BOT approves deferred maintenance bond

The Portland State Board of Trustees held a special meeting via telephone conference due to bad weather and the closure of campus. BOT unanimously approved an Article XI–Q bond of $10.8 million for deferred maintenance costs. The bond is both loaned by the state and paid off by the state.

According to the press release, the resolution was for “approving issuance of State of Oregon general obligation bonds for capital repair, renewal and accessibility projects (deferred maintenance).”

The state issued a bond to the seven Oregon public universities totaling $65 million, which will be split up by the Higher Education Coordinating Commission based on the square footage of public buildings. PSU expects to receive $10,841,080, but HECC has not yet released the money or come to a final assessment.

Deferred maintenance is a term to describe maintenance issues deemed necessary, but put off due to lack of funds in the budget or various other budget decisions.

“We have about $175 million in deferred maintenance in our education general buildings and we maintain a database that includes about 500 desires and needs of all our buildings,” said Dan Zalkow, associate vice president of PSU Planning, Construction & Real Estate.

The state owns all of PSU’s properties, except the Academic and Student Recreation Center. BOT is responsible for maintenance and administration of PSU buildings, primarily through state payments. Article XI-Q Bonds are not reflected in the school’s financial statements.

Similar bonds are given every two years and this year’s was nearly double that of the last biennial bond. President Wim Wiewel attributed this increase to good lobbying and state legislature’s goals in this direction.

“It’s a combination of the universities’ collectively agreeing that as we’ve all grown deferred maintenance is increasingly important,” Wiewel said. “But also, I’ve got to say, a lot of pressure from the legislature side, where they are nervous about continuing expansion of new buildings while the old buildings are falling apart.”

Potential projects addressed at the meeting include: Cramer Hall plumbing upgrade; modernizing the three worst elevators on campus (not named); major electrical upgrades; and replacing the generator on top of the 4th Ave. Building, which is 50 years old and was damaged in the recent snowstorm.

“The areas we mentioned [at the board meeting] are the priorities,” Wiewel said. “$10 million over a two-year period only goes so far when you have over 5 million square feet of space.”

Wiewel also commented that new buildings are a way to offset deferred maintenance as they rely on different funding pools, saying that state allocated funds specifically for deferred maintenance was only one way to address maintenance needs.

“The other, much bigger way is that PSU on the whole has built few brand new buildings, but instead has used its capital requests to undertake major deferred maintenance projects,” Wiewel said. “The most recent big projects (Neuberger, the Stott Center, and the School of Business Administration) are renovating hundreds of thousands square feet of space and making a major dent in our deferred maintenance. We hope the State will continue its capital investments which both create jobs and ensure we can provide students with educational opportunities.”

The resolution also relinquished BOT’s obligation to the bond and handed it to President Wiewel, who may then turn it over to PSU Finance and Administration. The Board must convene on all debt or financing matters greater than $5 million, under Section III.B of the PSU’s Debt Management Policy.

Deferred maintenance continue to fall behind each year. The Board estimates that the backlog increases by $10 million per year, while the $10.8 million expected to be allocated by HECC will cover two years, leaving backlog growth at $5 million per year.