NWC News Desk
Financing partnership helps NWC avoid seeking a tax increase in Park CountyPosted by: NWC News Desk — August 16, 2012
POWELL, Wyo. - Thanks to a creative partnership between Northwest College and the NWC Foundation, the college will avoid asking Park County residents to increase their property taxes to help fund a new instructional building on campus.
The announcement came at a Northwest College Board of Trustees meeting Monday when trustees voted unanimously to partner with the NWC Foundation to finance the nearly 50,000 square-foot building, tentatively being called the Yellowstone Academic and Workforce Training Building.
Nearly $9.4 million of the $14.25 million cost was appropriated for NWC’s building project by the Wyoming State Legislature at its 2012 session. That left approximately $5 million the college needed to raise to complete construction.
“We’re delighted to be able to proceed with the building,” NWC President Paul Prestwich said. “It’s our top-ranked unmet need in the Facilities Master Plan.”
The multi-faceted finance plan calls for the college’s commitment of $2 million from its budget reserves, along with a $2 million loan from a yet-to-be-selected Park County commercial lender, plus the NWC Foundation’s pledge to generate $1.2 million in a fundraising campaign.
“We’re immensely appreciative of the NWC Foundation’s generosity,” Trustee President Mark Westerhold of Cody said. “We’re so fortunate to have such a strong and supportive foundation alongside us in this financing plan. For decades, the foundation has been there to help the college . . . now it joins us with a new level of support that’s critical to the college’s ability to move forward with the building. All of us on the board of trustees express our gratitude to foundation board members.”
“The Foundation’s previous focus on endowments has allowed us to build regular support for student scholarships and classroom enhancements,” said NWC Foundation President Jim Linton of Powell. “The added beauty is that we now have the financial strength to extend resources to Northwest College’s building project in some exciting new ways.”
The NWC Foundation, a private, nonprofit corporation, will begin its $1.2 million fundraising campaign in coming weeks, according to its Executive Director Shelby Wetzel.
Avoiding a ballot initiative
Asking Park County voters to increase the college’s mill levy, likely through a general obligation bond issue, was among funding options considered.
“It’s a particularly bad time to seek a tax increase,” Prestwich said. “Although substantial, the amount NWC must raise to use the state’s capital construction funds isn’t enormous; therefore, we wanted to accomplish the financing as creatively as possible and avoid a public vote.”
Building construction in a budget-cutting environment
“Another major consideration we wrestled with is the strong likelihood of a state-imposed four-to-eight percent budget cut in 2013-14,” Westerhold added. “Having to reduce our budget in the future underscores the need for caution now, as we plan to take on debt.”
Funding new building construction while at the same time preparing for budget cuts will understandably be puzzling to the public, Prestwich said.
“While it may seem incongruous, the two are completely unrelated,” Prestwich explained. “The state’s capital construction money came to us in a one-time appropriation, while potential budget cuts would be ongoing.”
Coincidentally, capital construction dollars were appropriated for NWC during the same legislative session when natural gas prices had started to tumble, prompting Governor Mead to call for statewide budget cuts a year from now.
“To our knowledge, NWC has never received capital construction funds from the state’s general fund,” Prestwich added. “It would be irresponsible of Northwest College to not use the state’s $9.38 million appropriation.”
The college’s last public bond issue in Park County was in 1992, when bonds funded construction of a $6.16 million Science-Mathematics Building.
Mitigating loan debt
As part of the process to secure a $2 million loan, the college will solicit proposals from all Park County financial institutions later this month, Prestwich said.
“Considering that Park County residents are the true owners of Northwest College, we believe a commercial loan that’s kept within the county is another positive aspect of this finance plan,” Prestwich added.
To help ensure that the college’s budget isn’t strained by loan debt, two funding vehicles will provide assistance—the NWC Foundation will step back into the picture, and help from future students will be called upon as well.
First, the NWC Foundation will commit up to $300,000 a year toward annual loan payments estimated at $525,000 for four years. NWC will repay the foundation over the next nine years.
“We believe the ability to leverage state dollars with private ones is a wise investment of the foundation’s current resources as well as for new donors to the project,” Wetzel said. “Repayment of foundation funds by the college is important, as it allows us to meet our obligations to donors who previously established endowments with the foundation.”
The finance plan also includes a new $5 per-credit-hour fee which will be assessed among students starting in the fall 2013 semester to cover the balance.
“Any time the board considers increasing student fees, we do so with great caution because we want the cost of attendance to be as affordable as possible for our students,” Westerhold emphasized.
The potential of student assistance for the building was first mentioned at a trustees meeting last April while discussing finance options.
“In the last week or so, we communicated our intentions to Student Senators, including newly elected 2012-13 officers, and we’ll present the full plan when Freshman Representatives are elected in September,” Prestwich said.
At least two other Wyoming community colleges—Central Wyoming College and Casper College—implement such a per-credit-hour fee for facilities.
In addition to students benefitting from the building they help fund through the new fee, the college pledges that future proceeds will be used to fund enhancements that will improve students’ experiences, according to Prestwich.
“Foremost is upgrading our wireless Internet delivery throughout the campus, including in the residence halls,” Prestwich explained. “We’ve talked to students who say Internet service and speed are more important to them than heat in the residence halls! We intend to provide both.”
Additional student-related projects the fee revenue may address are being considered.
Because proceeds from the new student fee must initially be devoted to help finance the new building’s construction, college administrators will use other funds during the life of the loan to address student-related projects until the loan’s debt is retired.
While initial plans called for the college to commit $1.5 million from its budget reserves, the amount was increased to $2 million to help make the financing package possible.
“That takes our budget reserves down a bit more than we had originally planned,” Westerhold said, “so we’ll need to be very cautious about expenditures over the next few years, especially considering the likelihood of significant budget cuts a year from now.”
State law dictates that Wyoming community colleges’ budget reserves may not exceed an amount equal to eight percent of their operating fund. The $2 million commitment will leave NWC’s reserves at approximately $1.3 million, or about six percent of its operating fund.
Building components, architect selection and construction schedule
The proposed 49,700 square-foot building will provide diverse classroom, laboratory, and faculty office space, including much-needed space for growing career-technical, transfer and workforce training programs.
Two high-tech classrooms with podcasting capabilities are planned in the building, plus a 75-student-capacity classroom. In addition, a 300-seat conference facility with dividable spaces will accommodate workforce training programs, conferences, meetings, community events and credit-bearing classes.
Because state funds are being provided for a portion of the building costs, the Construction Management division of the Wyoming Department of Administration and Information selected an architectural firm in consultation with the college, according to Kim Mills, NWC vice president for administrative services.
Twelve architectural firms answered the Construction Management division’s request for proposals to design the building, Mills said. Five firms were selected to make on-campus presentations in mid-July—CTA Architects Engineers of Billings, Mont.; Malone Belton Abel of Sheridan, Wyo.; MOA Architecture of Casper, Wyo.; Plan One Architects of Cody, Wyo.; and GSG Architecture of Casper, Wyo.
CTA Architects Engineers was selected by the Construction Management division for the project in late July.
A preliminary construction schedule calls for ground breaking next spring and completion in late summer 2014 for occupancy at the start of the fall semester.