The overwhelming passage of Measure 69 in Tuesday’s primary election once again gives Oregon universities the ability to access low-cost financing to purchase existing facilities, which can be less costly than building new facilities, as well as the ability to finance other facilities that would benefit higher education.
In a referendum, the public voted to amend the state constitution to once again permit schools access to low-cost bonds that allow schools to buy existing properties.
Roughly nine months ago, the Oregon Department of Justice called into question the legality of using such bonds. As a result, the legislature decided to take on the task of amending the law to ensure the bonds’ usage, according to Portland State President Wim Wiewel.
Di Saunders, the Oregon University System director of communications, said that Measure 69 was a housekeeping fix that provides a process for a change in the Oregon constitution to codify the law and make it perfectly clear how colleges and universities can use the bonds known as type XI-F and XI-G.
In the past, colleges and universities used state funding to build and purchase buildings to better meet student and university needs. However, according to Saunders, the new Attorney General John Kroger did not feel that there was enough clarity in the law to allow a university to use the XI bonds to purchase existing buildings, such as PSU purchasing the Market Center Building.
With the unprecedented enrollment growth in Oregon universities, there is a need for public universities to be nimble in meeting student access needs and campus space requirements, said OUS Chancellor George Pernsteiner.
“The passage of Measure 69 gives the Oregon University System the option to purchase existing structures at the same interest-rate cost of building a new facility,” he said.
Previously, a university would have to purchase a new building to utilize the lower interest rates available through low-cost general obligation bonds.
“Oregon public higher education continues to see decreasing support from the state,” Saunders said.
While Saunders stresses the importance of prudent use of existing resources, she also said that due to current circumstances there needs to be a greater number of tools available to ensure that students’ needs are served.
The passage of Measure 69 allows the OUS lower costs when adding new space and facilities at OUS campuses, as well as the ability to meet the needs of classrooms, labs and other spaces more quickly, Saunders said.
According to a document prepared by the OUS and the Oregon Community College System, the two XI bonds affected by Measure 69 were placed in the Oregon Constitution in 1950 and 1964, respectively.
Since then, the roles and nature of higher education institutions have evolved beyond traditional instruction into areas of research, public service and economic development, according to the document.
Measure 69 eliminates outdated provisions and allows Oregon to issue these lower cost general obligation bonds for the types of facilities used by today’s community colleges and public universities.
The measure also provides more flexibility to use non-taxpayer money to repay the bonds, according to the document prepared by the OUS.
Market Center Building cost of purchase according to OUS issue brief
Without passage of Measure 69
Certificates of Participation higher interest rates
$24 million to purchase the Market Center Building
$1.6 million per year in payments
$48 million total purchase price using higher interest rate of certificates of participation (COPS) at 5.3 percent
With passage of Measure 69
XI-F bond lower interest rates
$24 million to purchase Market Center Building
$1.5 million per year in payments
$46 million total purchase price over the life of the XI-F bond with 5 percent interest rate
Potential savings to Oregon: $2 million
Ability to purchase existing building with passage of Measure 69
$42–$45 million estimated to build new facility with equivalent space and amenities
$24 million cost to purchase Market Center Building
Potential savings to Oregon: $18 million
Total potential savings to Oregon: $20 million