Board of Trustees MeetingBoard of Trustees Meeting

Funding PossibilitiesFunding PossibilitiesFor For

Master PlanMaster Plan

May 25 , 2010May 25 , 2010

Master PlanMaster PlanSteering Committee Objectives Steering Committee Objectives

• New Science and Allied Health LabsNew Science and Allied Health Labs

• Enrollment CenterEnrollment Center

• Classroom modernizationClassroom modernization

• Student studying/gathering spaceStudent studying/gathering space

• Wi-Fi and cell phone reception in all public areasWi-Fi and cell phone reception in all public areas

• InfrastructureInfrastructure

Other Community Colleges’ Other Community Colleges’ Master Plans Master Plans

• Harper CollegeHarper College $ 89 million in 2001$ 89 million in 2001$ 156 million in 2008$ 156 million in 2008

• College of DuPageCollege of DuPage $ 183 million in 2002$ 183 million in 2002

• Moraine ValleyMoraine Valley $ 89 million in 2006$ 89 million in 2006

• ElginElgin $ 178 million in 2009$ 178 million in 2009

• JolietJoliet $ 220 million in 2008$ 220 million in 2008

How Much Will Oakton’sHow Much Will Oakton’sMaster Plan Cost?Master Plan Cost?

$ 25 Million ?$ 25 Million ?

$ 50 Million ?$ 50 Million ?

$ 75 Million ?$ 75 Million ?

At this time we don’t knowAt this time we don’t know

What We Do KnowWhat We Do Know

It is not too early to be It is not too early to be

thinking about how Oakton thinking about how Oakton

might fund its Master Planmight fund its Master Plan

Funding Possibilities Funding Possibilities

• Bonds (non-referendum)Bonds (non-referendum)

• Debt certificatesDebt certificates

• Construction feeConstruction fee

• Performance contractingPerformance contracting

• Alternative fundingAlternative funding

• Net assets (reserve)Net assets (reserve)

• ICCB Grant/State of IllinoisICCB Grant/State of Illinois

Bonds Bonds

Debt Extension Base is $2,950,000Debt Extension Base is $2,950,000

• Max College can spend in one year on debt Max College can spend in one year on debt service (principal & interest)service (principal & interest)

• Grows at same rate as CPIGrows at same rate as CPI

Bonds Bonds

Assuming CPI grows 1.5% annuallyAssuming CPI grows 1.5% annually

• College could borrow about $45 millionCollege could borrow about $45 million

• Pay it back over 20 yearsPay it back over 20 years

• Interest rate of 4% (May, 2010)Interest rate of 4% (May, 2010)

• Total cost principal & interest about $73.5 millionTotal cost principal & interest about $73.5 million

• Would increase property tax bill by 7% annuallyWould increase property tax bill by 7% annually

• Typical homeowner property tax bill increase fromTypical homeowner property tax bill increase from

$175 to $188 or $13 increase$175 to $188 or $13 increase

Debt Certificate Debt Certificate

• Similar to bonds Similar to bonds

– Can be used to pay for constructionCan be used to pay for construction

• Less restrictive than bonds; requires only Board Less restrictive than bonds; requires only Board

actionaction

• May cost 10–25 basis points more than bondsMay cost 10–25 basis points more than bonds

– No tax levy to support debt serviceNo tax levy to support debt service

Construction Fee Construction Fee

• Could add construction fee to help pay for Could add construction fee to help pay for Master PlanMaster Plan

• $5 per credit hour equals $1 million annual $5 per credit hour equals $1 million annual revenue streamrevenue stream

• Could issue Alternate Revenue Bonds with the Could issue Alternate Revenue Bonds with the revenue streamrevenue stream

• College could borrow about $11 millionCollege could borrow about $11 million

• Pay it back over 20 years; debt service cost of Pay it back over 20 years; debt service cost of $19 million$19 million

• Interest rate of 4% (May, 2010)Interest rate of 4% (May, 2010)

Performance ContractingPerformance Contracting

• Make energy saving improvementsMake energy saving improvements

• Energy savings pay for improvementsEnergy savings pay for improvements

• Down sideDown side

– More expensive than bondsMore expensive than bonds

– Interest rate of 6 – 9 %Interest rate of 6 – 9 %

– Usual 10 year termUsual 10 year term

Alternative FundingAlternative Funding

• Capital Campaign by Education FoundationCapital Campaign by Education Foundation

• Creation of partnerships with businessesCreation of partnerships with businesses

• Stimulus ProgramsStimulus Programs

– Energy efficiency back grantsEnergy efficiency back grants

– State energy programState energy program

• Other GrantsOther Grants

Net Assets (Reserve)Net Assets (Reserve)

Unrestricted ReserveUnrestricted Reserve $59,800,000$59,800,000

Restricted ReserveRestricted Reserve $22,670,000$22,670,000

June 30, 2009June 30, 2009

ICCB GrantICCB GrantState of IllinoisState of Illinois

• Currently Oakton is number 21 on the Currently Oakton is number 21 on the ICCB Capital Projects listICCB Capital Projects list

• If funded would represent about $40 If funded would represent about $40 million to College from the Statemillion to College from the State

Our Timing is Good…Our Timing is Good…

• Interest rates are near all-time lowsInterest rates are near all-time lows

• Construction costs are downConstruction costs are down

• Number of realistic funding optionsNumber of realistic funding options

• Ability to mix and match funding optionsAbility to mix and match funding options

• Opportunity to involve many stakeholder Opportunity to involve many stakeholder groupsgroups