvals at the beginning of the year,” said Terry Hull, director of finance for the UT System. “In August, the board approved issuances of up to $600 million on the revenue financing side and $300 million on the [Permanent University Fund] side. Those authorizations should last us the full year.”
In addition to the revenue financing system bond program, the University of Texas System has the authority to issue debt backed by the $16 billion PUF, which is comprised of state lands and investments. All bonds issued by the UT System carry natural triple-A ratings from all three rating agencies.
Hull said the system would be unlikely to include the debt for the stadium expansion and the hotel under this year’s issuance.
“Typically, we finance such projects under our commercial paper program until they get a little closer to their opening date,” he said. “I would expect that we would do that in this case and probably not fix it out with bonds until 2007 at the earliest.”
The stadium expansion will cost a total of $149.9 million, including $15 million that regents approved last fall to finance renovation and expansion projects on the west side of the stadium.
The system will issue debt to cover about $106.6 million of the project’s cost, with debt service coming from revenues generated by the Centennial Room and west stadium seating.
“The debt will still be issued under our revenue financing system, but it is expected to be self-supporting,” Hull said.
Donations would cover $35 million of the overall project cost, and the remaining funding would come from investment returns on the construction account for the University of Texas at Austin, the system’s flagship campus.
The project, which will increase the stadium’s capacity from 80,082 to more than 90,000 seats, will be completed in time for the 2008 football season. Most of the work would focus on the stadium’s north end zone, and would also include the addition of offices for media and television production crews, ticketing, guest services, the Longhorn Foundation, athletic officials, and the cheerleading program. Space would also be included for academic advising and classrooms.Officials say that prior to the UT-Austin win at the Rose Bowl on Jan. 4, there was a great deal of demand for additional seating, but added that with the national championship under the Longhorns’ belts, they expect to face more seating pressures.
The regents also approved the construction of a $120.9 million hotel and conference center that will be built at the southern edge of the UT campus. The facility will be called the University of Texas Executive Education and Conference Center.
The project has been in the works for some time, with regents first bandying the idea around in 1999. However, the project stalled during the recession that began in 2001, as well as being delayed while officials worked to acquire land from the University Avenue Church of Christ.
However, negotiations to acquire the land currently occupied by the Player’s restaurant fell through, and system officials opted not to utilize their powers of eminent domain to force a sale of the land. Instead, they have opted to build a three-level underground parking garage on land already owned by the system — a project that will bump the cost of the overall hotel and conference center from just under $85 million to its current price tag of $120.9 million.
In addition to the garage, the increased cost included the addition of 50 additional hotel rooms, boosting the project to a total of 300 rooms from the 250 originally planned.
The university will use $85.9 million of revenue financing system bonds to pay for the majority of the project’s cost, with $30 million of gifts and $5 million of investment revenue from the UT-Austin construction account making up the difference.
Debt service for the bonds will come from revenues from the hotel and conference center and the parking garage.
