The NWC Board of Trustees began considering how to provide that $4.9 million local match at its meeting last month.
NWC President Paul Prestwich encouraged the board to provide some of the money from reserves. He noted that, in its original proposal to the Wyoming Community College Commission and the Legislature, Northwest College said it would pay a local match of $1.5 million of the building’s cost. That later was raised to $4.9 million by the new 6-mill local match requirement.
“It’s still important for us to use that amount from our reserves, because we had already planned to do that,” Prestwich said. “I think if we do end up going to the voters for a possible mill levy or a general obligation bond, I think we need to show that we’re willing to put money from our reserves, a sizable chunk, (toward the cost).”
However, Prestwich stressed it’s ultimately a decision for the board.
Sheldon Flom, NWC finance director, outlined different options that could be available to the board to raise and/or pay the local match money.
By holding expenses down, the college could afford payments of as much as $400,000 per year without going to the voters, Flom said.
In addition, the college could impose a $5 student facility fee on all credits taken at the college. That would raise approximately $245,000 per year to help pay for the building, Flom said.
Some options would require voters to approve a bond issue; some would not. Each has its own advantages and disadvantages, Flom said.
Those options are:
• A mill levy on property taxes.
“With a mill levy, we say we need 1.5 mills, and it generates what it generates, whatever that is,” Flom explained. “It’s not a guaranteed amount. If levies go up, we get more money; if they go down, we will have to make that up out of reserves.”
• A general obligation bond.
• A revenue bond, pledging income from the college’s auxiliary funds.
“We say, our auxiliaries generate $300,000 per year, and we’re pledging all that to pay for this bond,” Flom said.
• A lease revenue bond, pledging revenue from all of the college.
“We’re pledging the revenue of all the college to pay off this bond. We would have a bigger revenue base, which brings down the interest rate.”
• A traditional loan.
“A loan is a wild card,” Flom said. “It’s not as secure as a bond.”
Interest rates also will be higher; the longer the loan period, the higher the interest rate, he said.
However, with a loan, you don’t have other expenses that come with a bond, he said.
For instance, a bond reserve fund is required with a bond issue. It is held by a trustee in case of default and to make up interest rates and payments as they fluctuate.
In one short-term scenario, the required fund would be in the neighborhood of $300,000. Interest and other expenses would add another estimated $121,000 and $85,000, respectively, bringing the total cost to about $500,000.
For a 15-year lease revenue bond, interest would be 3.4 percent, totaling about $1.5 million, plus $100,000 in revenue expenses, and the reserve fund would be higher as well, Flom said.
“With a traditional loan, you have a higher interest rate, but you avoid all the bonding expenses.”
For a 13-year term, a traditional loan is estimated to cost about $1.3 million. By making bigger payments for 10 years, that is reduced to $790,000.
Mark Kitchen, NWC vice president for public relations, said the Wyoming Constitution requires the college to go up for a public vote under some of those scenarios.
“In a nutshell, it says that, except for taxes for the given year, a political subdivision cannot incur debt into the future except that which you seek public approval to do,” he said. “The one exception to that is the revenue bond and the lease revenue bond system.”
Kitchen told the board he has contacted the office of U.S. Rep. Cynthia Lummis to inquire whether federal funds are available to help pay the local match money.
Flom noted the college already had been asked by Gov. Matt Mead to determine how it could cut 4 percent from its fiscal year 2014 budget.
“That 4 percent would be about $400,000,” he said.
Since then, the governor has increased that directive to planning for an 8 percent funding cut.
Prestwich said, “It’s not hard to imagine a scenario out there where, if we had to fund this ourselves ... and we took a cut from the state, that the combination of that payment plus a cut could have really significant effects on our budget. We could be in a a situation where we’re having to lay off faculty and staff and significantly cut down on our services ... You start to combine those, and you could be in a really tough situation.”
Board members discussed the possibility of taking the matter to voters for approval of a bond issue.
Trustee Rick LaPlante said it’s important to inform voters completely and honestly.
“The whole West Park thing, ‘We don’t have the money,’ — ‘Oh, look we found the money,’ was a fiasco,” he said.
Prestwich said it also is important that voters know the college must come up with the money somehow to leverage the state funding for the building. There won’t be another chance, he said.
NEW NWC BUILDING DETAILS
As envisioned, the 49,700 square foot Yellowstone Academic/Workforce Training Building would house the Northwest College nursing and criminal justice programs.
The building would allow Northwest to increase enrollment in the NWC Nursing Program, and provide a dedicated space for the Criminal Justice Program’s new firearms simulator.
It also will provide diverse classroom, laboratory and faculty office space for growing career-technical, transfer and workforce training programs.
In addition, the planned facility would include two high-tech classrooms with podcasting capabilities and a 300-seat conference facility with dividable spaces for workforce training programs, conferences, meetings and community events.
Faculty offices now located in the Orendorff Building would relocate to the new building, thereby consolidating student services in the Orendorff Building.
Board President Mark Westerhold of Cody said he expects to call a special work session of the board around the end of May or the first part of June to discuss in detail the plans and potential financing methods for the building.