OF IDAHO FOUNDATION
UNIVERSITY PLACE FACT SHEET
In order to clarify misconceptions, inaccuracies
and important omissions made in reports concerning
the University of Idaho Foundation’s (UIF)
investment in the University Place Project (UPP),
the UIF is providing this Fact Sheet. If additional
information is needed, please contact the UIF
Office by phone at (208) 885-9100, fax at (208)
885-4999 or email at firstname.lastname@example.org.
Why and how did the UIF plan and
finance the UPP?
• The University of Idaho (UI), as Idaho’s
land grant university, has an obligation under
federal law to provide outreach and extension
programs throughout the state. As an example,
the UI has extension staff and faculty located
in 42 of Idaho’s 44 counties. The UI has
been offering programs in Boise and the Treasure
Valley since 1907.
• In addition to its land-grant obligations,
expanding the academic choices throughout the
state is a direct result of the State Board
of Education (SBOE) specifically defining the
missions of Idaho’s public universities.
The mission statement directs all three Idaho
public universities to offer courses within
their defined mission wherever in Idaho the
need exists, without duplication. Law and agriculture
are just two examples of mission areas where
UI is directed to serve the citizens of the
• In 1998, the Governor and Idaho Legislature
enacted legislation that directs all state agencies
to convert from leasing facilities to owning
them wherever possible. In complying with this
directive, both the UI and ISU began the process
in 1998 of converting their long-term lease
obligations to equity ownership in new Treasure
Valley facilities. The UI has for a long period
of time leased facilities throughout the Treasure
Valley, including leasing a substantial portion
of the MK Plaza in Boise. ISU has also leased
various office and classroom facilities throughout
• As a result of these directives, former
UI President Bob Hoover requested that UIF support
the UI’s plan by facilitating the construction
of such facilities in Boise, following the very
successful model utilized by the UI and the
UIF in the construction and operation of University
Place in Idaho Falls.
• In 1999, the UIF Board of Directors
responded to President Hoover’s request
by agreeing to provide an initial investment
of $1.9 million needed for the development of
the UPP. Over the course of three years, that
initial investment increased to a total authorization
level of $28 million. The UIF Board of Directors
was assured that when bonds were issued, all
funds advanced would be reimbursed to the UIF.
• Given the rapid growth of the greater
Boise area and the increasing demand for higher
education services, the UIF and the UI, as well
as ISU, pursued what by all accounts was an
unprecedented project, unlike any other public
project undertaken in the state. The size and
scope of the project was large; an anticipated
$136 million series of three buildings located
in urban Boise.
• The first and primary building is the
Idaho Water Center (IWC), bonded at $48 million.
The IWC is under construction and scheduled
for completion in August 2004. This precedent-setting
facility brings together, in one building, the
UI’s nationally acclaimed water resource
program with the water research programs of
the U.S. Forest Service and the Idaho Department
of Water Resources. UI programs delivered in
Boise, including agriculture, architecture,
education, engineering, law, and natural resources,
will now also be housed in the single UI Water
• A second building is the ISU Health
Professions Center. This building would allow
ISU to offer in Boise those programs it has
a statewide mission to provide, such as graduate
nursing, pharmacy and other health profession
disciplines. ISU is now pursuing its proposed
Health Sciences Building. A feasibility study
will determine the terms and conditions by which
ISU can construct the Building through the Idaho
State Building Authority (ISBA).
• The third building was to have been
the Learning Center, a building for the UI to
house various programs within the UI’s
mission. UI Interim President Gary Michael concluded
in July of this year that the UI did not have
the financial ability to pay for this building.
• With legislative approval during the
2002 session, the UIF and the UI chose the ISBA
as the entity to finance the project. The ISBA
is an Idaho quasi-governmental entity whose
sole purpose is to finance facilities by issuing
low-interest, tax-exempt bonds. Issuing bonds
provides private funds for the construction
project. The public funds involved in the project
are a portion of the annual lease payments and
other operating costs outlined below. In any
event, annual payments are required from UI,
whether for occupancy and debt service for the
UPP, or - simply as rent for the facilities
UI occupies in Boise.
What is the true fiscal impact of the UPP
on Idaho taxpayers?
• As a matter of law, the bondholders
of the $48 million debt issued by ISBA assume
the risk of repayment in the event of a default.
This is not a taxpayer obligation.
• The operating impact to the university
is related to the cost of leasing and operating
the facilities. In fiscal 2004-2005, these costs
are currently estimated to be $1.6 million.
Additional lease expenses of $1 million will
be incurred in fiscal 2005-2006. Additional
one-time expenses for tenant improvements estimated
at $2.9 million and additional operating expenses
will be incurred as UI programs are phased into
• The costs for the IWC can be met by
a variety of sources, including as examples;
lease income from other tenants in the building,
state appropriations to cover the basic UI space
costs, and grants related to research carried
out in the facility.
• When the bond debt-service is fully
paid at the end of the 40-year period, the UI
will own its classrooms and research laboratories,
which is a stated public policy objective.
What progress has the UIF made in
recouping its investment in the UPP?
• $28 million was expended in developing
the UPP, half of that on IWC. The UIF has developed
a plan to carry the costs of this debt over
the next several years, while at the same time
undertaking an aggressive plan to repay the
loan principal. Interest on all of the debt
• The UIF is working with ISBA to maximize
the return to the Foundation from the $48 million
bonded amount. ISBA has identified approximately
$4 million to $5 million that is potentially
available due to lower than expected construction
costs and contingencies. Of this amount, $1
million has already been reimbursed to UIF.
This $1 million is part of a total $3 million
that has been repaid against principal owed
to the UI.
• The UIF continues to work with ISU
and ISBA to determine the potential for completion
of the Health Professions Center on the UIF-owned
property. Moving ahead on this component of
the project would return to UIF the funds invested
in this start-up.
• The UIF has also taken initial actions
and is currently working with auditors to determine
how to handle potential write-down of some of
this investment. This decision for FY 03 will
be announced at or before the UIF Annual Meeting
• The UIF continues to explore other
options to recover an additional $10 million
to $12 million in funds invested in UPP.
How has the UPP impacted the UIF’s
ability to support the UI?
• The UIF continues to provide strong
financial support to the UI and its students.
This year, the UIF endowments will distribute
more dollars for scholarships than ever in its
history. The UIF continues to manage private
scholarship and other gift funds with exceptional
• Over an 11 year period UIF has seen
remarkable increases in its total assets, as
well as in the amount of revenue earned annually,
and distributions made to UI annually from the
|UIF Total Assets
|UIF Total Revenue
to UI & affiliates
CIT Endowment Income
• During the 14-year period ending June
30, 2003, the UIF has distributed over $117,181,652
million to the UI to fund a variety of programs,
an all-time record.
• An operating budget impact to UI is
reflected in that $1.9 million annually will
not be transferred from the UIF to UI. This
amount will be used by UIF to carry and pay
down the project debt that was acquired to fulfill
• In Idaho Falls, the UIF acquired and
maintains University Place, which it makes available
at little or no cost to ISU, SBOE and UI for
education programs in the region.
• In the near future, the UIF will transfer
the $15 million J.A. Albertson Building---funded
entirely with private gifts--- to the UI.
• Since 1993, the UIF has nearly tripled
its assets. Sound investment management has
accumulated assets in excess of $190 million
at the end of FY 03.
• Despite reports to the contrary, the
UIF will meet all of its obligations to pay
for UI scholarships. Nothing will be lost from
any and all dedicated scholarship monies administered
by the UIF on behalf of UI students.
• The UIF’s investment performance
review as of June 30, 2003 states a total rate
of return for the year at 4.58%, ranking the
UIF among the top third of institutional investors
in the nation. In this very difficult investment
climate, the UIF continues to out-perform the
• As a result of this project, UIF has
undertaken a review of its relationship with
the university and the operating procedures
that support the relationship. Better operational
guidelines are already being put in place.
Will the UPP realize its full potential?
• Not as originally envisioned. The IWC
is under construction and the ISU Health Profession
Center is now under serious consideration. Economic
conditions, resulting in reduced funding, precluded
the UI from moving forward with the third building
• When the UPP was conceived, the stock
market was high, the economy was booming, and
budget surpluses were more common than deficits.
Those deteriorating economic conditions took
their toll, but substantial benefits will still