UH puts building projects on ice

New building projects will be halted across the University of Hawaii system for three years under a moratorium the Board of Regents is imposing to redirect resources toward a repair and maintenance backlog that has swelled to nearly a half-billion dollars.

The construction freeze, approved unanimously at a regents meeting held last week on Maui, takes effect immediately. But it comes with several exemption criteria that regents want to apply to 13 planned projects statewide.

The plan was proposed by regent Benjamin Kudo, who said the university’s repair backlog "is exacerbated when (capital improvement) resource priorities overly emphasize new building projects."

The move could mean that some of the $200 million the university typically requests for new construction annually would be diverted to address long-standing repairs. It also could mean less work for the building industry as construction priorities shift to maintenance projects.

Repair and maintenance needs across the 10-campus system total $487 million, with 84 percent of that on the flagship Manoa campus. Some of the repair needs date from the 1990s.

More than 80 percent of the buildings on the 101-year-old Manoa campus — or 209 buildings — have lingering repair and maintenance needs that will cost $407 million to fix. The figure represents the cost to address deferred maintenance and bring the buildings up to standard, such as painting, roof repairs and electrical and plumbing upgrades.

Meanwhile, large construction projects in recent years have included the $120 million Cancer Research Center that opened this year in Kaka­ako, a $43 million Information Technology Center under construction on the Manoa campus, a $24 million science building completed this year on the UH-Maui College campus and a $14 million innovation facility under construction at Leeward Community College.

"My concern was if we spent too much of our efforts to approve new projects, that it would somehow affect our ability to take care of the back of the house," Kudo said last month when first proposing the idea of a moratorium. "We’ve neglected too long to take care of our physical plant."

The university had requested $214 million for new construction projects as part of its fiscal 2014 budget request to lawmakers. The Legislature approved $96 million of that and just $50 million over the next two years for systemwide deferred maintenance.

With a moratorium in place, the regents have asked university officials to come up with a 10-year schedule to eliminate UH’s repair backlog in three phases: by 33 percent in the first three years; by 66 percent in the following three years; and completely by the 10th year.

A list of projects by phase will need to be approved by the regents. The board plans to re-evaluate the moratorium’s effectiveness after the first three years.

The local carpenters union hopes the moratorium is brief.

"Certainly any project that’s shovel-ready and does not proceed would be a loss," said Ron Taketa, executive secretary-treasurer of the Hawaii Regional Council of Carpenters, which represents 6,200 members.

He added, "We certainly understand the important responsibility for the regents to prioritize spending, but we’re hoping the moratorium is short-lived, not just for the jobs it would produce in the short run, but to allow the university to become a 21st-century institution that the community relies on."

Interim UH President David Lassner said the university supports directing capital improvement funding to eliminate the deferred maintenance and repair backlog.

"Our facilities have degraded over many years of underinvestment. The Board of Regents and administration are committed to repairing and modernizing our facilities to support 21st-century learning and scholarship to benefit our students, faculty and the communities we serve," Lassner said in a statement to the Hono­lulu Star-Advertiser. "We hope to gain the support of the executive and legislative branches for this effort, as the University of Hawaii belongs to all of us."

A list of exemption criteria would allow for an initial 13 projects statewide to proceed during the freeze.

The exemptions cover major projects approved by regents before the moratorium and modernization projects needed to support academic needs. It also covers projects needed to support a program in jeopardy of losing accreditation, such as the $33 million College of Pharmacy at UH-Hilo.

Only two of the exempted projects have funding in hand: Kapiolani Community College’s $38 million Culinary Institute of the Pacific at Diamond Head and a $38.2 million advanced technology training center at Hono­lulu Community College. Neither project has gone out to bid.

Funding for nine of the exempted projects is included in the university’s budget request for the upcoming legislative session, including a $19 million administration building for UH-West Oahu, a $25 million classroom building for UH-Manoa’s College of Education and a $3 million expansion of Manoa’s law library.

The controversial Daniel K. Ino­uye library, to be built on the Manoa campus to house the late senator’s congressional papers, is also exempted. The project generated criticism not only for the speed with which UH was pursuing it, but also for the hefty $27 million price tag. (The board recently approved reducing its request for state bond financing to $5 million following a request by Ino­uye’s family to take more time to get feedback from the public and to obtain more accurate information on the size and cost of the project.)

In all, the 13 exempted projects would cost about $170 million to complete, according to the latest budget figures.

State Rep. Isaac Choy, chairman of the House Committee on Higher Education, called the moratorium a good start but said the university needs to be more proactive.

"I feel that we pay these folks a lot of money to be responsible, not to start to be responsible," Choy (D, Manoa-Moiliili) said. "It comes down to poor management."

He also emphasized that creating exemptions waters down the moratorium’s effect.

"Any projects that are not started yet should not be exempt until UH finishes all of their repair and maintenance," Choy said, "or else the moratorium is not meaningful."

Lassner called the moratorium an integral part of the administration’s proposal to pay for the needed repair and maintenance by selling revenue bonds that would be paid back over time with student tuition revenue.

Under that plan the university would issue about $440 million in revenue bonds over six years to make the needed repairs, but that will require annual debt payments of about $28 million in tuition revenue for the next 30 years.

While some regents expressed concerns about going that route, the board ultimately voted in favor by approving the university’s overall budget request for next year, which includes the revenue bond proposal. UH would need approvals from both the Legislature and the governor to float the revenue bonds.