MINUTES OF THE meeting
of the
Assembly Committee on Ways and Means
AND THE
Senate Committee on Finance
JOINT Subcommittee on Higher Education/CIP
Seventy-Second Session
May 2, 2003
The Assembly Committee on Ways and Means and the Senate Committee on Finance, Joint Subcommittee on Higher Education/Capital Improvement Program (CIP), was called to order at 8:20 a.m., on Friday, May 2, 2003. Chairman Morse Arberry Jr. presided in Room 3137 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Guest List. All exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.
Assembly COMMITTEE MEMBERS PRESENT:
Mr. Morse Arberry Jr., Chairman
Ms. Chris Giunchigliani, Vice Chairwoman
Mr. Walter Andonov
Mrs. Vonne Chowning
Mrs. Dawn Gibbons
Mr. Richard Perkins
Senate COMMITTEE MEMBERS PRESENT:
Senator William J. Raggio, Chairman
Senator Raymond D. Rawson, Vice Chairman
Senator Barbara Cegavske
Senator Bernice Mathews
COMMITTEE MEMBERS ABSENT:
Mr. David Goldwater (excused)
GUEST LEGISLATORS PRESENT:
None
STAFF MEMBERS PRESENT:
Mark Stevens, Assembly Fiscal Analyst
Gary Ghiggeri, Senate Fiscal Analyst
Rick Combs, Deputy Fiscal Analyst
Connie Davis, Committee Secretary
Carol Thomsen, Committee Secretary
UNIVERSITY AND COMMUNITY COLLEGE SYSTEM OF NEVADA
CIP 03-C02 – CAMPUS FIRE FLOW PUMP STATION UPGRADE – TMCC, RENO
Daniel K. O’Brien, P.E., Manager, State Public Works Board (SPWB), called the members’ attention to project C02 for the Truckee Meadows Community College (TMCC). The project included an upgrade of the campus fire flow pump station. The need for the project was discovered during the process of completing project 01-C22, which was the new student development center on the Dandini campus. It came to the attention of the SPWB approximately one year ago that the fire flows in the area that serve TMCC and the Desert Research Institute (DRI) were not adequate to meet the fire department’s fire flow requirements. Mr. O’Brien noted the Board had discussed how they could discover those problems a little earlier, before a project was approved, so that due diligence could be somewhat better. Nevertheless, it had come to the attention of the SPWB that fire flow in the area must be upgraded, and a new pump station must be installed.
Over the last year, the SPWB had been negotiating with the Truckee Meadows Water Authority (TMWA) on the necessary construction to improve the facility. All parties had discussed upgrading the existing facility, but what was really needed was to replace the facility and provide emergency generator power to the facility so that emergency backup could be provided and the fire flows would be available when needed. Mr. O’Brien explained the negotiations with TMWA produced an agreement that was approved by the Board in February 2003 and executed in early April 2003. Originally, TMWA wanted the state to pay for the full amount of the project and the budget that had been submitted to the Legislature reflected that agreement.
Since that time, continued Mr. O’Brien, there have been further negotiations with TMWA and they had agreed to participate in the amount of $202,000. There had also been some modifications to the necessary equipment. The good news was that the project request was reduced from the original $879,000 by approximately $300,000. The SPWB would be providing staff with a new project cost estimate. The agreement stated that TMWA would do the construction at a cost of $474,000, which was based on their construction estimate. A construction contingency of approximately $60,000 would be retained, and the advertising and printing costs would be eliminated because the TMWA would be doing the construction and going out to bid for the project. It would also limit the architectural and engineering design and supervision fees, and the plan check costs. Mr. O’Brien said the adjustments would reduce the project cost by $300,000, and the project management and inspection fees would also be reduced. If any more construction work was to be done at TMCC or DRI at this site, the pump station was a necessity.
Chairman Arberry inquired how many additional square feet could be added to the Dandini campus area before additional fire flow upgrades would be necessary. Mr. O’Brien deferred to Gus Nunez, Deputy Manager, Professional Services, SPWB, for response to the Chairman’s question. Mr. Nunez explained for the build-out at TMCC and DRI, with the knowledge in hand today, the pump station would be adequate. When asked about the definition of “build-out,” Mr. Nunez told the Chairman there was a master plan for development of the area at DRI.
Rick Combs, Deputy Fiscal Analyst, Fiscal Analysis Division, Legislative Counsel Bureau, asked if a pump station upgrade would be a necessity every time a new building was added to the TMCC or DRI campuses, or would this project solve the water flow issue for a period of time into the future. Mr. Nunez responded that the state could spend just under $250,000 and upgrade the existing system; however, as soon as there was any additional development, the same situation would again be faced. This particular project was for a new pump station so every time there was an expansion, a new pump station would not have to be added.
CIP 03-C03 – FURNISHINGS, EQUIPMENT & BUILD-OUT – TMCC HIGH TECH CENTER, RENO
Mr. O’Brien noted this project was for furnishings, equipment, and build-out of the TMCC High Tech Center, located at the Redfield Campus. The request was the University System’s highest priority. Obviously, the building would be completed and the furnishings and equipment would need to be provided. Mr. O’Brien reminded the members this building was re-sited from the Edison Way site to the Redfield Campus, and was a repetitive plan for the High Tech Centers, with some obvious modifications.
The construction documents were 80-85 percent complete and final programming for the classroom areas was the piece remaining to be completed. This project was scheduled to be bid in the summer of 2003 with a scheduled opening for the spring semester of 2004, and the FF&E was necessary to complete this project. Part of those dollars would be spent on some of the final equipment for the facility – casework, podiums, and building signage as outlined in the write-up. Mr. O’Brien remarked the project was a legislative project added in 1999, number C37L, and he requested support from the Subcommittee.
Senator Raggio commented he had been asking about the status of the project and wondered if he would live long enough to see the ground broken. Mr. O’Brien responded he hoped so because the project should go out to bid in August of 2003. Senator Raggio knew there had been delays, that there had been a problem with the architect and so forth. Mr. O’Brien pointed out that the project had been plagued by numerous problems; for example, a reduction in the original funding; the architect died, the firm then went bankrupt, and another architect was hired. There had also been legal issues involved in attempting to retrieve the plans. The problems were resolved and now the project was moving forward. Mr. O’Brien said the current schedule showed the project would be bid in August of 2003; therefore, the project would be started later this summer.
Senator Raggio inquired if this building would be similar to other High Tech Centers. Mr. O’Brien answered affirmatively and said this was a re-siting of an existing layout, with some modifications, as was the case with every one of the High Tech Centers. However, the main structure was the same in all of the centers.
CIP 03-C04 – TELECOMMUNICATIONS, FF&E – CHEYENNE CAMPUS, CCSN, LAS VEGAS
Mr. O’Brien apprised the members the project was to provide the furnishings, fixtures, and equipment (FF&E) for this campus and was another high priority for the University System. The design/build team had been selected, and based upon their proposal, the building would be completed in July of 2004. This project had been approved in the 2001 session, 01-C29L, and Mr. O’Brien said the SPWB had been working very closely with the Community College of Southern Nevada (CCSN) on the design/build process. The contract would be drawn up in the near future and project C04 was the FF&E which would complete the building and allow it to open on time.
Chairman Arberry called attention to the fact the SPWB was using a concept of design/build to ensure the project came in on time and under cost. He asked how the concept was working and if the agency would be able to meet the criteria. Mr. O’Brien explained this was the first design/build process; therefore, developing all the boilerplates for it was much more extensive because it was generating something new. The benefits of design/build were that the project came in on schedule with the least amount of change orders. There would be fewer disagreements between the contactor and subcontractors. This was a case where the designer and the contractor worked together in submitting a proposal and a project, so it was to their advantage to work together. Mr. O’Brien believed this was a good delivery method and had been accepted across the United States and was growing in Nevada. The private sector was using the design/build process frequently and, although it was new for the state, now that the boilerplates had been created, it was expected the state would do more design/build projects. The advantages were that a project could be brought in on a tighter time frame and within budget, which were concerns of the agency. The SPWB projects seemed to drag on and on because there were delays with the designers and the contractors, delays with the owner making decisions, and so forth. With the design/build process, many of those delays would be eliminated.
Chairman Arberry recalled the project was expected to be finished in July 2004, and asked when any savings would be realized – step-by-step as the project was constructed or at the end when the project was completed. Mr. O’Brien said there would be savings as the project moved forward. The design/build team had to come in within the project budget. By law, the board was required to place a 30 percent weighting on the price provided by the design/build teams in determining which team should be awarded the contract. Mr. O’Brien felt there would be real savings in the reduced amount of change orders and that the process would lessen the potential for any delays, as delays were the primary source of problems, followed by cost.
CIP 03-C21 – HEALTH SCIENCES BUILDING – WEST CHARLESTON CAMPUS, CCSN, LAS VEGAS
Mr. O’Brien said this project was the Health Sciences Building at the Community College of Southern Nevada and was a building that had been approved for design in 2001 as number C21L; the project was recommended by the Governor for design through construction, but the 2001 Legislature approved design only. The design of the building was complete and ready to go out to bid after the funding was provided. The building expansion would allow for several specialized programs, mainly nursing programs – nursing assistant, practical nurse, associate degree in nursing, as well as surgical technology. The furnishing of this project needed to be deferred to the next session, but the construction at the project would be moving forward right away. The advance planning was approved in the 2001 session at a cost of a little more than $1.4 million.
Mr. O’Brien referred to the binders that were handed out during the first presentation by the SPWB which contained the recommended Capital Improvement Program. For the Subcommittee’s information, the rendering on the front cover of the binder was of this project.
Senator Rawson addressed the construction costs which appeared to be based on a building containing 84,000 square feet; however, there were notations stating the building was actually 80,000 square feet. He asked what was the actual square footage. Mr. O’Brien responded the building design was 84,000 square feet.
With reference to the furnishings for this building, Senator Rawson remarked it was possible that this building would be finished before the next legislative session convened in 2005. He suggested the possibility of authorizing the furnishings now rather than let a finished building sit unoccupied. Mr. O’Brien said there would be no objections from the SPWB, if it fit within the funding capabilities of the bonding capacity. Originally, the discussion was that the furnishings could be deferred to the next session, and that was why this proposal showed the deferral. Since that time, over a matter of months, Mr. O’Brien said it had been his understanding that there was a desire to finish this building and, without objections, the agency could move forward on FF&E, if funding was available. The completion date had been scheduled for July 2005.
Chairman Raggio pointed out the project cost estimate clearly showed the building was 80,000 square feet, with FF&E based on 80,000 square feet at $47.09 per square foot. Mr. O’Brien acknowledged the discrepancy; the executive summary referred to an 80,000-square-foot building, but actually, the budget/construction costs breakdown was based on 84,000 square feet. Senator Raggio called attention to the FF&E costs which approached $3.7 million, and if everything the Subcommittee reviewed was approved, the result would be more than the available funding. Therefore, there was not the capacity in the budget to add $3.7 million at this time.
Mr. Combs indicated the issue the Subcommittee was most interested in was if it would actually take 24 months to construct this building. Although the project was ready to go out to bid, would the building actually be done in two years. Mr. Nunez mentioned he had received an update this very morning and the schedule called for a plan check in July of this year, which was a three-month process. After the plans were checked, the SPWB could proceed with advertising, which was a five to six-week process. Substantial completion of the building was projected to be in mid-May 2005, with final completion at the beginning of July 2005.
Senator Raggio mentioned another item of concern was that the CIP Subcommittee was often asked to approve projects for which there was representation that they would be built using, in addition to state-provided funding, funds from other sources. In this particular case, the original recommendation was that $5 million would be provided by the Community College of Southern Nevada (CCSN). After the Legislature began considering the project, the college returned and stated they could only commit to raising $1 million. Now it appeared they could only raise $500,000. This was a concern of the Subcommittee because this had occurred more than once. Senator Raggio asked that someone from the system tell the members what had happened to the money for this project. Senator Raggio acknowledged Dr. Ronald Remington, President of CCSN, who said the $500,000 amount stated in the request was a very realistic amount that he believed could be raised from donors to match the state dollars.
Senator Raggio mentioned that when this project was first promoted, there was a great deal of enthusiasm and the Legislature was told $5 million could be raised. Based on that testimony, the state committed to the project. Now, however, the last time the college representatives testified, they said they could raise only $1 million; and now there was more slippage and only $500,000 could be raised. This type of action was very bothersome, and it was not the only project where this had happened. Senator Raggio pointed out he was not accusing Dr. Remington, because he was not present during those occurrences, but it became a difficult situation and Senator Raggio wanted some honesty about the college’s contributions and whether they could raise the other $500,000.
Dr. Remington agreed with Senator Raggio and said the college would find the money. It was a realistic amount and the college believed it could raise the money to match the appropriated state dollars.
Senator Raggio admitted he was pressing the issue because once the project had been approved, and with that kind of commitment, there would be a concerted effort to go out and raise that funding. He asked if there had been an effort originally to raise the $1 million because the need had been apparent two years ago. Dr. Remington said he could not speak to what had happened prior to his arrival at CCSN, however, he believed there had been an effort to raise the money, but it fell short. Since that time, the college had tried to be very realistic in terms of the amount of money donors could provide to help support those projects.
CIP 03-C23 – SCIENCE ENGINEERING AND TECHNOLOGY COMPLEX – UNLV, LAS VEGAS
Mr. O’Brien commented this project was originally approved in the 2001 Legislature for advance planning and development of the infrastructure for $8.8 million, project 01-C15. The State Public Works Board had received approval for the advance planning and since then, they had been moving forward with the selection of design consultants. This was a very extensive building, very complicated, and having a good design team was imperative. The design team had been hired and they had been working with the University System to develop the programming and move forward with the complex. It was anticipated that a notice to proceed for this project would be issued in January of 2005, and it was anticipated there would be a 25-month construction period, with completion in June 2007.
Mr. O’Brien believed this project was another high priority for the University System, number two on their major construction list. The SPWB had been working with the university staff to have a successful completion of the construction project. There had been some desire to utilize construction management services so someone would be on the job site 100 percent of the time to oversee the construction and progress. Mr. O’Brien proposed that this be one of the Board’s pilot projects for the use of contract construction management services. The Board had been working with the university staff to acquire the funds within the existing budget to pay for this management. Significant savings could be realized in the architectural and engineering fees because the architects and engineers would not have to do some of the work that would be assigned to a construction manager. There would also be a reduction in the project management fee because the project manager would not have to be on the job site on a full-time basis. Mr. O’Brien felt the SPWB could stay within the project budget and hire a construction manager.
A bill was under consideration this session that would allow the SPWB to initiate some pilot programs with construction management and Mr. O’Brien wanted to bring this to the attention of the Subcommittee along with the proposal for this project. Because this was such an important and expensive project, there was a need for a strong presence on the site representing the owner, and it was felt that construction management was the best answer. Mr. O’Brien advised the Subcommittee there were representatives in the audience from the University System to address the design process.
Chairman Arberry said one of the biggest concerns was originally the building was planned for a certain size and now the building had been reduced by 40,000 square feet, but the cost had increased. He asked for an explanation of how a building size could be reduced and the cost increased. Mr. O’Brien reiterated that projects had been approved without any advance planning. Budgets and square footage were established based on what someone thought, rather than based on concrete information, and those decisions were made on the best information available at the time. During the 2001 Legislative Session, the Subcommittee had discussed a 230,000-square-foot building. Mr. O’Brien said they must work with the needs of the agency as well as within the budget that was approved. In this case, based on the needs of the agency, the square footage had been reduced to approximately 190,000 square feet. He felt there was no need to build 200,000 square feet if there was no need for it.
The building would be a very expensive building because of the laboratories that would be constructed, but in comparison to other buildings of the same type being built around the country, Mr. O’Brien felt that cost per square foot for the building was reasonable. The SPWB was trying to work with the needs of the university for the building, and also stay within the budget as approved. In reality, once the design was started and the true numbers became apparent, it did not always come together as planned.
Mr. O’Brien introduced Thomas Hagge, Associate Vice President, Facilities Management and Planning, University of Nevada, Las Vegas. Mr. Hagge explained that scoping a project like this was iterative and in the very early phases, thoughts were in terms of a budget and an aggregate cost per square foot. As the project was defined and more detail became available, the cost per square foot was refined and, in this case, the cost per square foot went up as the intensive mechanical systems were determined along with comparable building costs. The starting place was 230,000 square feet, and, at one time, the number went as low as 170,000 square feet. As the project got deeper into programming and more complete estimates were available, the size today was in the 190,000-square-foot range. Mr. Hagge did not believe this represented anything more than the usual process of working through a project, particularly when the concept was started with no detail.
Mr. O’Brien added that the ideal way of doing those projects was to do the advance planning first, especially on large projects such as this one. That way, there was a figure for the final square footage and what the cost estimates were before full construction money was requested. Sometimes what the Subcommittee heard were the best estimates that could be presented at the time based on desire. In some cases, projects had been added into the CIP and the project managers became frustrated because they wondered where that dollar came from because they did not have any input. However, the SPWB was required to work within the needs of the agency as well as the scope of the budget.
Senator Raggio stated he wanted to reaffirm the funding because a bill had been heard earlier in Senate Finance, at the request of the University System, to obtain the authority for $25 million in revenue bonds for this project. Dr. Carol C. Harter, President of the University of Nevada, Las Vegas (UNLV), said the Senator’s comments were correct. Senator Raggio asked if the university was still contemplating that $10 million would be raised otherwise. Dr. Harter responded that $10 million was part of the $25 million, not in addition to it. The university already had $16.5 million toward the $25 million, which was being handled by a committee from the foundation board, and the university was working very hard to raise the additional $8.5 million. If that could not be done with private funds, capital improvement fees on the campus would be redirected in order to meet the $25 million.
Senator Raggio had been under the impression that in addition to the $25 million that would be coming through the revenue bonding process, there would still be the effort to raise $10 million through donations. Dr. Harter pointed out the entire university match was originally $15 million, then it was raised by $10 million to $25 million. It was assumed that the university would bond $25 million and that the sources of revenue for that $25 million would be guaranteed by the university from private funds, from a lease the university had with the Environmental Protection Agency (EPA) that was renting property on the UNLV campus and, if necessary, through some capital improvement fees. However, Dr. Harter assured the Subcommittee it would have $25 million when the necessary time came.
Senator Raggio commented there was still some confusion regarding the funding because originally there had been discussion about $15 million in revenue bonds through the increased lease payments from the EPA and $10 million in donations. Dr. Harter said that was correct and the university was assuming that since UNLV must find the $25 million immediately when the project needs required the funding, the money would be bonded and those various pledges from the EPA and from private sources would become the revenue stream to pay off the $25 million in bonds. Senator Raggio understood the revenue would not be sufficient itself to pay off the increased authority in the revenue bond, and there would have to be other funding. Dr. Harter explained the total UNLV commitment was $25 million, as she understood the agreement. Therefore, the university would have to issue bonds to produce the $25 million. Of that amount, $15 million would be paid through leases the EPA paid on a yearly basis at $1 million per year. The rest of the money, $10 million, hopefully would be paid by private donor pledges. The university had already raised $1.5 million of that $10 million and was working to raise the rest of the money privately. Senator Raggio indicated that had been his question, that the effort was in place to raise the $10 million, to which Dr. Harter absolutely agreed.
Mr. O’Brien called attention to the funding issue and reminded the Subcommittee that the last Legislature put language in the capital improvement bill that all the funding for a project needed to be in place and in the control of the SPWB before going out to bid. A bill was presently before the Legislature that would clarify the priority of spending on a project. Mr. O’Brien was addressing this issue because $25 million was a lot of money, and it would not just be turned over to the SPWB, but it would go into an account and the Treasurer’s Office would put back into that account any interest that had accrued. The agencies had always had a concern they were losing interest when they provided the money up front because it ended up going into the General Fund. The bill Mr. O’Brien referred to, if approved, would allow the interest to go back into the project so those interest monies would not be lost. In a project as large as this, the interest was a significant amount.
Mr. Combs asked how the proposed legislation would address such a scenario in which the project was finished and there was money left in the project account, and how the remaining funds and accrued interest would be distributed at that point. Mr. O’Brien said the bill as proposed would first spend the money that had been authorized for the project. If there were any funds left, that would be General Obligation Bond money and would return to the state. That was the way Mr. O’Brien understood the bill had been proposed. There was a schedule as to which funds would be expended first.
CIP 03-P5.6 – ELECTRICAL & INDUSTRIAL TECHNOLOGY BUILDING – GBC, ELKO
Mr. O’Brien referred to the next project and said this was a planning project for the electrical and industrial technology building at the Great Basin College in Elko. The project was previously requested in the 1999 CIP and also in the 2001 CIP, and was originally requested for the full design and construction, but through the CIP process, was reduced to design only. Mr. O’Brien reiterated this did not create a problem because it gave the agency a better idea on what the budget and the costs would be for the project. This project was number five on the Board of Regents’ CIP priority list, and would go through the design phase and plans would be prepared for the bidding process.
Chairman Arberry called attention to the square footage of the facility and asked how the square footage was determined on this project. Mr. O’Brien responded he was aware of 35,000 square feet, but he did not know how that amount of space had been determined. Carl Diekhans, Vice President of Administrative Services at Great Basin College (GBC), noted that in the original 1999 project, the building was based on 25,000 square feet. When the project was reassessed for the next legislative session, there were two properties rented in downtown Elko and the electronics program and some tutoring space were added. Therefore, the building went from 25,000 square feet in 1999 to 35,000 square feet to house all the additional programs. Mr. Diekhans called attention to Exhibit C which showed the programs that would be housed in the building – Electrical Technology, Instrumentation, Industrial Plant Mechanics, Electronics, Study/Tutor area and Faculty/Staff offices, and a conference area.
CIP 03-U – CAMPUS IMPROVEMENTS – ALL UCCSN CAMPUSES
CIP 03-U/LEG – CAMPUS IMPROVEMENTS – ALL UCCSN CAMPUSES
Mr. O’Brien indicated the University and Community College System of Nevada (UCCSN) had requested system-wide funds of $10 million for campus improvements. Those improvements would consist of maintenance, repair, and minor construction projects, and there were three buildings not assigned to a specific campus, such as the chancellor’s office. Every year, this project was funded and the money distributed to the different campuses by the system.
Chairman Arberry called attention to two issues, the Higher Education Capital Construction (HECC) and the Special Higher Education Capital Construction (SHECC) projects under CIP 03-U and 03-U/Leg, and expressed concern about the cash flow. He asked why the Board was proposing the bonds be distributed to the UCCSN over a three-year period when the statute required that the funds be provided each fiscal year. Evan Dale, Deputy Manager, Administration and Finance, State Public Works Board, explained Chairman Arberry was correct. In the past, the money had been raised over the two years of the biennium, and the cash flow situation needed to be corrected. Mr. Dale added that recently the cash flow had been scheduled out for the next bond issue of the 2001 CIP, and it was believed that would create more flexibility for the 2003 CIP. Obviously, Mr. O’Brien interjected, if the statute required that the funds be provided each fiscal year, the SPWB would take care of the matter.
Senator Raggio expressed concern about the same matter because the funds had been projected out to 2006. Previously, the Subcommittee had been provided with a breakdown as to the intent on each of the campuses. He noted he would like to receive that information as soon as possible because the Board had not provided any breakdown as to how it was anticipated the $15 million would be allocated. Mr. O’Brien agreed to provide that information; the University System had provided a breakdown, which looked at all their needs, and was much more than the $15 million total. He would ask the University to break down the request for those two project funds and provide that information to the Subcommittee.
Dr. Jane Nichols, Chancellor of the UCCSN, was present to testify about the system’s capital projects, and referred the Subcommittee to Exhibit D. In that handout, at page 12, was a general breakdown of the distribution of those funds by campus. Dr. Nichols advised there was also a detailed breakdown available for projects; however, the table on page 12 of Exhibit D gave the Subcommittee a sense of the allocation by campus of the requested funds.
Mr. O’Brien commented that was the end of his discussion on the UCCSN projects and advised that the Chancellor wished to present an overview of the projects.
Dr. Nichols thanked the Chairman and Subcommittee members for the opportunity to discuss the capital needs of the University and Community College System. They had gone through a long and lengthy process within the system to make difficult decisions about needed facilities and brought those needs to the SPWB, through the Governor, and now were testifying before the Subcommittee. Dr. Nichols said she would be remiss if she did not point out that the enrollment growth projections indicated that all seven campuses would be short of space by 2007, particularly at the University of Nevada, Las Vegas (UNLV), the Community College of Southern Nevada (CCSN), and Nevada State College (NSC). The space needs would outgrow the ability of the state to meet the growth in the system.
In light of the growth issue, Dr. Nichols said a great deal of emphasis had been put into space utilization, and major steps had been taken within the system to utilize every single square foot, every day, every hour. This was a necessary step to accommodate the number of students who would be entering into the system. A great deal of emphasis had also been placed upon the distance education programs, which were the fastest growing sector of classes. Dr. Nichols advised these steps were taken knowing that within the state budget, the state bonding capacity, and taxing capacity, the question of acquiring buildings in the state to accommodate the growth was a very large concern.
Dr. Nichols recalled earlier testimony regarding the raising of private funds to support the UCCSN buildings within the state. Last biennium, that percentage was over 50 percent of the cost of the projects approved. Both students and private donors helped support the cost of buildings for higher education. The Executive Budget included a recommended one cent increase in the property tax for bond redemption, and if the decisions made by the SPWB were reviewed, the UCCSN was at the cut-off point to work within the existing bonding capacity. As the Subcommittee considered whether to levy that recommended one cent increase, the increase became critical for the UCCSN in terms of obtaining the second building as recommended by the Governor.
Dr. Nichols explained that the Governor’s recommendation for the UCCSN included funds for the construction of two new buildings this biennium and planning for one building, which was one of the lowest numbers of buildings recommended for the system in a long time. Additionally, the UCCSN percentage share of the CIP was 42 percent, the lowest it had been in the last three sessions. The UCCSN was aware of the difficulty faced by the state because there was insufficient bonding capacity to support new buildings for the various institutions and campuses. Dr. Nichols said they had asked that two cents be set aside to take the level to 17 cents per $100 of assessed value for additional capital improvements, but she indicated she would be remiss if she did not ask again for the additional one cent, as the Subcommittee considered the necessary CIP projects.
Referring to page 2 of Exhibit D, Dr. Nichols said the UCCSN capital improvement request emphasized space for students and classrooms, particularly in Las Vegas, and technology, workforce development, and high tech that would help economic development grow in Nevada. In addition, emphasis was placed on renovation of existing buildings, and each of the campuses faced different issues. For example, the University of Nevada, Reno (UNR), had some tremendous problems relating to space and the renovation necessary for continued use of that space. Also included in the UCCSN request were the system priorities, starting with the first priority – the furnishings, fixtures, and equipment (FF&E) for the Truckee Meadows Community College (TMCC), CCSN, and NSC, plus the addition of the fire flow pump at TMCC.
Dr. Nichols said priority 4, the UNLV student services addition, received planning money last biennium and it was unusual for a project that had received planning money not to be funded. There simply was not enough money for the project to be funded, and this was the third biennium this project had been delayed. There was planning money for the Great Basin College (GBC) electrical and industrial technology building. The irony was that last session there had been a misunderstanding about the type of building, and without the confusion, GBC would have been given planning money last session and the building would be ready for construction this session.
Priority 7 was the campus renovation package for UNR, which was desperately needed. Dr. Nichols pointed out there was $9.1 million in other funding for that project and $10.7 million in state funding. The next three items, under priority 8, were a combination of needed renovations and infrastructure at the various community college campuses. Priority 9 was a critical renovation/addition needed for the Desert Research Institute (DRI), and priority 10 was the CCSN West Charleston campus library addition, at a cost of $2 million.
Dr. Nichols hoped the Subcommittee noticed a theme that those were very modest requests and understanding the situation in the state, the UCCSN kept their requests low, and the lowest overall request was submitted. Although the figure seemed quite large, the requests were kept modest and very conservative. However, the needs of the system were great and they would become greater on the capital side. She added there were some representatives in the audience from the community colleges and other institutions who would like to have an opportunity to briefly address their projects, at the discretion of the Chairman.
Senator Cegavske inquired how many other university properties were close to high schools. She was aware the community colleges were the closest and could accommodate space in the best way. She had been working with President Remington of CCSN, in conjunction with Bonanza High School, to utilize the after‑hours space. Senator Cegavske inquired if that was still a priority to look for high school space that could be used after school hours. Dr. Nichols responded affirmatively and added that each of the institutions had a partnership with high schools and was using space. UNLV, in particular, had utilized space in the schools for teacher education programs, which had been a very productive partnership. Of course, there were also the High Tech Centers, which in many cases were on high school campuses. However, in either case, the partnerships were formed to utilize space.
Dr. Nichols acknowledged the system was perhaps being forced into what might prove to be a very fruitful partnership to utilize high school space in the afternoons and after high school hours. The primary stumbling block was whose classroom was it, and the needs, for example, of teachers in K-12 to have their class ready for the next day. That issue was being addressed very carefully. Regarding the students, they were having to be reeducated on every front. They preferred to come to campuses, but might not be able to; or they preferred to come between Monday through Thursday, but they might not be able to and have to come on weekends. All of those issues arose in trying to acquire more space, including the use of high schools in the afternoon, and convincing the students that a high school was where they had to go for classes and what they had to do for the classes they needed.
The Chairman recognized Dr. Carol Harter, President of UNLV, who said her presentation would be very short. She wished to introduce four people from the community, and explained that for several years they had been envisioning a way to enhance economic development and diversification in the community and a partnership between business partners, agency partners, and the university and its creative faculty and staff. And now, a wonderful science, engineering and technology building had been envisioned and was before the Subcommittee. An enormous amount of enthusiasm had been coming forward from the business community for the project, and several of the community leaders had come today to speak on behalf of the project. She introduced Terry Wright from Nevada Title, who would be the future chairman of the foundation board at UNLV; Donald Snyder, President of Boyd Gaming Corporation, who had been chair of the foundation board for several years and continued to be a member; Jim Rogers, owner and Chief of Sunbelt Communications; and Somer Hollingsworth, the Executive Director of the Nevada Development Authority, who was very enthusiastic about the relationship of the university and the ability to bring and attract new business to the entire state.
Don Snyder, President of Boyd Gaming Corporation, advised he was before the Subcommittee wearing several hats. He said he had the pleasure of being at the Legislature several years ago when the planning grant had been discussed for the science, engineering and technology building at UNLV. His experience and perspective came not only from working with the university, but also from being involved in the local economy, in particular with ideas and projects designed to expand the economy in southern Nevada. He had the pleasure of being the chair‑elect for the Nevada Development Authority and had been a banker for 22 years before becoming involved in the gaming industry. There was nothing more important to be done as a community and as business people, than to expand the economy, economic development, and diversification. That was what drove everyone, in one way or another. The work being done by the Nevada Development Authority had been very successful in bringing the types of jobs that were needed into the community. This particular building was, Mr. Snyder believed, the most important building to be built in the state in terms of what it would do for economic development and diversification.
If other economies and communities around the country were looked at, this was the type of building that created a catalyst for economic development and diversification by creating skilled employees who would then bring the type of businesses into the economy that would help to develop and diversify the revenue stream. Mr. Snyder declared this building could not be more important, and from a fund-raising point of view, extremely high on the priority list. The private money would be raised as there was a commitment to make the building a reality and it was a building that had the magnitude that required the public sector and the private sector to work together, and the private sector was committed to make this happen.
Terry Wright, Chairman of Nevada Title Company, and a former chairman of the Nevada Development Authority, said he had the opportunity to talk to companies about moving or expanding their business operations to southern Nevada. Everyone had read or heard about the comments that if there was any type of tax, businesses would not move to Nevada. Mr. Wright knew, after talking to the owners and chairmen of those companies that were looking to relocate or expand, that taxation was important to them. They did not want to leave a community, go somewhere else and pay more taxes, that was a certainty. At the same time, when speaking to those people after they had chosen where they wanted to relocate to, and it had not been in Nevada, the main reason they could not move to our community was found to be the lack of educational infrastructure. If Nevada was going to make economic development and diversification a reality, as suggested by Mr. Snyder, it was only going to be done if the educational infrastructure was built within the community. People would not move to Nevada just because there was a good tax situation. Businesses needed to know their workforce would be educated, they would not have to hire workers from outside the state to come to work, and the only way they would have that assurance would be knowing that the educational facilities were there for their workforce. That information, reminded Mr. Wright, came from the people who were looking to relocate those companies. That was not Mr. Wright’s opinion, but the opinion of business people when they considered moving to southern Nevada versus other places.
Jim Rogers, owner of Sunbelt Communications, explained he had television stations in eight states and spent approximately 80 percent of his time either in economic development in each of those eight states or raising money for education. In his travels throughout the United States, Mr. Rogers said it had not made any difference what state they came from, the first question asked of Mr. Rogers and his companions about the state they were from was, what was the education system. As Mr. Wright had said, taxes might be important, but they were not as important as the education system in the state. Mr. Rogers added that he spent 80 percent of his time raising money for colleges and universities, and he understood the obligation of the private sector. His family had obligated itself to over $270 million to support the colleges and universities in areas where the television stations were located. Unless the state supported and continued to support this education system, the private sector would not be able to do enough to continue to develop the education system. The private sector certainly would not be able to do enough to bring economic development and continued success to the community.
Mr. Rogers indicated he could not speak too strongly about the necessity for UNLV to enter into the education role across this country. It was essential to increase the reputation of UNLV and increase its ability to attract people. For the private sector to continue to develop the southern Nevada area, it was a necessity to have the college and university. He urged support from the Subcommittee.
Somer Hollingsworth, President of the Nevada Development Authority (NDA), noted he would give some insight as to the clients NDA was trying to recruit into southern Nevada and how this particular project became a cornerstone of the recruitment. Mr. Hollingsworth said he had found that to create the highest quality, highest paying jobs in the area, recruitment would have to be technology-driven. There would either be broad sections of technology in those companies, or they would be producing technologies. In essence, Mr. Hollingsworth said he traveled extensively around the country and spoke to companies in a lot of different areas. Much time had been spent in the area of San Jose, and both southern and northern California, talking to technology companies. In essence, every one of them would tell him that he had been in their area many times and to put his money where his mouth was; and this project was putting his money where his mouth was. What this would say to companies was first, we would show you where you get your future employees, and when you hire those people, we would show you where they would get those advanced degrees that would be required of them. It would also show potential businesses where the research and development and joint ventures would be done on a university level.
In every city visited by NDA where technology thrived, Mr. Hollingsworth stated there was a major university involved. Technology absolutely did not work without education. On a selfish level, he felt this project was a real necessity to go forward with economic diversification and economic development in the southern Nevada area. It was a priority on the NDA list, and he had testified before the Board of Regents and appeared several times before the Legislature regarding this building. It really was the future cornerstone of where the state would go with diversification in southern Nevada.
Chairman Arberry thanked the witnesses for their testimony and asked if anyone else wished to testify. He acknowledged Dr. Ronald K. Remington, President of the Community College of Southern Nevada (CCSN), and Bob Gilbert, Director of Site Planning and Construction Management with CCSN.
Dr. Remington indicated he would like to discuss the importance of the health science building on the West Charleston Campus of CCSN. He believed everyone was aware of the critical shortage of nurses in the state of Nevada. CCSN was committed to recruiting and bringing more students into nursing programs and would do everything possible in the coming months and years to bring students into nursing to accommodate the needs. However, it was necessary to have a place to put those students when they were admitted to the nursing program, and this health science building was critically important. Dr. Remington believed they were producing approximately 330 nurses per year and there was a need for nearly 800 nurses per year. Those nurses needed to be very well educated, and Dr. Remington admitted he was reaching an age where he wanted to have top‑notch nursing care. This was a very important project, he emphasized, and there would be a need to produce more quality nurses in the state, and much of the burden fell on CCSN.
Dr. John Lilley, President of the University of Nevada, Reno (UNR), introduced Dick Bostdorff, President of Tech Alliance, a very important and expanding program in northern Nevada. Dr. Lilley advised the biggest challenge at UNR was the age of the buildings on campus. The university began in 1875 and it was approaching a time when one-third of the buildings would be 45 years old or older. The SPWB had suggested at that point the buildings either be renovated completely or demolished. The planning dollars being sought for the math and science building were necessary because the newest laboratories on campus were approaching 30 years of age. Dr. Lilley implored the Subcommittee to give their support for the planning dollars for the math and science building. Additionally, he requested support for the first package of what was now approaching the need for $100 million of renovation of older buildings.
Dr. Lilley said the appearance of the campus was very nice and had an “old feel” to it, but when one entered some of the buildings, there was a third world character to them. He indicated UNR would very much like to have the Legislature’s help in moving forward with both the planning for a new math and science building and for the first part of the renovation package. The renovation package did have some private fund-raising, and one of his top priorities had been to reinvigorate the fund‑raising mechanism for the university, and Dr. Lilley felt substantial progress had been made with a new vice president. Nevertheless, the university was prepared to do its part in making those improvements at UNR. He asked Mr. Bostdorff to add his comments.
Mr. Bostdorff reiterated he was President of Tech Alliance, and was also a Commissioner on the Commission for Economic Development and a private consultant. He wished to reinforce the comments made by the contingent from Las Vegas as they had taken many of the words out of his mouth. It was extraordinarily important to have a strong university system and a strong university reputation to grow an area. Mr. Bostdorff said he had done a lot of work purchasing research and technology information from areas in the telecommunications industry, which was his background. He researched the last four years of employment growth in Raleigh-Durham, North Carolina, which was one of the premier areas for support communications technology and jobs had grown 5 percent in the area in the last four years. He had also looked at Austin, Texas, where the University of Texas supplied a great deal of information and many employees for telecommunications companies, and they had grown 10 percent in jobs.
In looking at northern Nevada, Mr. Bostdorff said it had grown 3.5 percent over the last four years. It was of concern to him that, besides all the supportive comments by the folks from Las Vegas about the need for education to support economic development, the planning dollars were not in the program for new research facilities. Research would be done as required by business, good professors would be graduated from schools and begin to grow, learn, and create new opportunities for economies. The question was whether to choose to have new facilities in our state, or choose to let them go someplace else. Mr. Bostdorff strongly encouraged the Subcommittee to look at the planning dollars that were missing from this budget. Although the buildings in Las Vegas were important, the renovation at UNR was extraordinarily important because of the age of the campus. He emphasized there was a need to plan for the future because it was a wonderful system where the Legislature only met every two years, but it was also an inhibitor because, as the economy changed, if the planning and research had not been done for growing the university’s reputation and capacity to support business, then the community would be left out and business would go somewhere else. He agreed there were some difficult decisions ahead, and Mr. Bostdorff complimented the members for doing a good job.
Dr. Stephen Wells, President, Desert Research Institute (DRI), Reno, reminded the members that DRI existed in Reno as well as Las Vegas. The construction in Las Vegas was nearly done and they were ready to move into the building, and it would be a very successful opening in terms of expansion of activities. Although DRI was not on the list under discussion by the Subcommittee today, Dr. Wells wished to draw the members’ attention to the fact that space needs in the northern part of the state were tremendous. The institution had grown very successfully, approximately 20 percent overall in terms of employees, and 25 percent in the north that was related to a 33 percent growth in research revenues. The Reno campus was full to capacity and was in desperate need of additional space. The administration was being moved into double-wide trailers to accommodate those employees. Dr. Wells hoped that if there was any opportunity to address that issue with increased bonding capacity, he hoped DRI would be looked upon favorably.
Dr. Wells also thanked the Subcommittee for their consideration in supporting research facilities such as those at UNLV and UNR. It was important to the state and there had been strong support from the community.
Dr. Nichols concluded her remarks by saying she was very aware of the pressure being placed on the Legislature by the University System in terms of the state being the fastest growing in the nation and a community college and university system that was also increasing rapidly. Those pressures were everywhere one turned, but the capital improvement problem would not go away and if there was any way to address this growth more aggressively this session, Dr. Nichols encouraged the Subcommittee to do so.
James Richardson, representing the Nevada Faculty Alliance (NFA), noted he was speaking on behalf of the NFA chapters throughout the state and all the campuses. He said Chancellor Nichols was eloquent in her opening remarks and in her brief closing statement about the need for more buildings. Mr. Richardson stated he would like to go on record, representing the NFA, and urge the Subcommittee to seriously consider the recommendations made today regarding the buildings for the UCCSN. The system was desperately trying to meet the largest enrollment growth in the nation and find classrooms in which to place students. Additionally, the system was trying desperately to stay ahead of Indian gaming and diversify the economy of the state by more economic diversification and research. The NFA had recommended a significant increase in the property tax allocation for handling bonds for the state for capital improvements. The Governor recommended a one‑cent increase, which was absolutely essential and would help fund the vital building at UNLV. Mr. Richardson asked the Subcommittee to look seriously at the issue of adding to that one-cent increase. Another penny would do marvels in terms of the amount of steps that could be taken down the list. The amounts of money involved were relatively small and it was Mr. Richardson’s understanding that another cent would bond a little more than $100 million worth of bonds. A lot could be accomplished with that amount of money for the needs of the system. He reminded the members that the next four projects after the cut-off point used by the SPWB involved badly needed university projects. Some of those projects included significant other funding sources that could be taken advantage of if some seed money could be found. Mr. Richardson thanked the members and urged their support.
Senator Raggio wanted to make everyone aware that the Governor had proposed the extra one-cent increase in property tax. Historically, the state had used 15 cents for its bonding programs, so this increase would amount to 16 cents per $100 of assessed property value, and approval would require a two-thirds vote from the Legislature. In addition, next week the Legislature would have to consider another one-cent increase for state parks, which was the bond proposal that had been on the last election ballot. Senator Raggio reminded the members that a cent here and a cent there could produce a substantial tax increase. However, the 16 cents was required to fund just what had been recommended in The Executive Budget, and another cent was required for the park bond.
Although Exhibit E, the Science, Engineering And Technology Building brochure, and Exhibit F, the CCSN Capital Construction List, were not specifically mentioned during testimony, they have been included for the record.
DEPARTMENT OF MOTOR VEHICLES
CIP 03-M91 – ADDITIONAL FUNDING TO IMPLEMENT 2001 PROJECT 01-M01, RENOVATE HVAC SYSTEM IN EAST WING OF CARSON CITY DMV
Mr. O’Brien said this project was the Heating, Ventilation and Air Conditioning (HVAC) for the Department of Motor Vehicles (DMV) in Carson City. The project was originally authorized in the 2001 CIP as project 01-M01 in the amount of a little more than $1.2 million. Once the design of the project was started, it became apparent that the project was substantially underfunded to meet the needs of the building. Mr. O’Brien indicated he had representatives from the Buildings and Grounds Division to address the needs of the facility.
Mr. O’Brien noted the factors that contributed to this additional funding included having to move people out of the facility. The facility would have to continue to operate, and the construction would have to happen during some normal working hours as well as during off hours. A portion of the project included funding for temporary trailers in order to house staff. It would have been preferable to move everyone around to accomplish the project, but keeping the operation running was the primary consideration. The funding request of $2,124,000 was a combination of the funding from 2001, plus new funding.
Whenever there was a project which dealt with the DMV and their needs, Mr. O’Brien advised, in the future it would be necessary to work with them to ensure the facility would remain operational during construction and that would be a consideration in the original budget.
Chairman Arberry asked why the funding for the trailers had not been established when the project costs were originally developed. The issues of moving staff out of the building and construction taking place during working hours should have been established in the beginning when dialogue took place with the agency. Mr. O’Brien said he did not disagree with the Chairman. He was unsure where the lack of communication occurred, but the SPWB was working very closely with the management at DMV. Dennis Colling, Chief of the Administrative Services Division, had been working with the SPWB and attended many meetings to deal with several issues at the DMV. There was a good rapport with Mr. Colling and the agency. Nevertheless, Mr. O’Brien admitted he did not have a good answer where the problems arose, but it became apparent that this type of construction just could not be accomplished by moving a few people around.
Chairman Arberry inquired if this project was approved, would there be sufficient funding to perform all the work. Mr. O’Brien responded affirmatively. Chairman Arberry also inquired about CIP project M32, the new counter for the East Sahara DMV office in Las Vegas, and asked if there would be enough funding for that project or would trailers or other special needs be required that had not been included in the funding request. Gus Nunez, Deputy Manger, Professional Services, SPWB, responded that when reviewing the project in Las Vegas, there were sufficient funds for the required phasing, for construction, and to keep the DMV operating.
There being no further business before the Subcommittee, Chairman Arberry adjourned the meeting at 9:47 a.m.
RESPECTFULLY SUBMITTED:
Reba Coombs
Transcribing Secretary
APPROVED BY:
Assemblyman Morse Arberry Jr., Chairman
DATE:
Senator William J. Raggio, Chairman
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