As legislators peppered them with questions Tuesday, University of Kansas officials defended the financing of a $350 million building project and tried to assure lawmakers they had intended to be upfront about the plan.
“I didn’t think we were going behind the Legislature’s back,” Bill Feuerborn, a member of the Kansas Board of Regents, told the House Appropriations Committee. “I didn’t think we were slighting your power or authority or anything like that.”
At issue is KU’s Central District Development Project, which includes new student housing, science classes and labs, and a student union. The university is financing the project with bonds through an out-of-state agency, a decision that has drawn strong criticism from lawmakers.
KU chancellor Bernadette Gray-Little said the project, years in the works, is crucial for replacing inadequate facilities and ultimately for retaining and recruiting faculty.
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“Our science facilities were built before we put a man on the moon,” she said.
Jeff Gans, special counsel to KU, told lawmakers that officials discovered in September that the project could not be financed through the Kansas Development Finance Authority without additional authorization from the Legislature. To keep the project on schedule, they sought other financing options and settled on a Wisconsin agency.
“This was a long process,” Gans said. “It was a thoughtful process.”
The financing deal involves $327 million in bonds and a lease structure, with KU making lease payments from housing, parking and student fees. The plan doesn’t involve additional state funds or tuition increases, KU officials said.
But some lawmakers argued that the state would ultimately be on the hook if the university couldn’t make its lease payments.
And they questioned why KU officials didn’t wait until the Legislature returned in January, when lawmakers could have been consulted about financing through KDFA.
Rep. J.R. Claeys, a Salina Republican, said it seemed the university was “trying to avoid a transparent process.”
Rep. Mark Hutton, a Wichita Republican, criticized KU’s exclusive agreement in the financing plan with Edgemoor Infrastructure and Real Estate for development and construction of the Central District project.
“This is essentially a sole-source construction project,” Hutton said.
The Board of Regents approved the project, and KU officials had briefed lawmakers last fall. But some legislators said they had requested more information about the bond financing plan but didn’t receive it.
The House Appropriations and Senate Ways and Means committees have approved measures in response to the project. The House Appropriations proposal would limit KU’s authority to spend certain unanticipated funds. The Senate Ways and Means measure would prevent KU from using public funds to make lease payments associated with the project.
“The Senate amendment would cause us to be in breach of our lease agreement,” said Theresa Gordzica, KU’s chief financial officer.