2017 09 27 FINAL Business and Finance CMT Book

ARIZONA BOARD OF REGENTS
Business and Finance Committee

Northern Arizona University
High Country Conference Center, Humphreys Room
Flagstaff, AZ
Wednesday, September 27, 2017

1:00 p.m. to 2:30 p.m.
Committee Members:
Regent Ron Shoopman, Chair Regent Rick Myers, Vice Chair
Regent Jay Heiler Regent Lyndel Manson
Regent Larry Penley Regent Karrin Taylor Robson
Regent Bill Ridenour (ex-officio) Regent Vianney Careaga
1:00 p.m. CALL TO ORDER, GREETINGS, AND ANNOUNCEMENTS FROM THE

COMMITTEE CHAIR (Humphreys Room)
1:05 p.m. 1. Approval of Minutes
The board office asks the committee to review and approve the minutes from
the March 30, 2017 Tuition Workshop, the regular and executive session of the
June 7, 2017, and the executive sessions of the August 8, 2017 and August
29, Business and Finance Committee meetings.
1:10 p.m. 2. Proposed Update to the Business and Finance Committee Charter, and
Review of Calendar of Work and Areas of Oversight
The board office asks for approval of the proposed update to the Business and
Finance Committee Charter, as well as Review of the Calendar of Work and
Areas of Oversight.
1:15 p.m. 3. FY 2019 State Budget Requests (ABOR, ASU, NAU, UA)
The board is asked to review and approve the universities’ and system office
FY 2018-19 state budget requests for submittal to the Governor and
Legislature by October 1, 2017.
1:40 p.m. 4. FY 2019-2021 Capital Improvement Plans (ASU, NAU, UA)
Arizona State University, Northern Arizona University and the University of

Arizona ask for approval of their FY 2019-2021 Capital Improvement Plans.
5. Sun Devil Stadium Renovation Phase 3 Revised Project Approval (ASU)
Arizona State University asks approval for the Revised Project Approval of
$134.9 million for Phase 3 of the Sun Devil Stadium Renovation project.
6 Extension of Lease Term for ASU California Center (ASU)
Arizona State University (ASU) asks for approval of ASU's extension of the
term of the Leases between ASU and 725 Arizona Avenue (SM), LLC, for
ASU's California Center for an additional five-year term.
.
7. Arizona State Museum Fees (UA)
The University of Arizona asks for adoption of the Arizona State Museum rate
and fee structure, pursuant to ARS § 15-1631, as amended by SB 1418. The
rate and fee structure applies to mandated cultural resource management
services provided by the Arizona State Museum.
2:00 p.m. EXECUTIVE SESSION (Rees Room)
Pursuant to A.R.S. § 38-431.03 (A), the committee will convene in executive

session to discuss items identified on the executive session agenda.
2:20 p.m. RECONVENE IN PUBLIC SESSION (Humphreys Room)
8. Novus Innovation Corridor Master Plan Approval and Reporting

Structure (ASU)
The board office and Arizona State University asks for approval of the Novus
Innovation Corridor master plan and proposed reporting structure.
9. Ground Lease with American Campus Communities for Development

of the UA Honors College Housing (UA)
University of Arizona asks for approval to execute a ground lease and

associated agreements with American Campus Communities (ACC) for the
development of an Honors College Housing Community on the northern
edge of the UA campus.
10. Honors College Community Support and Auxiliary Services

Project and Financing Approval (UA)
The University of Arizona asks for project approval and financing approval of
the Honors College Community Support and Auxiliary Services Project. To
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serve the third-party privatized Honors Residence Hall Community, the UA
will enter into a development agreement with American Campus
Communities to construct a 370-space garage, 322 surface parking spaces,
a 49,700 square foot recreation and campus health center, a 14,600 square
foot dining facility, and 24,500 square feet of office, classroom, academic and
support spaces at cost of $53.3 million. Parking reserves will fund $11.2
million and system revenue bonds will fund the remaining $42.1 million and
issuance costs. The bonds would be repaid over 25 years.
11. Fremont Street Acquisition Approval (UA)
The University of asks for approval to acquire a segment of Fremont Street

from the City of Tucson, in connection with the development of the Honors
College Community.
2:30 p.m. ADJOURN
PLEASE NOTE: This agenda may be amended at any time prior to 24 hours before the committee meeting.
Estimated starting times for the agenda items are indicated; however, discussions may commence, or action may
be taken, before or after the suggested times. Any item on the agenda may be considered at any time out of order
at the discretion of the committee chair. The committee may discuss, consider, or take action regarding any item on
the agenda. During the meeting, the committee may convene in executive session pursuant to A.R.S. § 38-
431.03(A)(3) for legal advice regarding any item on the agenda.
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BUSINESS AND FINANCE COMMITTEE
EXECUTIVE SESSION AGENDA
Wednesday, September 27, 2017
NOTE: This agenda may be amended at any time prior to 24 hours before the Committee
meeting on Wednesday, September 27, 2017. The executive session may be
recessed and continued as necessary.
Statutory Authorization
A.R.S. § 38-431.03 Items to be Discussed
I. ARIZONA STATE UNIVERSITY
(A.3, 4 and 7) A. Phoenix Biomedical Campus Lease Parcel
The committee will convene in executive session for legal advice,

discussion and direction to designated representatives regarding a
leased parcel from the City of Phoenix.
B. Novus Innovation Corridor Master Plan Approval and

Reporting
The Committee will convene in executive session for legal advice,

discussion and direction to designated representatives regarding
the Novus Innovation Corridor.
II. UNIVERSITY OF ARIZONA
(A.3, 4 and 7) A. Honors College
The Committee will convene in executive session for legal advice

and discussion regarding proposed agreements with American
Campus Communities (ACC) for an Honors College development.
PLEASE NOTE: This agenda may be amended at any time prior to 24 hours before the
Committee meeting. Estimated starting times for the agenda items are indicated; however,
discussions may commence before or after the suggested times. Any item on the agenda
may be considered at any time out of order at the discretion of the Committee
Chair. Pursuant to A.R.S. §38-431.03 (A)(3), the Committee may convene in Executive
Session at any time during the meeting to receive legal advice regarding any item on the
agenda.
Business and Finance Committee Meeting
September 27, 2017
Item # 1A
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DRAFT ARIZONA BOARD OF REGENTS

Minutes of the Business and Finance Committee
Tuition Workshop
Thursday, March 30, 2017
A meeting of the Arizona Board of Regents Business and Finance Committee was held on
Thursday, March 30, 2017 at Arizona State University, Student Memorial Union in Tempe, AZ
Present: Regent Rick Myers (Chair) (by phone), Regent Jay Heiler (Vice-Chair), Regent
Vianney Careaga, Regent Jared Gorshe, Regent Lyndel Manson, Regent Greg Patterson,
Regent Larry Penley, Regent Bill Ridenour, Regent Ron Shoopman (by phone).
Also present were President Eileen Klein (ABOR), President Michael Crow (ASU), President
Rita Cheng (NAU), President Ann Weaver Hart (UA), Jennifer Pollock (ABOR), Nancy
Tribbensee (ABOR), John Arnold (ABOR) Gale Tebeau (ABOR), Mark Denke (ABOR), Shelley
McGrath (ABOR), Sue Sosa (ABOR), Morgan Olsen (ASU), Rich Stanley (ASU), Mark Searle
(ASU), Jennifer Hightower (ASU), Gregg Goldman (UA), Melissa Vito (UA), Kathy Whisman
(UA), Gail Burd (UA), Andrew Comrie (UA), Christy Farley (NAU), Bjorn Flugstad (NAU), Jane
Kuhn (NAU).
By Phone: Regent Rick Myers, Regent Ron Shoopman,
Regent Heiler called the meeting to order at 10:05 a.m.
Regent Heiler explained the purpose of the meeting is to review the presidents’ tuition and fees
proposals, and resident housing and meal plan recommendations for the 2017-18 academic
year. A tuition hearing held on March 28, 2017 at various campuses throughout the state
allowed for public comment on the tuition and fee proposals. Twenty-one individuals provided
input and feedback.
President Eileen Klein provided introductory comments pertaining to the purpose of the
workshop, which is to provide more stability, affordability and predictability as well as sufficient
transparency into the process so students and stakeholders can understand the role that tuition
is playing. The board is required by policy to review tuition proposals presented by the
universities. The workshop provides the opportunity for the board to delve into each item and to
provide context regarding enrollment and tuition costs for non-resident and resident students.
Studying tuition trends will allow the board to examine affordability and review net price students
will pay. In recent years, the presidents have provided more detail of the distribution of tuition
proceeds, so the workshop not only provides information needed to determine tuition and fees
but also the operational budgets the board will decide on. This aligns with the strategic plans for
each of the universities and is part of the continuous business cycle.
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Item # 1A
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BASE TUITION AND MANDATORY FEES, DIFFERENTIAL TUITION, PROGRAM FEES,

CLASS FEES, AND OTHER FEES, AND RESIDENCE HOUSING AND MEALS PLANS FOR
THE 2017-2018 ACADEMIC YEAR (ITEM 1)
OVERVIEW
PowerPoint slides 2-9
John Arnold provided an overview including PowerPoint slides of tuition policy objectives, and
tuition setting inputs, definitions and median family income. The presidents will review their
student consultation process as part of their presentations today. The tuition setting process
includes a culmination of several reports and presentations that come to the board throughout
the year. One of the measures you will see today is the cost of attendance as a percentage
compared to our peers. We rank relatively high as compared to other measures, because the
median family income is lower in Arizona than the national average.
Mr. Arnold provided clarification for Regent Myers regarding slide 8. The total cost of attendance
includes mandatory fees only, not class fees that vary. Regent Myers suggested that we add
class fees to the oversight of the Audit Committee agenda to ensure that they are used
specifically for the classes in which they are charged. President Hart stated that that
information would be easy to provide, being that there are fully audited expenditure reports that
depicts class fee usage.
Regent Heiler requested information regarding trends of out-of-state and in-state attendance
relating to slide eight. Mr. Arnold stated that that information is not included but can be provided
at a later date. President Crow commented that the data provided is an overall view while there
are many layers of data and information not included, such as information regarding transfer
students. President Crow stated that all three of Arizona’s universities function on net tuition and
net cost of attendance figures in which all three are very competitive. While other states are
increasing tuition rates, Arizona’s universities are in a modest position relative to net tuition with
other states.
NAU
Mr. Arnold provided an overview, including a PowerPoint slide of the tuition philosophy for
Northern Arizona University (NAU).
BASE TUITION AND MANDATORY FEES (A)

Gale Tebeau provided an overview, including a PowerPoint presentation of the base tuition and
mandatory fees for Northern Arizona University.
NAU’s proposed tuition rates for 2017-18 maintain the Pledge guaranteed tuition program,
resulting in no tuition increase for the majority of continuing undergraduate students at the
Flagstaff campus. NAU recommends new tuition rates 3.0 percent higher for all graduate
students and undergraduate resident and nonresident students at the Flagstaff campus and
statewide. For students on the Pledge program, this equates to an increase over the four years
of less than 1.0 percent per year.
For resident undergraduate students attending the Yuma campus, NAU proposes a 5.0 percent
increase. This proposed increase brings the Yuma campus tuition to the same level as the
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statewide rate. For the Yavapai campus, NAU proposes an increase of 8.6 percent for both
resident and nonresident students. NAU-Yavapai is a year-round campus offering bachelor’s
degree programs that allow students to complete the program in three years.
No increases in NAU’s mandatory fees are proposed.
President Klein and Ms. Tebeau (slide 15) clarified that the regents required set aside amounts
are outlined in board policy and are need-based only, while additional tuition and fees set-aside
for financial aid by NAU are both need and merit -based.
Regent Penley asked for details (slide 16) on the expenditures of the research initiative
investment proposal of $2.25 million and the recruiting and retaining faculty and staff proposal of
$2.5 million. President Cheng stated that the lack of tenure or tenure track for instructional staff
has raised issues concerning the long-term scholarly ranking of departments. We are meeting
instructional needs of students and looking for efficiencies in our curriculum to re-invest in
tenure track faculty. The research initiative investment are a combination of expenditures for
remodeling space to accommodate growth and making some strategic hires for growing
programs. Teaching and research laboratory space is a priority as well, some of which will be
through remodeling, addressing the Governor’s proposal.
President Cheng answered Regent Ridenour’s question of how NAU came to the 2.8% increase
for in-state student enrollment by stating that NAU is monitoring open house attendance,
deposits in housing, orientation session attendance, and conversations with students and
parents.
Referring to slides 20 and 21, Regent Manson requested the method used to determine peer
institutions. Ms. Tebeau stated that in 2008-2009 a consultant was hired to determine what
institutions were considered Arizona’s peer institutions based on multiple criteria, including
budget, student mix, programming mix, and population.
Regent Patterson referred to slide 23 reflecting that NAU is providing degrees at a lower cost
than its peer institutions. Comparing community college costs to NAU, their costs would appear
much higher, not because cost structure is higher but their degree production is so much less.
Regent Heiler commented on the difference between the efficient cost of degrees from NAU and
the sizable gap of those universities who are charging almost $80,000 and $100,000 per
degree.
Regent Gorshe questioned and President Cheng commented on slide 24, regarding the FY
2016 the Free Application for Federal Student Aid (FAFSA) filers. The $24,090 includes tuition,
fees, travel, books, room and board, it is all inclusive.
Regent Penley commented on the fact that eight of 10 students are receiving financial aid,
which indicates the commitment of NAU to providing financial aid and affordability for students.
Regent Patterson commented on slide 27, which clarifies the true number of students (which is
about half) and average amount of debt at graduation.
DIFFERENTIAL TUITION/PROGRAM FEES/CLASS FEES (B)

Mark Denke provided an overview, including a PowerPoint presentation of differential tuition,

program and class fees for Northern Arizona University.
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NAU’s proposal includes one program fee increase for the undergraduate Honors College, and
the elimination of one program fee for the Geographic Information System (GIS) Certification
program. NAU’s proposes no changes to any of their class fees.
Regent Manson requested that in the future, that the differential program fees reports include
the date the fee was established along with the date(s) of the last increase or adjustments. Mr.
Denke stated that the information is included in the materials on page 77 of 150, but was not
included on the slide.
HOUSING AND MEAL PLANS (C)

Mr. Denke provided an overview, including a PowerPoint presentation of the housing and meal
plans for Northern Arizona University.
For housing and meal plans, NAU proposes to increase student housing by an average of 5.9%
(about $306 per year) and meal plans by an average of 8.9 percent (between $334 and $406
per year). Meal plan rates are guaranteed for two years, so for current participants, there will be
no increases for 2017-18.
Regent Heiler asked President Cheng to comment on slide 40 and the analysis that supports
on-campus housing cost increases and competitiveness of surrounding housing opportunities.
President Cheng stated that an in depth analysis has been done of other universities and the
Flagstaff market and with the proposed rate increase; NAU is very cost effective in the housing
market. President Cheng deferred to Jane Kuhn, who reported on the university’s research,
analysis and comparison of public housing near Northern Arizona University. The analysis
included comparing rates of apartment complexes within a three-mile radius and housing rates
on the ASU and UA campuses. The average rate of nearby off campus housing was $1,200
more per academic year than campus housing. This includes future remodels or new
construction of housing on campus and a high demand to live on campus.
President Cheng
President Cheng presented the process involved in establishing Northern Arizona University’s
tuition proposals. Student enrollment and retention projections weigh heavily in the process and
NAU students have been involved in the process to ensure their priorities are included in budget
recommendations. The funding model set by the Board of Regents benefits NAU particularly
because a high proportion of the student population is from Arizona. Research investments are
built into the budget to reach 2025 research metrics. Infrastructure needs are a priority and
there is still a high need for additional lab, classroom, and building maintenance. Partnerships
with Sodexo and American Campus Communities have helped to provide better facilities for
essential housing and meal needs. Program and workforce reductions were enacted, including
closing 12 extended campuses and reorganizing the operations for a more effective model.
Information Technology was enhanced for greater access and reachability for online and remote
student education.
The tuition proposal for the 2017-18 school year includes adaptive workforce needs through
Science, Technology, Engineering and Mathematics (STEM) and healthcare professions. The
Pledge Guaranteed Tuition program remains part of NAU tuition practice with 98% of students
at the Flagstaff campus maintaining their current tuition rate. New freshmen will be charged 3%
more than the previous year. A 3% increase in tuition is proposed for statewide sites to ensure
quality services. Yavapai and Yuma campus tuition are being aligned with other NAU statewide
sites but remain lower than the Flagstaff campus tuition rates. Online costs have been
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simplified and modernized and now reflect one base price (undergraduate and graduate
courses) for all credit hours. Total tuition and fee levels for resident students will increase
between $220 and $472.
The tuition proposal includes the elimination of more than 200 course fees with 41 more course
fees planned for future elimination. Goals include helping students with awareness of what fees
cover and gain student insight on fee costs in the future.
Projected impact from increased enrollment estimates plus state investment posed by Governor
Ducey, the per student funding model for next year will be flat. The total per student funding is
more than $2,000 below the FY 2008 full time equivalent (FTE) total. Northern Arizona
University continues to be dedicated to providing a quality education and using resources
efficiently.
President Cheng explained to Regent Manson that the elimination of course fees would not
negatively affect future budgeting or need to be recouped later because the course fees were
related to technology upgrades that each department was trying to accomplish individually.
With the upgrade and standardization of technology the fees were eliminated.
In response to Regent Ridenour inquiry concerning progress of looking at outside sources,

philanthropy and private public partnerships, President Cheng stated that NAU has just closed
their first ever capital campaign and exceeded their target and beginning second campaign this
summer. We are also continuing to collaborate with American Campus Communities and
Sodexo.
UA
Mr. Arnold provided an overview, including a PowerPoint slide of the tuition philosophy for the
University of Arizona (UA).

Ms. Tebeau provided an overview, including a PowerPoint presentation of the base tuition and
mandatory fees for the University of Arizona.
UA proposes a 1.0 percent tuition increase for all new and continuing students, undergraduate,
graduate, resident and nonresident students. This will be UA’s fourth year of their Tuition
Guarantee Program on the main campus (third year at UA South) with tuition and mandatory fee
rates guaranteed for four years, so the majority of UA’s continuing undergraduate students will
see no increases.
UA proposes increases in their mandatory fees totaling $350. These increases only apply to
new incoming students beginning Fall 2017, and students not on the Tuition Guarantee
Program. Mandatory fees are included in UA’s Tuition Guarantee, so continuing students will
not be affected by the rate changes.
Library Tech Fee increase of $55 to support the library portion of the Bear Down Student
Success District, additional technology tools and software, upgrades to the wireless network,
and ongoing operations and programmatic services. This fee, established in 2006-07 was last
increased in 2013-14.
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Student Services fee increase of $70 to support Bear Down Student Success District as well as
ongoing programmatic services and strategic initiatives. This fee was first established in 2008-
09 as a two-year phase-in, and has not increased since 2009-10.
Health and Recreation Fee increase of $125 to support the health and recreation portions of the
Bear Down Student Success District and the Honors Village as well as ongoing operations and
programmatic services. This fee was first established in 2010-11 as a two-year phase-in, and
has not increased since 2011-12.
Athletics fee of $100 is a newly proposed fee to support facilities and ongoing operations and
programmatic services for Athletics. Graduate students will be charged half ($50), but will have
a choice of opting out.
Regent Heiler requested a chart showing the per student state support for peer universities to
compare peer state investment. Ms.Tebeau responded that that information is available.
Referencing charts depicting the sticker price for under graduate tuition and fees, President
Crow suggested the board office provide charts that reflect the net price of tuition, what people
actually pay, which reflects the true cost of tuition as well as the financial aid each university
works so diligently to provide.
Mr. Arnold offered to provide the requested information at the next board meeting.
Referring to slide 59, President Hart explained that the information provided is an average of
tuition paid for students based on tradition that assumes all students and their way of life are the
same, but students’ cost of attendance varies greatly based on room and board, on and off of
campus. To lump all students into an average does not represent true accurate data.
DIFFERENTIALTUITION/PROGRAM FEES/CLASS FEES (B)

Mr. Denke provided an overview, including a PowerPoint presentation of differential tuition,

program and class fees for the University of Arizona.
The UA proposal also includes differential tuition, program fees and class fee increases. For
undergraduate students, the UA requests two new differential tuitions in the College of
Engineering-Architecture, and one new program fee in the College of Agriculture and Life
Sciences-Animal Biomedical Industries. For graduate students, the UA proposes two new
program fees: one for the College of Medicine-Genetic Counseling Graduate Program, and the
other for the College of Public Health-Health Certificate Program. In addition, the UA proposes
increases in three existing program fees in the College of Nursing and the College of Pharmacy.
The UA also proposes to increase three existing class fees and to add one new class fee for
graduate students in the College of Sciences for Chemistry and Biochemistry course.

plans for the University of Arizona.
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For housing, the UA proposes to increase undergraduate student housing by an average of

2.7% (about $190 per year). The UA does not provide meal plans at its residence halls, but
give students options of purchasing a meal plan through the Student Union, which then provides
for discounts at the various eateries throughout campus including the student union.
President Hart
Predictability and small changes help students prepare for fiscal responsibility. The tuition
proposal for the University of Arizona are the product of extensive research, study and input
from student leadership, university leadership and the financial advisory committee. Alternative
models were reviewed to accomplish goals with regard to affordable tuition, faculty pay, and
graduate support as well as capital improvements and growth. UA is in its fourth year of the
Tuition Guarantee Program.
The key area of focus for the University of Arizona is to expand predictability of costs and
financial aid for students so they can create a plan with their families to see them to graduation.
President Hart gave the following examples of ways the University of Arizona has saved money
to keep tuition as low as possible:
 Renegotiated and refinanced debt saving over $18 million in FY 2016

 Renegotiated utility contracts saving $5.3 million since FY 2013
 Savings on projects, such as to the timing of buying commodities for a savings of $10.3
million since FY 2014
 Resources Center Management gives faculty and staff authority and accountability for
their programs and expenses
Regent Ridenour asked for a report on philanthropic resources being pursued by UA, and if the
Athletic Fee of $100 was enough; does it cover the needs of the department? President Hart
reported on a fundraising campaign that resulted in $1.5 billion raised to build endowments.
Additionally, for the next four years, $5 million per year will be redirected from the Foundation’s
general fund to the development of future endowments to provide financial stability for the future
of the university. President Hart explained the reasoning behind the Athletic Fee, highlighting
that the fee is not attached to a specific project but instituted to support the development of
athletics department, which will benefit the university as a whole. In response to Regent Heiler,
President Hart stated that the fee covers the cost of admission for many UA sports events.
Regent Penley asked if the fee will have an effect on debt capacity. Mr. Goldman stated that
based on the 8% statute, UA is at about 5.1%. The fee will bring in revenue that will raise the
8% ratio limit, but will still be well within that band. The fee is anticipated to bring in about $3.5
million a year, giving UA the ability to bond about $75 million.
Regent Penley pointed out that the mandatory fees added up to about a 40% increase
(approximatively $370 per student) and asked where the funds would be applied. Melissa Vito
explained that for almost a decade, student services and health and recreation services have
been funded by student fees due, to cuts in state support. This is the first time the fees have
been increased to further programs in counseling, debt services on upcoming projects and
general higher operational costs, supporting the Student Success District, as well as continued
think tanks and retention programs. President Hart added that the student advisory committees
meet to determine where the monies from the fees are spent.
Regent Penley commented there is evidence supporting that recreational facilities actually
increase retention and graduation rates, as well as mental health issues act as a detriment.
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Having facilities and services available on campus for the student experience actually helps in
addressing these issues.
Andrew Comrie explained the $55 increase in the Library Fee will be used to enhance the
library portion of the Student Success recreation facility and a large portion will be used to
update the Wi-Fi network on campus.
ASU
Mr. Arnold provided an overview, including a PowerPoint slide of the tuition philosophy for
Arizona State University (ASU).

Ms. Tebeau provided an overview, including a PowerPoint presentation of the base tuition and
mandatory fees for Arizona State University.
ASU proposes a tuition increase of $150 for resident undergraduates and $160 for resident
graduates, both about 1.5%. The increase for nonresident undergraduates and graduates is
$900 and $990, respectively, both about 3.5%. For international undergraduates the tuition rate
will increase $1,240 and for graduates $1,350, or a 4.5% increase. ASU proposes to maintain
its resident tuition surcharge at its current level of $270 per semester. The surcharge is
conditional based on the amount of state support ASU receives. There are no mandatory fee
increases.
DIFFERENTIAL TUITION/PROGRAM FEES/CLASS FEES (B)

Mr. Denke provided an overview, including a PowerPoint presentation of differential tuition,

program fees and class fees for Arizona State University.
ASU’s proposal includes new and increases in graduate program fees. ASU requests four new
program fees in the areas of Health Solutions-Post Baccalaureate Certificate in Communication
Sciences and Disorders, and MS Biomechanics; Teachers College-MEd Educational
Leadership; and Business-MS Management (Online). ASU requests an increase to 11 of their
existing program fees within the College of Business, College of Liberal Arts and Sciences,
Nursing and Health Innovation, Engineering, and New College.
In addition, ASU’s proposal includes seven new class fees: six in the Engineering/AMT Flight
Operations and Safety courses and one in W.P. Carey Business School for the Immersive
Entrepreneurial Experience.
The majority of new fees are connected with the Flight Operations and Safety program, which
President Crow stated is associated with the training of jet pilots who graduate as certified jet
pilots; this is a very expensive program.
Regent Manson inquired about how the fees for the Flight Operations and Safety program are
paid currently. Provost Mark Searle stated that in the past, the students paid a third party
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provider for flight training. Recent Veterans Administration changes require ASU to collect the
funds from the students and pay the flight training provider.

plans for Arizona State University.
For housing and meal plans, ASU proposes to increase residence halls and required meal plans
by an average of 3.5 percent each, for an average annual increase of $207 for residence halls
and $150 for meal plans. Revenues generated from increases are for renovation and making
repairs on deferred maintenance projects, improve Americans Disability Act (ADA) accessibility,
building integrity and functionality. New life safety and energy conservation plans, increased
utility costs, and minimum wage and operating cost increases will also be covered by these
revenue dollars.
President Crow
President Crow presented an overview, including a PowerPoint presentation of the logic,

rational, structure and theory behind the way Arizona State University thinks about tuition.
Arizona State University strives to find as many resources to make the institution successful
while becoming more efficient with current resources, admitting as many eligible students as
possible and graduating all of them.
President Crow reviewed the Arizona resident graduation rates and past problems with students
who attended ASU and did not graduate, or had negative experiences. He discussed gross
revenue sources and projections to 2025. President Crow presented a graph (slide 9) showing
ASU’s FY 2016 full-time resident undergraduate student’s net tuition paid after gift aid and other
tuition benefits. The overall average was under $2,000. The graph shows the amount of tuition
paid based on income and financial need. Additionally the enrollment of students whose families
are low income has increased more than three times since 2002 and middle class student
enrollment has doubled since 2002.
Regent Heiler commented on slide 9, that it shows that the average tuition paid by an in-state
resident undergraduate student after gift aid is about $1,800. President Crow stated that the net
amount is after any Pell or grant aid, including private scholarships, veterans and employee
benefits. Basically it is any aid you have that keeps you from writing the check, other than a
loan. Regent Heiler commented that this ties directly into your increasingly prominent
description of ASU as being a national service university.
In response to Regent Patterson inquiry of the history leading up to the temporary surcharge,
Rich Stanley stated that in FY 2015-16, ASU’s state funding was reduced by $53 million. The
cut in state support reversed the previous two years of parity and performance funding growth.
In response, base tuition was not increased but a temporary $320 surcharge was established to
recuperate $12.8 million, or one-quarter of the $53 million reduction. ASU recognized the
reduction of state appropriations necessary, and not wishing to put the whole burden of the
reduction on students the surcharge was established. In FY 2016-17, the ASU reduced the
surcharge to $270 with plans to eliminate the surcharge when state funds are restored, which
has not yet occurred. President Crow stated that the $209 million cut in state funding to ASU
and its students, starting in 2009 was the largest cut to a public university in American history.
President Crow stated that the surcharge will be eliminated when 50% of the $53 million is
restored.
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Regent Manson asked for clarification regarding online enrollment and online pricing. Mr.
Stanley stated that ASU has a single online cost for all students, resident and non-resident. The
policy was made that online prices would remain within the market value and at or below
resident cost. Online is charged on a per-credit hour basis rather than a flat rate and many of
the mandatory fees are not accessed for online students. The proposed FY 2017-18 per hour
credit rate will increase by 2%.
Regent Manson asked about the 4.5% or $1,200 increase for international students and if the
increase would cause any barriers for these students. President Crow is confident international
students will pay more for their education at Arizona State University because services to them
are expanding and they are reaping more benefits through the experience of an ASU education.
Mr. Stanley explained that ASU has been well under market price for international student
education and the 4.5% is more competitive with the market price. Additionally, ASU employees
are in in other parts of the globe like India, meeting with students to not only assist with
educational decisions but to dispel the rhetoric that spreads around the globe regarding the
United States. Jennifer Hightower described some of the services ASU provides for international
students including assisting in international internships, career services, and post-graduation
global employment opportunities.
Regent Penley requested President Crow’s input on what the board needs to do in the future to
help model where we need to go both, in the total number of students in Arizona, as well as the
budget and resources necessary to get there. President Crow suggested looking at other
universities and states to be able to create a model that will work for Arizona, and to greatly
enhance the ability for residents of Arizona, in particular students who did not finish college, to
access our online education program. Finally, a goal that would improve the college going rate
of Arizona high school students and citizens.
President Crow concluded his presentation by assuring the board that the tuition proposals are
bottom-line necessary. Many requests by faculty and departments are represented, in these
proposals.
President Klein extended her gratitude to the university presidents, their teams, the students
who have helped with the tuition proposals for their presentations to board leadership. President
Klein revisited slide 3, Tuition Policy Objectives and based on changes in systems since 2011,
our operating reality has changed as well. The Governor requested that we view the state as
one of many investors in the financial model of our universities, that enrollment rates are
growing significantly, an increasing financial need for our students and continued demand for
qualified students coming out of the K-12 system for all institutions. It is important to look at all
these factors and understand if we are asking the correct questions to find solutions and make
decisions. President Klein commented that many other states are abandoning all structures
around tuition and no longer differentiating between resident and non-resident. Challenges
consist of moving class fees to differential tuition and class fees with a uniform methodology and
in thinking more broadly about how tuition is charged and being competitive. The responsibility
of the board is to continue forward thinking. President Klein offered to work with university
presidents and their teams to consider the analysis provided, and the policy the board sets in
this area and reviewing the entire pricing strategy. The board needs the insight of the presidents
and their teams to provide analysis needed as a governing board. This topic will be open to
discussion in April and June board meetings.
Chairman Patterson voiced approval of the process regarding board analysis and presentation
of the universities proposals and the opportunity for the presidents to discuss their proposals
and answer questions as needed.
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Regent Heiler directed his closing comments to the parents and students stating that the
university enterprise is very student centric. The process of setting tuition is done with a great
deal of care and attention given to the actual value proposition for the student. It is about
advancing great institutions and the delivery of a formal education that will take students to the
next level of life-long learning in their careers. The education provided, though not free, is of
great value and the board continually rededicates itself to ensuring the state universities are
providing the greatest possible value in education. Regent Heiler advised students; the cost of
attending college, in this day and age is a function of two capacities, the capacity to excel and
the capacity to pay. The greatest way to drive down the cost of an education is to work hard as
a student before you get to the university to receive merit driven aid, then work hard and be
smart in choosing your course to save additionally. As for access for all, there is a great deal of
analysis and effort to make higher education accessible to people regardless of income, taking
all the steps to qualify for financial aid. For the State of Arizona, this higher education system is
the best design for the time. The enterprise will continue to reward students that excel and
provide accessibility for those who cannot afford it.
ADJOURNMENT
The meeting adjourned at 2:40 p.m.
Submitted by:
_________________________
Sue Sosa
Committee Secretary
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DRAFT - ARIZONA BOARD OF REGENTS

Wednesday, June 7, 2017
The Arizona Board of Regents Business and Finance Committee held a meeting on
Wednesday, June 7, 2017 at Northern Arizona University, High Country Conference Center in
Flagstaff, AZ.
Committee Members Present: Regent Jay Heiler (Vice-Chair), Regent Jared Gorshe, Regent
Greg Patterson, Regent Larry Penley, Regent Bill Ridenour, Regent Ron Shoopman.
Absent: Regent Rick Myers (Chair)
Also present were: Regent Ram Krishna, Regent Vianney Careaga, Regent Lyndel Manson,
President Eileen Klein (ABOR), President Michael Crow (ASU), President Rita Cheng (NAU),
President Robert Robbins (UA), Nancy Tribbensee (ABOR) John Arnold (ABOR), Lorenzo
Martinez (ABOR), Gale Tebeau (ABOR), Morgan Olsen (ASU), Gregg Goldman (UA), Melissa
Vito (UA) Bjorn Flugstad (NAU), Daniel Okoli (NAU)
Regent Heiler called the meeting to order at 2:45 p.m. in the Rees Room.
Regent Heiler provided introductory remarks regarding the meeting. He stated that the meeting
would begin with an executive session. Agenda items 5, 11 and 15 will be heard in executive
session, and due to time constraints, there will not be any discussion on items 8, 9, 10 and 13 at
this meeting, but these items will be discussed at the full board meeting tomorrow. Executive
Session will reconvene at the close of the public session.
APPROVAL OF MINUTES (ITEM 1)
Upon motion by Regent Heiler and seconded by Regent Patterson, the committee unanimously
approved the minutes from the regular and executive sessions of the March 30, 2017 and April
5, 2017, Business and Finance Committee meetings. Motion passed.
Upon motion by Regent Heiler and seconded by Regent Patterson, the meeting was convened
into Executive Session at 2:50 p.m. Motion passed.
Public Session reconvened in the Humphreys Room at 3:50 p.m.
FY 2018 ANNUAL BUDGETS FOR ARIZONA STATE UNIVERSITY, UNIVERSITY OF

ARIZONA, NORTHERN ARIZONA UNIVERSITY AND THE BOARD’S SYSTEM OFFICE
(ASU, NAU, UA, ABOR) (ITEM 2)
Gale Tebeau provided an overview of the budgets, followed by each university providing more
detail of their proposed annual budgets. Included in the universities’’ materials is a budget
overview and other information, which helps provide context to the universities proposal.
Included is general institutional information, enrollment assumptions, discussion of significant
revenue sources, financial strategies and major initiatives planned.
Also, included is a dashboard of each university’s key performance and financial data. The
report included five-year trends of university net position, days cash-on-hand, education and
general expenses (E&G) per full-time equivalency student (FTE), net revenues as a percentage
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of total revenues, revenues verses expenditures and state appropriations as a percent of the
combination of tuition and fees revenues plus general funds (the core revenues for operating
budgets).
In summary, total FY18 revenues for the universities are projected at $5.2 billion, an increase of
about $200 million or about 4 percent over the FY17 budget, with a comparable increase in
expenditures. Each university has indicated a balanced budget in FY18, i.e., current
expenditures do not exceed current revenues. The combination of tuition and fee revenues and
the state general fund appropriations make up the largest share of the operating budget at
about 56 percent, and largely make up the universities general-purpose funds.
Each university has provided a schedule on how they intend to allocate these general-purpose
funds. The allocations support each of the university’s strategic goals and objections, as
outlined in their Operational and Financial Reviews (OFR). Financial Aid and expenses related
to enrollment growth make up the largest portions of the increases in general purpose funds.
The FY18 gross tuition and fee revenue projections are $2.9 billion. An increase of about $137
million (5%) over FY17 budget. This is within one half of one percent of the estimates provided
in April. State general funds continue to be flat with virtually no increases in state operating
funds over prior year. In addition, with increases to the health insurance trust fund premium that
was unknown until after state budgets were approved, the universities may be hit with an
additional $22 million dollar expense.
Included in the universities budgets are revenues from Proposition 123. Proposition 123
increased the State Treasurers payout of state trust land income from 2.5% to 6.9%. This is
expected to generate for the universities an additional $60 million over the lifetime of the
proposition. The universities state trust lands are restricted for the purposes outlined in state
statue, but the board has some flexibility with the university land fund called eminent scholars
matching funds. These funds are used to match the interest earnings on permanent
endowments created for the sole purpose of attracting and retaining esteemed faculty. In the
event that matching funds exceed interest earnings, the board has the authority to repurpose
the excess. Therefore, for FY18 the universities request to use a portion of the increase for
general-purpose funds. Since we anticipate this to be an on-going request, the system office will
bring forward at the next meeting a proposed policy revision that will allow the universities to
use these funds for general purpose until Proposition 123 expires in 2025, as long as there is
sufficient funds to continue to match interest earnings on their eminent scholars endowments.
In response to Regent Mason’s question regarding the use of the eminent scholar funds being
used primarily for the recruitment of eminent scholars, instead of monies from the general fund.
Ms. Tebeau stated that the guidelines for eminent scholars are specific, in that these funds are
not to supplant, but rather supplement current funding.
Bjorn Flugstad presented a detailed overview of Northern Arizona University’s FY18 annual
budget including a PowerPoint presentation for committee review.
In response to Regent Penley’s question regarding the rationale behind the projected $200 per
student increase. Mr. Flugstad stated that NAU needs to look at what revenues are coming in
that allow them to make investments across the campus to ensure student success. In addition,
the increase reflects the investment in the research mission to attract faculty.
In response to Regent Penley’s question regarding continuous decline of net revenues as a

percentage of total revenues from a high of 86% in FY14 to a projected of 82% in FY18, Mr.
Flugstad responded that it is reflective of the investments in financial aid, and the significant
amount strategically invested to insure NAU meets its needs, and continues attracting students.
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In response to Regent Ridenour’s question regarding the distribution of the $14 million in
financial aid, Mr. Flugstad responded that there are three components
 Regents Set-Aside (formula-driven, need based financial aid) – Approximately $2 million
 Arizona Financial Aid Trust – Approximately $1.3 million
 Institutional merit based financial aid – Approximately $10.7 million
Morgan Olsen presented a detailed overview of Arizona State University’s FY18 annual budget
including a PowerPoint presentation for committee review.
Gregg Goldman presented a detailed overview of the University of Arizona’s FY18 annual
budget including a PowerPoint presentation for committee review.
In response to Regent Patterson request to clarify the health insurance trust fund adjustment
and how it affects the universities, Mr. Arnold stated that Arizona State University, the University
of Arizona and the ABOR office are required to participate in the state’s employee health
insurance program. NAU participation is optional, although there are a handful of NAU
employees that do participate. Two years ago, the ABOR office in conjunction with the
Department of Administration conducted a study with a third party actuary. The study
determined that the state systematically overcharges the universities approximately $30 million
per year, compared to university employee costs. The study showed that if the universities were
to separate from the state employee health insurance program, ASU and UA would save about
$30 million a year, with most of that savings accrued to UA.
In response to Regent Heiler’s question concerning the overcharging and how it was being
measured, Mr. Arnold responded that the rates the state charges generates about $30 million
more than the cost of employee claims. It was possible to disaggregate and total the charges
against the premiums paid for university and ABOR employee claims. The calculations were
based on the pattern of five years’ worth of data. Since 2012, the state has swept around $270
million out of the trust fund. Therefore, the state as a self-insured body, earned a profit on the
employee health plan and swept that money into the general fund. Including $79 million just this
year. In January, the Governor announced that the trust fund was about $60 million
underfunded. To solve the problem, the legislature allowed the Department of Administration to
raise the premium on the employer for one year. The increase will begin on July 1, 2017 and is
expected to raise about $75 million. The Department of Administration determined that the
dollars that flow into the health insurance trust fund, about one-third of those dollars are general
fund, one-third are other appropriated dollars and one-third are non-appropriated dollars.
The legislature appropriated $25 million of the general fund to cover the one-third of the general
fund costs. The universities’ budget is about 20% general fund and so the legislature provided a
corresponding $4.5 million. The total impact from that premium increase is $27 million. The $22
million (plus) shortfall will have to be made up with other funds, which are largely tuition and
auxiliary dollars, which will be split between ASU and UA at about $11 million each. The Arizona
Department of Administration has assured the universities that there is no relation between the
premium they are charging and the actual costs. They are just trying to raise as much money
as possible with the $25 million general fund appropriation.
In response to Regent Patterson question concerning if there are any policy options or
interpretations, and that it seemed people were caught off guard, Mr. Arnold stated that he has
spoken with Office of Strategic Planning and Budget (OSPB) and they assured him that this was
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contemplated in the negotiations and it is the correct implementation of what was passed. Mr.
Arnold also spoke with other legislators who said that they were not fully aware of what this
President Klein commented that historically, sweeps began when the state experienced a down
turn. Every fund that had available dollars, including the Health Insurance Trust Fund (HITF)
was swept of balances. The legislature continues to sweep funds in an effort to keep a balanced
budget. The difference is that when Arizona went into the recession the general fund supported
the majority of university educational operations. Today, tuition dollars pay for the majority. It is
no longer just circulating general fund dollars through the Health Insurance Trust Fund out to
agencies and the universities and then recapturing them. Now, when the state sweeps funds,
they are taking tuition and other revenues. This is why the ABOR office has been requesting, for
several years to stop the practice of sweeping funds, and to separate the universities from the
state, knowing they could procure health insurance at a much cheaper rate. Pres. Klein stated
she has brought this to the attention of the legislature for several years and made explicit
appeals for separation from the health insurance fund, with the support of this board. The
providers of the insurance through the fund have blocked the effort for fear that one of the
current providers may not be the winning bidder of choice. President Klein committed to
continue to press this issue in the next legislative session.
Regent Heiler commented that the universities need to pull together a plan for an affirmative
statement of exactly how the system would do this, while making a compelling case for savings,
not just for the universities, but also for the taxpayers and enhanced health outcomes for
covered personnel.
In response to Regent Penley’s question of UA, concerning the $7.1 million decline in
scholarship allowance in the projected budget from FY17 to FY18, Mr. Goldman stated that last
year, the UA made a one-time $10 million allocation towards financial aid to attract and retain
students. The difference of the $7.1 million is the net effect of the use of the allocation.
Regent Penley asked a question concerning the market base salaries for UA graduate students
and the plan to provide an increment in pay. Regent Penley added that they have heard from
graduate students at the UA about their compensation levels, and will they be included in the
merit base increase planned for FY18. Mr. Goldman responded that they will be included with
roughly a two-percent market-based increase expected.
John Arnold presented a detailed overview of the Arizona Board of Regents office FY18 annual
budget for committee review. The FY18 budget for the board office is equal to 0.11% of the total
system revenues. The projected FY18 includes a small increase of $14,000; additionally the
state is increasing health insurance premiums by 12.6 percent adding $52,700 to the board
budget. President Klein commented on several highlights, including slight changes in board
office staffing to match the enterprise model and transparency of budgeting by showing by
program area within the office where expenditures are.
Upon motion by Regent Heiler and seconded by Regent Gorshe, the committee recommended
forwarding for board approval the FY18 Annual Budgets for ASU, NAU, UA and the ABOR
office, as presented in the executive summary. Motion passed.
FY 2018 CAPITAL DEVELOPMENT PLANS (ASU, NAU, UA) (ITEM 3)
Mr. Olsen presented an overview of Arizona State University’s FY 2018 Capital Development
Plan (CDP). The CDP adds four renovation projects and one new construction project totaling
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$200 million. The debt service associated with the CDP will increase the overall debt ratio by
0.58%.
Daniel Okoli presented an overview of Northern Arizona University’s CDP. NAU’s CDP includes
the Recital Hall Renovation and Expansion project totaling $15 million. The debt service
associated with the CDP will increase the overall debt ratio by 0.14%.
Mr. Goldman presented an overview of the University of Arizona’s CDP, which includes five new
projects and two previously approved projects totaling $386.5 million. The two previously
approved projects are currently on hold. The debt service associated with the CDP will increase
the overall debt ratio by 014% excluding SPEED projects, and 0.15% including SPEED projects.
Upon motion by Regent Heiler and seconded by Regent Penley, the committee recommended
forwarding for board approval, the FY 2018 Capital Development Plans for ASU, NAU and UA,
as presented in the executive summary. Motion passed.
RECITAL HALL EXPANSION AND RENOVATION PROJECT AND FINANCING APPROVAL

(NAU) (ITEM 4)
Mr. Okoli presented an overview of the Northern Arizona University’s proposal of the Recital
Hall expansion and renovation project, totaling $15 million, which will be partially financed by
issuing system revenue bonds.
Upon motion by Regent Heiler and seconded by Regent Shoopman, the committee
recommended forwarding for board approval, NAU’s request for expansion and renovation of
Recital Hall, including the requested financing, as presented in the executive summary. Motion
passed.
LAND EXCHANGES WITH THE CITY OF FLAGSTAFF INCLUDING WAIVER OF POLICY

REQUIRING APPRAISALS (NAU) (ITEM 5)
Mr. Okoli presented an overview of Northern Arizona University’s request for land transfers of
four city parcels, totaling 61,162 square feet between the City of Flagstaff and Northern Arizona
University.
Upon motion by Regent Heiler and seconded by Regent Penley, the committee recommended
forwarding for board approval, NAU’s request for the land exchanges between the City of
Flagstaff and NAU including a waiver of board policy requiring appraisals, as presented in the
executive summary. Motion passed.
GREEK LEADERSHIP VILLAGE COMMUNITY CENTER PROJECT APPROVAL (ASU)

(ITEM 6)
Mr. Olsen presented an overview of Arizona State University’s request for project approval of
the $14 million, 30,000 square foot, stand-alone Community Center component of the Greek
Leadership Village project developed with American Campus Communities.
In response to Regent Heiler’s question concerning the housing complex being subscribed, Mr.
Olsen stated that 26 of the 27 housing communities have been subscribed within the Greek
Leadership Village.
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September 27, 2017
Item #1B
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recommended forwarding for board approval, ASU’s request for project approval of the stand-
alone Community Center component of the Greek Leadership Village project, as presented in
the executive summary. Motion passed.
INFRASTRUCTURE, CLASSROOM AND LABORATORY RENOVATION PROJECTS

FINANCING APPROVAL (ASU) (ITEM 7)
Mr. Olsen presented an overview of Arizona State University’s request to issue $35 million in
system revenue bonds, plus any issuance related costs to finance $10 million in building and
infrastructure modifications and enhancements, $10 million in classroom and academic
renovations, and $15 million in research laboratory/faculty startup projects.
Upon motion by Regent Heiler and seconded by Regent Gorshe, the committee recommended
forwarding for board approval, ASU’s request to issue system revenue bonds for infrastructure,
classroom and laboratory renovations, as presented in the executive summary. Motion passed.
ACKNOWLEDGEMENT AND APPROVAL FOR ASU ENERGY CENTER, LLC COMPONENT

UNIT TO ISSUE REFUNDING BONDS (ASU) (ITEM 8)
No discussion. This item will be reviewed at the board meeting
ACKNOWLEDGEMENT AND APPROVAL FOR SUN DEVIL ENERGY CENTER, LLC

COMPONENT UNIT TO ISSUE REVENUE AND REFUNDING BONDS (ASU) (ITEM 9)
No discussion. This item will be reviewed at the board meeting tomorrow.
SKY SONG 1 LEASE AMENDMENT (ASU) (ITEM 10)
No discussion. This item will be reviewed at the board meeting
PROPERTY ACQUISITION OF SOUTHWEST CORNER OF RURAL ROAD AND UNIVERITY

DRIVE (ASU) (ITEM 11)
Mr. Olsen presented an overview of Arizona State University’s request to purchase a 50,087
square foot site located on the southwest corner of Rural Road and University Drive in Tempe.
The purchase price for this property is $2,750,000, plus customary transaction costs.
Upon motion by Regent Heiler and seconded by Regent Ridenour, the committee
recommended forwarding for board approval, ASU’s request to purchase property on the
southwest corner of Rural Road and University Drive in Tempe, AZ, as presented in the
executive summary. Motion passed.
BUILDING 90 DEFERRED MAINTENANCE PROJECT AND FINANCING APPROVAL (UA)

(ITEM 12)
Mr. Goldman presented an overview of the University of Arizona’s request for project approval
and financing of $18 million for deferred maintenance project of Building 90, which is 59,914
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September 27, 2017
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square feet. The university seeks approval to sell system revenue bonds to finance the project,
costs of issuance, and payments to a bond insurer or other credit enhancer, if used. Debt
service will be paid over 25 years with half paid from the newly approved state supported
university financing program and half paid from university matching funds.
Upon motion by Regent Heiler and seconded by Regent Gorshe , the committee recommended
forwarding for board approval, UA’s request for project approval of the building 90 deferred
maintenance project, as presented in the executive summary. Motion passed.
LAND EXCHANGE WITH PIMA COUNTY FLOOD CONTROL DISTRICT (UA) (ITEM 13)
No discussion. This item will be reviewed at the board meeting.
LAND SALE TO SIERRITA GAS PIPELINE (UA) (ITEM 14)
Mr. Goldman presented an overview of the University of Arizona’s request to sell 11.5 acres,
along with easements, to Sierrita Gas Pipeline, LLC for a compressor station to serve an
existing natural gas pipeline. The property was appraised for $43,000 and the UA negotiated a
sales price of $110,000.
recommended forwarding for board approval, UA’s request to sell 11.5 acres to Sierrita Gas
Pipeline, LLC for a compressor station, as presented in the executive summary. Motion passed.
PROPERTY ACQUISTION AND FINANCING APPROVAL FOR FIVE PARCELS NORTH OF

PHOENIX BIOMEDICAL CAMPUS (UA) (ITEM 15)
Mr. Goldman presented an overview of the University of Arizona’s request to purchase five
separate parcels comprising 67,476 square feet, for a total of $8.775 million, and approval to
issue system revenue bonds to finance the acquisitions and associated issuance and
transaction costs.
Upon motion by Regent Heiler and seconded by Regent Ridenour the committee recommended
forwarding for board approval UA’s request to purchase the five parcels including approval to
issue system revenue bonds to finance the acquisitions, as presented in the executive
summary. In addition, UA’s use of the properties must be consistent with the intent of the
Phoenix Bio Medical Campus, and that president Robbins work with the other university
presidents on the best use of the land to expand and develop the Phoenix Bio Medical Campus.
Motion passed.
Upon motion by Regent Myers and seconded by Regent Heiler, the meeting reconvened into
Executive Session in the Rees Room at 5:35 p.m. Motion passed.
Executive session concluded at 5:53 p.m.
ADJOURNMENT
The meeting concluded at 5:55 p.m.
Submitted by:
_________________________
Sue Sosa
Committee Secretary
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DRAFT ARIZONA BOARD OF REGENTS

Tuesday, August 8, 2017
The Arizona Board of Regents Business and Finance Committee held a meeting on Tuesday,
August 8, 2017 at Arizona Board of Regents office, 2020 N Central Avenue, Phoenix, AZ.
Committee Members Present: Regent Jay Heiler, Regent Lyndel Manson (phone), Regent Bill
Ridenour, Regent Karrin Taylor Robson, Regent Vianney Careaga
Absent: Regent Ron Shoopman (Chair) Regent Rick Myers (Vice-Chair), Regent Larry Penley,
Also present were: President Eileen Klein (ABOR), Nancy Tribbensee (ABOR), Jennie Pollock
(ABOR), John Arnold (ABOR), Lorenzo Martinez, Greg Hamm (consultant New City
Enterprises), Joann Elkin (New City Enterprises) (phone)
Regent Ridenour called the meeting to order at 1:35 p.m.
Upon motion by Regent Heiler and seconded by Regent Penley, the meeting convened into
Executive Session at 1:40 p.m. Motion passed.
Meeting adjourned at 3:15 p.m.
Submitted by:
_________________________
Sue Sosa
Sue Sosa, Committee Secretary
September 27, 2017
Item #1D
Page 1 of 1
DRAFT / ARIZONA BOARD OF REGENTS

Tuesday, August 29, 2017
The Arizona Board of Regents Business and Finance Committee held a meeting on Tuesday,
August 29, 2017 at Arizona State University, Decision Theater, 21 E 6th Street, Tempe, AZ.
Committee Members Present: Regent Jay Heiler, Regent Lyndel Manson, Regent Larry Penley,
Regent Bill Ridenour, Regent Karrin Taylor Robson, Regent Vianney Careaga
Absent: Regent Ron Shoopman (Chair) Regent Rick Myers (Vice-Chair)
Also present were: President Eileen Klein (ABOR), President Michael Crow (ASU), Regent
Aundrea DeGravina, Nancy Tribbensee (ABOR), Jennie Pollock (ABOR), John Arnold (ABOR),
Lorenzo Martinez (ABOR), Chad Sampson (ASU), Morgan Olsen (ASU), John Creer (ASU),
Joanne Wamsley (ASU), Jose Cardenas (ASU), Christine Wilkinson (ASU), Lisa Loo (ASU),
Rudy Bellavia (ASU), M. Randall Levin (ASU Foundation), Maureen Anders (ASU), Jody
Pokorski ( Snell and Wilmer), Manjula Vaz (Gammage and Burnham), Sue Sosa (ABOR).
Regent Ridenour called the meeting to order at 12:30 p.m.
Upon motion by Regent Heiler and seconded by Regent Penley, the meeting convened into
Executive Session at 12:35 p.m. Motion passed.
Meeting adjourned at 4:50 p.m.
Submitted by:
____ _____________________
Sue Sosa
Sue Sosa, Committee Secretary

September 27, 2017
Item #2
EXECUTIVE SUMMARY Page 1 of 6
Item Name: Proposed Update to the Business and Finance Committee Charter, and
Review of Calendar of Work and Areas of Oversight
Action Item
Committee Recommendation to Full Board
First Read of Proposed Policy Change
Information or Discussion Item
Issue: The board office asks for approval of the proposed update to the Business
and Finance Committee Charter, as well as Review of the Calendar of Work
and Areas of Oversight.
Enterprise Strategic Plan
Empower Student Success and Learning

Advance Educational Attainment within Arizona
Create New Knowledge
Impact Arizona
Compliance
Real property purchase/sale/lease
Other: Board and committee governance
Statutory/Policy Requirements
 A.R.S. § 15-1626 General administrative powers and duties of board
Background and Discussion
 As part of the board’s continued efforts to advance its governance structure and better
organize itself to maximize its impact and decision-making abilities, the board is asked to
update and refine the Business and Finance Committee charter. Under the updated
charter, the Business and Finance Committee will assist the Board of Regents in fulfilling
the board’s oversight, monitoring, reporting and enterprise planning responsibilities
relating to university:
1. Budgets and finances;

2. Tuition, fees and other revenues;
3. Capital planning, projects and debt;
4. Real estate leases, acquisitions, sales, and development; and
5. Information technology planning and projects.
Contact Information:
John Arnold 602-229-2507 john.arnold@azregents.edu
Lorenzo Martinez 602-229-2525 lorenzo.martinez@azregents.edu
September 27, 2017
Item #2
 The Business and Finance Committee will be a standing committee of the board
consisting of members of the board appointed by the board chair. The committee shall
meet at least twice a year (more often as needed) and be supported by the board office
the board office Vice President for Business, Management and Financial Affairs working
together with each university chief financial officer and other key university leadership as
appropriate.
 In addition to updating the committee charter, annual calendars of work along with more
detailed lists of areas of oversight have been developed for each ABOR committee. All
three documents (charter, calendar of work and areas of oversight) align together to cover
each committee’s purpose, scope and work in an effort to identify the strategic and
material issues to address throughout the year.
 The proposed revised charter is attached, as well as the committee’s calendar of work
and areas of oversight are attached.
Requested Action
The board office asks the committee forward to the full board for approval of the updated
Business and Finance Committee Charter, and Review of Calendar of Work and Areas of
Oversight, as presented in this Executive Summary.
September 27, 2017
Item #2
BUSINESS AND FINANCE COMMITTEE

Of the Arizona Board of Regents
Charter
A. Purpose
To assist the Board of Regents in fulfilling the board’s oversight, monitoring, reporting
and enterprise planning responsibilities, and in evaluating and recommending changes
to policies, practices and procedures relating to university:
1. Budgets and finances;

2. Tuition, fees and other revenues;
3. Capital planning, projects and debt;
4. Real estate leases, acquisitions, sales, and development; and
5. Information technology planning and projects.
B. Organization
The Business and Finance Committee is a standing committee of the board consisting
of members of the board appointed by the board chair. The board chair will designate
one member of the committee to chair the committee.
C. Meetings
The Business and Finance Committee shall meet at least twice a year and more often
as needed.
D. Key Leadership Support
The committee will be supported by the board office Vice President for Business,
Management and Financial Affairs working together with each university chief financial
officer and other key university leadership as appropriate.
September 27, 2017
Item #2

Of the Arizona Board of Regents
Calendar of Work
September

1. Review Committee Charter and Charge
2. Review Committee Annual Calendar of Work
3. Budget Request
4. Capital Improvement Plans
5. NAU Capital Development Plan/Debt Review
6. Novus Annual Report
7. Other Items

November

1. Semester Financial Update
2. UA Capital Development Plan/Debt Review
3. Other Items

February
1. Comprehensive Annual Financial Statement Review
2. ASU Capital Development Plan/Debt Review
3. Financial Aid Plan
4. Other Items

March
1. Tuition Workshop

April
1. Semester Update
2. Large Project Updates
3. Other Items

June

1. Budget Approvals
2. Other Items

September 27, 2017
Item #2

Areas of Oversight
2018 Initial Board

Area Comments
Meeting Date
1. Budgets and finances
1.1.Annual Budget Approval June

1.1.1 Revenue and expenditure plan
analysis
1.2 Semester Update November/April

1.2.1 Compare revenue vs budgeted
1.2.2
1.3 CAFR Review February

1.3.1 Net assets
1.3.2 Days cash on hand
2. Tuition, fees and other revenues March
2.1 Enrollment projections
2.2 Tuition and Fee history/trends/newly

proposed
2.3 Revenue and expenditure plan analysis
3. Capital planning, projects and debt
3.1 Capital Improvement Plans September

3.1.1 Year 1 project list
3.1.2 Building renewal calculation
3.1.3 Deferred maintenance estimates
3.1.4 Debt ratio impact
3.2 Capital Development Plans Sept/Nov/Feb

3.2.1 Prior year project status review
3.2.2 Updated project list
3.2.3 Debt review
3.2.3.1 Beginning debt and debt ratio
3.2.3.2 Credit rating review
3.2.3.3 Retired and planned new debt
3.2.3.4 Ending debt and debt ratio
3.2.3.5 Debt capacity
September 27, 2017
Item #2
4. Real estate leases, acquisitions, sales November

and development
4.1 Novus Annual Report September
4.2 Large Project Updates April
4.3 Transaction review/approval as necessary Monthly
5. Information Technology Planning As necessary

September 27, 2017
AMENDED - Item #3
Item Name: FY 2019 State Budget Request
Action Item
Issue: The committee is asked to review and recommend forwarding to the full board
the universities and board office FY 2018-19 state budget requests for
submittal to the Governor and Legislature by October 1, 2017.
Enterprise or University Strategic Plan

Impact Arizona
Compliance
Other:
A.R.S. §35-114—Submission of Budget Estimates

A.R.S. §15-1626—General Administrative Powers and Duties of the Board
A.R.S. §15-1642—Arizona Financial Aid Trust
A.R.S. §15-1742—WICHE
ABOR Policy 3-401—Legislative Budget Request
Background
 The Enterprise Executive Committee comprised of the university presidents and

ABOR president, developed the FY 2019 proposed budget for the board’s
consideration as required by board policy.
Contact: John Arnold, ABOR (602) 229-2507 john.arnold@azregents.edu

September 27, 2017
AMENDED - Item #3
 The Enterprise Executive Committee’s recommendations for the 2019 state

budget requests were presented to the Business and Finance committee at its
September 27, 2017 meeting. The committee recommended forwarding this item
to the full board for approval.
 Beginning in FY 2017, the board adopted a new model by which to request state
appropriations in support of public universities. The new model was developed by
the Enterprise Executive Committee in response to Governor Ducey’s request of
the board to develop a “sustainable-enterprise financial model that counts on the
state as one of many investors.”
 The model identifies the state’s investment interest as providing university

access for Arizona residents. Therefore, state investments are defined in terms
of per resident student support.
 Historically universities relied heavily on state investments and prior to the

recession, the state funded approximately 75 percent of a resident student’s cost
of education.
Discussion
 Currently the state funds approximately 34 percent of the cost of education.
Recognizing that state finances will not permit a return to the 75 percent funding
level in the near future, and the universities have some ability to subsidize
resident students with other revenue streams, the universities have requested
the state fund 50 percent of a resident student’s cost of education. That
calculation is shown below:
Average education cost: $15,550

50 percent of costs: $ 7,775
Current state funding level: $ 5,239
Shortfall: $ 2,536
 In order to achieve the 50 percent funding goal at current FTE counts, the state
would need to increase state appropriations by $252,192,800.
Recommendation
 For FY 2019, the proposed resident student budget request sets 2022 as the
year in which the state will reach the 50 percent funding goal.
September 27, 2017
AMENDED - Item #3
 To accomplish that, the EEC recommends phasing in the required funds over
four years. The amount requested for FY 2019 in new state appropriations is
$63.1 million system wide.
Resident Funding Model Four-Year Phase In
FY 2019 FY 2020 FY 2021 FY 2022 Total

Request Request Request Request
ASU $33,636,900 $33,636,900 $33,636,900 $33,636,900 $134,547,600
NAU $12,710,500 $12,710,500 $12,710,500 $12,710,500 $50,842,000
UA $16,700,800 $16,700,800 $16,700,800 $16,700,800 $66,803,200
Total $63,048,200 $63,048,200 $63,048,200 $63,048,200 $252,192,800
 The state must also recognize not just existing resident students but new
resident students so as not to lose ground on its progress towards the 50 percent
goal. This is consistent with other major state funding formulas that support
services and programs for individuals, such as K-12, AHCCCS and DES, which
increase base appropriations each year to accommodate new qualified
individuals.
 Funding caseload growth will align the resident student funding model with these
other state funding models, and allow the state to fund individuals rather than
institutions. For budgeting purposes, the model defines growth as fall 2017
resident student counts over fall 2016.
 This year, the system is projected to add 2,678 new resident student FTE.
Growth Funding
University Growth Value

ASU 1,512 $7,921,400
NAU 513 $2,688,100
UA 653 $3,421,067
Total 2,678 $14,030,567
September 27, 2017
AMENDED - Item #3
 The full FY 2019 operating request is:
University Request
ASU $41,558,300
NAU $15,398,600
UA $20,121,867
Total $77,078,767
 The FY 2018 state appropriation includes $13 million in one-time funds that will
not be part of the FY 2019 baseline budget. The continuation of these dollars
would be counted as part of the above funding request.
FY 2018 Supplemental Request
 During FY 2018, the state increased health care premiums on employers due to
a shortfall in the state’s Health Insurance Trust Fund. The cost of this increase to
the universities is estimated at $26.8 million. The state only provided $4.7 million
to offset this cost, leaving a net negative impact of $22.1 million. Requesting
these dollars will provide the universities an opportunity for a broader discussion
on university participation in HITF.
University Request
ASU $10,793,500
NAU $183,500
UA $11,126,300
Total $22,103,300
Statutory Formulas
 In addition to the Arizona Board of Regents budget request, the budget request
will report the results of two statutory funding formulas.
 Building Renewal: A.R.S. §41-793.01 requires the JLBC to establish a building

renewal funding formula for the state building systems, including the ABOR
building system. That formula is based on age, replacement value and expected
useful building life. For FY 2019, the formula calculation equates to $148.4
million.
 Arizona Financial Aid Trust: A.R.S. §15-1642 established the AFAT fund
consisting of student fees and state appropriated funds. This trust fund is used
September 27, 2017
AMENDED - Item #3
to: (1) provide aid to students with verifiable financial needs, including students
who are underrepresented in the population of the university; (2) assist students
who, by virtue of their special circumstances, present a unique need for financial
aid; and (3) create an endowment for future financial aid.
o The established statutory formula calls for the state to provide a two-to-
one match of the collected student fees. The state has not fulfilled its
matching requirement since FY 2008, maintaining appropriations at $10.1
million. The FY 2019 calculated state match is based on actual student
fees collected during FY 2017. For FY 2019, the state matching
requirement is $23.8.
ASU NAU UA Total

FY 2017 Student Fees $10,120,100 $2,243,000 $4,526,700 $16,889,800
FY 2019 AFAT GF Formula $20,240,200 $4,486,000 $9,053,400 $33,779,600
FY 2018 Appropriation $10,041,200
FY 2019 Shortfall $23,738,400
Other Budget Elements
 The state also provides funding for the following ABOR programs. The current
budget proposal does not include additional resources for these programs.
o WICHE student subsidies (current appropriation is $4,086,000): The

Western Interstate Commission for Higher Education (WICHE) provides
partial financial support and preferential access for Arizona residents who
choose careers in certain health professions, which are not available at
Arizona’s three public universities. The current appropriation level
supports 166 students. At its peak (FY 2008), the program supported 203
students.
o Arizona Transfer Articulation Program (current appropriation is $213,700):

Established by A.R.S. §15-1824, ATASS is a joint initiative among public
community colleges and universities to facilitate the efficient transfer of
course credits.
o Arizona Teachers Incentive Program (current appropriation is $90,000):

The Arizona Teachers Incentive Program (ATIP) is a loan forgiveness
program at UA College of Education for students of deaf and blind
education. Students may earn forgiveness by teaching in an Arizona deaf
and blind program post-graduation. Statute requires $50,000 be
September 27, 2017
AMENDED - Item #3
distributed to 10 students at $5,000 per student. The balance is used for

instructional support.
The State’s Position
 In the FY 2018 appropriations report, JLBC published the below budget

estimates (in millions).
FY 2017 FY 2018 FY 2019 FY 2020

Ending
$171.0 $37.3 $51.9 $121.3
Balance
Structural
$3.9 $19.9 $79.8 $114.9
Balance
 JLBC also reported in the August Fiscal Highlights that the FY 2017 ending
balance is now projected at $218 million, approximately $47 million above
forecast. However, this increase is likely due to timing issues and should not
impact FY 2018 or FY 2019. Through July, revenues are running above forecast,
but more information will be required before long-term forecasts will be adjusted.
Requested Action
The proposed FY 2019 state appropriations request is forwarded by the Enterprise

Executive Committee for the committee’s consideration. The committee is requested to
forward to the full board for approval the FY 2019 State Budget Request for submittal to
the Governor’s Office of Strategic Planning and Budgeting (OSPB) and the Joint
Legislative Budget Committee (JLBC) by October 1.
September 27, 2017
Item #4
Item Name: FY2019 – 2021 Capital Improvement Plans (ASU, NAU, UA)
Action Item
Issue: Arizona State University, Northern Arizona University and the University of
Arizona ask for approval of their FY 2019-2021 Capital Improvement Plans.
 ABOR Policy 7-106 requires Capital Committ ee review and Board approval of the
annual Capital Improvement Plan.
 Arizona Revised Statutes 41- 793, require each building system to annually s ubmit a
Capital Improvement Plan (CIP) to the Gove rnor no later than Oct ober 15. The state
of Arizona recognizes three building systems: The Department of Transportation, the
Department of Administration, and the Arizona Board of Regents.
Project Justification/Description/Scope
 The annual CIPs serve 3 main functions:

o To serve as reference documents for current facilities inventory and related
financial management information;
o To request general fund monies, including building renewal, from the state; and
o To identify capital projects each university intends to implement during the next
fiscal year along with a forecast of proposed activities and projects in the following
2 fiscal years.
 The Capital Improvement Plans include a capital allocations report; building renewal
and deferred maintenance reports; building inventory reports; lease reports;
acquisitions and sales of land reports; capital project status reports; three-year capital
improvement plans; FY 2019 project descriptions, scope and cost; and preliminary
debt reports. In-depth Debt Capacity Reports are presented to the Committee in
November.
Morgan R. Olsen, ASU 480-727-9920 Morgan.R.Olsen@asu.edu
Daniel Okoli, NAU 928-523-8871 Daniel.Okoli@nau.edu
Gregg Goldman, UA 520-621-5977 GGoldman@email.arizona.edu
Lorenzo Martinez, ABOR 602-229-2525 Lorenzo.Martinez@azregents.edu
September 27, 2017
Item #4
 Approval of the CIPs allows universities to expend the greater of $750,000 or 5% of

project costs in preparation for any projects that will be submitted for the next stage of
project approval (Capital Development Plan).
 Each university draft CIP can also be found on the ABOR website
(http://azregents.edu/) under the Board meeting section.
Arizona State University CIP
 The ASU Capital Improvement Plan includes 2 projects totaling $218.4 million.
 The FY 2019 building renewal formula requirement is $48.2 million.
 The debt ratio is estimated to be 5.1% ex cluding SPEED projects, and 5.6% including
SPEED projects.
ASU Project Name Est. Cost

1. Interdisciplinary Science and Technology Building (ISTB) 7 * 175,000,000
2. Palo Verde East and West Renovations 13,420,000
3. Parking Structure 30,000,000
Project Total 218,420,000
Building Renewal
Building Renewal Requirement 48,249,110
* Represents University Capital Investment Program bond project. (50% state supported debt service)
Northern Arizona University CIP
 The NAU Capital Improvement Plan includes two projects totaling $156.4 million.
 The debt ratio is estimated to be 6.4% excluding SPEED projects, and 8% includin g
SPEED projects.
NAU Project Name Est. Cost

1. Science Annex Renovations * 17,400,000
2. Multi-Discipline STEM Academic/Research Building * 139,000,000
Building Renewal
September 27, 2017
Item #4
University of Arizona CIP
 The UA Capital Improvement Plan includes 8 projects totaling $156.4 million.
 The debt ratio is estimated to be 6% excluding SPEED projects, and 7.1% including
SPEED projects.
UA Project Name Est. Cost

1. Interdisciplinary Research Innovation Building 1 (IRIB 1) * 100,000,000
2. Interdisciplinary Research Innovation Building 2 (IRIB 2) * 100,000,000
3. Deferred Maintenance * 200,000,000
4. Arizona Stadium Improvements 25,000,000
5. Indoor Sports Center 18,000,000
6. Hillenbrand Softball Facility Improvements 8,000,000
7. Hillenbrand Aquatic Center Improvements 15,000,000
8. Oro Valley Veterinarian Medical Program Improvement ** 8,000,000
Building Renewal
** Funded with state appropriation.
Requested Action
Arizona State University, Northern Arizona University and the University of Arizona ask
that the committee forward to the full board for approval of their FY 2019 - 2021 Capital
Improvement Plans, as presented in this Executive Summary.
September 27, 2017
Item #4A
Item Name: FY 2019-2021 Capital Improvement Plan (ASU)
Action Item
Issue: Arizona State University asks for approval of its FY 2019-2021 Capital
Improvement Plan (CIP).

(Check the element(s) of the strategic plan that this item supports or advances)
Education excellence, access and degree production
Research excellence
Workforce and community
Productivity
Compliance
Other:
ABOR Policy 7-106 requires Capital Committee review and Board approval of the annual
Capital Improvement Plan (CIP).
 ASU continues to make meaningful progress in its evolution as a model for 21st
century higher education, dedicated to access, excellence and impact. In keeping
with the ambitious trajectory reflected in the ASU Strategic Enterprise Framework
and the ASU Campus Master Plan, the projects proposed in the 2019-2021 CIP focus
strongly on addressing the need for sustainable facilities that support the
achievement of our institutional mission and goals.
 For this CIP, ASU has set as its priorities the construction of two new facilities and the
renovation of one facility on the Tempe campus. The university proposes the
construction of a new, high-performance research facility that will be a comprehensive
addition to its growing research district. Additionally, the proposed construction of a
new energy-efficient, multi-level parking structure will provide the increased capacity
required to support the vibrant academic, cultural and social activities of the campus
and its surrounding communities. Renovation of the aging Palo Verde East and West
Morgan R. Olsen, Executive Vice President, Treasurer and CFO • (480) 727-9920 • Morgan.R.Olsen@asu.edu
September 27, 2017
Item #4A
residential colleges also is proposed to create a more energy-efficient and enriching

student living and learning environment.
 Thoughtful and productive investment in the university's infrastructure is vital to the
success of current and future ASU students and supports the key elements of ASU’s
Strategic Enterprise Framework, including:
 Achieving a 57 percent increase in degree production

 Establishing national standing in academic quality and the impact of
colleges and schools in every field
 Enhancing local impact and social embeddedness
 Expanding research performance to $815 million in annual research
expenditures by 2025.
 The FY 2019-21 CIP, as well as the active capital projects already being advanced
through our Campus Master Plan, reflect the physical manifestation of ASU’s
realization of the New American University and its steadfast commitment to serve the
people of Arizona.
Project Delivery Method and Process
The delivery method for each project in the Capital Improvement Plan is selected based on
which method provides the most efficient and effective delivery. The anticipated project
delivery method will be identified as projects are submitted in the Capital Development Plan.
Project Status and Schedule
Capital projects progress through the various project development phases based on a
variety of factors, including the priority and need for the project and programs it supports, as
well as availability of funding and financing. Project schedules usually are aligned to the
academic calendar so that construction activity can occur during the summer break or when
there is lower activity on campus. In addition, project schedules typically are developed so
that projects are completed and functional in time for the beginning of a new semester.
Anticipated schedules are submitted in the Justification Report, which is included for each
project in the Capital Development Plan.
Project Costs
 The first year of this three-year CIP contains three projects, displayed in Table 1 on
the following page. The projects total $218,420,000 in estimated costs.
 The CIP also includes a Fiscal Year 2019 Building Renewal Request totaling
$48,249,110. The Building Renewal Request is computed by using the Joint
Committee on Capital Review-approved formula, along with direction from the
Arizona Board of Regents office.
September 27, 2017
Item #4A
Table 1
Capital Improvement Plan
FY 2019 Projects
Proje ct Funding Es tim ated Total

Priority Cam pus Project De scription
Nam e Me thod Costs
This project w ill construct a new , approximately 258,000

gross-square-f oot research f acility that w ill be a
comprehensive addition to the university’s grow ing
Interdisciplinary research district on the Tempe campus. The facility w ill System
Science and be designed to f oster an interdisciplinary approach to Revenue
1 Tempe $ 175,000,000
Technology know ledge generation and leading-edge research. Open Bonds
Building (ISBT) 7 dry research laboratory space, as w ell as w et (SRB)
laboratory or other specialized space f or biological
sciences, may be included in this project to advance the
ambitious research goals of the university.
The Palo Verde East and West residential colleges,

located in the heart of the Tempe campus on East
University Drive, w ere constructed in the 1960’s and
ref lect a timew orn condition. In particular, the restrooms
and common spaces are in a severe state of
degradation. The proposed project w ill use energy-
Palo Verde East ef f icient components to upgrade the f itness centers,
Other
2 Tempe and West student lounges, kitchens, f ire alarms and inf ormation $ 13,420,000
(OTHR)
Renovations technology systems, as w ell as to renovate the student
units. In addition, the heating ventilation and air
conditioning and mechanical, electrical and plumbing
systems w ill be brought into code compliance. The
exterior corridors and common areas w ill also be
upgraded to provide students w ith a more open, bright
and enriching living and learning environment.
This proposed new energy-eff icient, multi-level parking

structure w ill replace an existing surface lot on a new
development site at the southeast corner of University
Drive and Mill Avenue in Tempe. A solar panel system
w ill be installed on this structure to provide the campus System
Tempe Campus
w ith an additional source of renew able energy and Revenue
3 Tempe Parking $ 30,000,000
support the university’s continuing commitment to Bonds
Structure
sustainability. This approximately 1,200-space parking (SRB)
structure w ill also support the academic, cultural and
social activities on the Tempe campus and accommodate
the parking needs of a new on-site hotel and
conference center, as w ell as f uture site development.
State Appropriation (SAP)

Ge neral Fund, Debt Service (GFA)
Syste m Reve nue Bonds (SRB) $ 205,000,000
Ce rtificates of Participation (COPS)
Fe de ral Funds (FEDF)
Gifts (GIFT) $ -
Other (OTHR) $ 13,420,000
TOTAL COST: FY 2019 $ 218,420,000
 Additional information on these FY 2019 projects is provided in the Project

Descriptions section of this plan.
September 27, 2017
Item #4A
Fiscal Impact and Financing Plan:
 The annual assessment of debt capacity contained in the CIP provides a summary
report of the university's ability to finance additional capital projects through the
issuance of debt. Based upon the university's capital projects approved in the FY
2018 Capital Development Plan, the FY 2019 One-Year Capital Plan, and projects
that already have received ABOR Project Approval, the highest projected debt ratio is
5.1 percent. The debt ratio is the total projected annual debt service on bonds and
certificates of participation as a proportion of total projected university expenses. The
maximum debt ratio allowed by ABOR policy and state statute is 8 percent. This ratio
excludes debt service from the Stimulus Plan for Economic and Educational
Development (SPEED) projects. The projected highest debt ratio including debt
service on SPEED projects is 5.6 percent.
 Debt Ratio Impact: The debt service associated with the FY 2019 projects included
in this CIP will increase the projected debt ratio by 0.08 percent.
 The preceding debt ratios are estimates based on unaudited FY 2017 financial
records and are subject to change.
Occupancy Plan
Projects included in the CIP will create space that will allow for the creation, expansion
and/or relocation of programs. The space that the projects provide will house programs that
fulfill various objectives within the university strategic plan, including academic, research
and student success goals. Project justification reports that are submitted when these
projects are transitioned to the Capital Development Plan will provide additional detail on
occupancy plans for new or renovated space.
Requested Action:
Arizona State University asks that the committee forward to the full board for approval of the
proposed Capital Improvement Plan Fiscal Years 2019-202, as presented in this Executive
Summary.
September 27, 2017
Item #4A
FY 2019 Project Description
Project Name: Interdisciplinary Science and Technology Building (ISTB) 7
Priority: 1
Description
This project will construct a new, approximately 258,000 gross-square-foot, high-

performance research facility that will be a comprehensive addition to the university’s
growing research district on the Tempe campus. The facility will be designed to foster an
interdisciplinary approach to knowledge generation and leading-edge research, including
innovative endeavors focusing on sustainability and the “Food, Energy and Water” theme.
Open dry research laboratory space for computing, engineering design and fabrication, as
well as wet laboratory or other specialized space for biological sciences, may be included in
this project to advance the ambitious research goals of the university. The project will be
debt-financed with debt service funded by the State of Arizona Capital Infrastructure Fund
and university funds.
Justification
This project will support the primary institutional priority of establishing the university as a
leading global center for interdisciplinary research, discovery and development by 2025.
 Become the leading American center for discovery and scholarship in the integrated
social sciences and comprehensive arts and sciences
 Enhance research competitiveness to more than $815 million in annual research
expenditures
 Transform regional economic competitiveness through research and discovery and
value-added programs
 Become a leading American center for innovation and entrepreneurship at all levels
Estimated Project Cost: $175,000,000
Funding Source: System Revenue Bonds

September 27, 2017
Item #4A
Project Name: Palo Verde East and West Renovations
Priority: 2
Description
The Palo Verde East and West residential colleges, located in the heart of the Tempe
campus on East University Drive, were constructed in the 1960s and reflect a timeworn
condition. In particular, the restrooms and common spaces are in a significant state of
degradation. The proposed project will use energy-efficient components to upgrade the
fitness centers, student lounges, kitchens, fire alarms and information technology systems,
as well as to renovate the student units. In addition, the heating, ventilation and air
conditioning and mechanical, electrical and plumbing systems will be brought into code
compliance. The exterior corridors and common areas also will be upgraded to provide
students with a more open, bright and enriching living and learning environment.
Justification
The university’s residential colleges provide supportive environments that connect and
involve students outside of the classroom. Student engagement with their peers, faculty and
staff, as well as in their communities, serves to enhance student academic growth and
development and improve persistence. Providing much-needed renovations to these aging
living and learning facilities, therefore, is essential to advancing the university’s goal of
demonstrating leadership in academic excellence and accessibility.
Funding Source: Other

September 27, 2017
Item #4A
Project Name: Tempe Campus Parking Structure
Priority: 3
Description
This proposed new energy-efficient, multi-level parking structure will replace an existing
surface lot on a new development site at the southeast corner of University Drive and Mill
Avenue in Tempe. A solar panel system is planned on this structure to provide the campus
with an additional source of renewable energy and to maintain the university’s commitment
to sustainability. This approximately 1,200-space parking structure will support the
academic, cultural and social activities on the Tempe campus and accommodate the
parking needs of a new on-site hotel and conference center, as well as future site
development.
Justification
This new energy-efficient parking structure will provide the essential capacity required to
support the institutional priority of establishing ASU as a global center for interdisciplinary
research, discovery and development. Given the close proximity of this parking structure to
the rich cultural and social life that is fostered by ASU Gammage and the Mill Avenue
District in downtown Tempe, this project also will enhance the local impact and social
embeddedness of the university in the communities it serves.
Funding Source: System Revenue Bonds

September 27, 2017
Item #4B
Item Name: FY 2019- 2021 Capital Improvement Plan (NAU)
Action Item
Issue: Northern Arizona University asks for approval of its FY 2019 – 2021 Capital
Previous Board Action

None

Impact Arizona
Compliance
Other:
 ABOR Policy 7-106 requires Capital Com mittee review and Board approval of the
annual Capital Improvement Plan.
 In keeping with the vision articulated in both the Enterprise and University’s Strategic
Plan, the projects proposed in the FY 2019 – 2021 Northern Ariz ona University CIP
focus on improved academic space and increased research space on campus.
 For this plan, NAU is proposing the following projects in the first year:
Science Annex Renovation $ 17,400,000
Multi-Discipline STEM Academic/Research Building $139,000,000
Total: $156,400,000
Contact Information
Daniel Okoli, Vice President, (928) 523.8871, Daniel.Okoli@nau.edu
September 27, 2017
Item #4B
 Science Annex Renovation – The 3rd and 4th floors of Building 20 Scienc e Annex
(formerly Chemistry) are currently not o ccupied due to numerous Building, Fire and
ADA codes issues as well as general di srepair affecting virtually all building
components including HVAC, electrical, windows (common to the entire building) and
finishes. The space also contains hazar dous materials that do not necessarily pose
and immediate health threat but must be remediated prior to construction activities.
The intent of this project is to bring those two floors into code compliance and general
modernization. These two floors will be left as shell space suitable for open offices or
tenant improvements as needed by future occupants. The total renovation of the 3rd
and 4th floors is 34,115 GSF, while the total building is 73,168 GSF.
 Multi-Discipline STEM Academ ic/Research Building - This project represents the

construction of a new 162,500 GSF building dedi cated to multiple disciplines within
the STEM programs. A new multi-discipline science building is needed to provide
adequate space for departments that have increased enrollments over the last several
years in order to maintain a high academ ic standard. The full programming of the
building is to be determined over the next several months. This building would be
located at the site of an existing building, Peterson. The cost to demolish Peterson is
not included in this projected budget.
 Additional information on these projects is provided in the Three Year Capit al Plan
section of the Capital Improvement Plan.
 The delivery method for each project in the capital improvement plan is selected on a
project-by-project basis depending on whic h method provides the most efficient and
effective delivery. The anticipated delivery method will be identified when projects are
submitted in the Capital Development Plan.
 Projects progress through the various capi tal phases based on a va riety of factors,
including priority, need for t he project and programs, ava ilability of funding and
financing, and potentially the sc heduled use of the existing s pace if the project is a
renovation.
 Project schedules are usually aligned to the academic calendar so that construction
activity can occur during the summer and winter breaks or when there is limited activity
on campus to minimize the impact. In addition, project schedules are developed so
September 27, 2017
Item #4B
that projects are completed and functional in time for thebeginning of a new semester.
 Anticipated schedules for each project are submitted in the Justification Report
included for each project when they are submitted in the Capital Development Plan.
Project Cost
 The first year of the three- year CIP contains two projec ts, and are displaye d in the
table below. The projects total $156,400,000 in estimated costs.
 The CIP includes a Building Renewal calculation of $19.1 million for fiscal year 2019.
Building renewal is computed using the Joint Committee on Capital Review approved
formula and directions from the ABOR Central Office.
Fund Estimated Board
Project Name Project Description Method Total Cost Approvals
1 Science Annex The 3rd and 4th floors of Building 20 Science Annex (form erly Chemistry) SRB $17,400,000
Renovation are currently not occupied due to numerous Building, Fire and ADA codes
issues as well as general disrepair affecting virtually all building
components including HVAC, electrical, windows (common to the entire
building) and finishes. The space also contains hazardous materials
that do not necessarily pose and im mediate health threat but must be
remediated prior to construction activities. The intent of this project is to
bring those two floors into code compliance and general modernization.
These two floors will be left as shell space suitable for open offices or
tenant improvements as needed by future occupants. The total
renovation of the 3rd and 4th floors is 34,115 GSF, while the total building
2 Multi-Discipline STEM iThis
73 project
168 GSF represents the construction of a new 162,500 GSF building SRB $139,000,000
Academic/Research dedicated to multiple disciplines within the STEM programs. A new m ulti-
Building discipline science building is needed to provide adequate space for
departments that have increased enrollments over the last several years
in order to maintain a high academic standard. The full programming of
the building is to be determined over the next several m onths. This
building would be located at the site of an existing building, Peterson. The
cost to demolish Peterson is not included in this projected budget.
State Appropriation (SAP) $0

General Fund Debt Service (GFDS) $0
System Revenue Bonds (SRB) $156,400,000
Certificates of Participation (COPS) $0
Federal Funds (FEDS) $0
Gifts (GIFT) $0
Other (OTHR) $0
Total Costs: FY 2019 $156,400,000
 The Annual Assessment of Debt Capacity found in the CIP provides a summary report
of the university’s ability to finance capi tal projects through i ssuance of debt. The
university’s debt capacity study for the FY 2019 – 2021 Capital Improvement Plan
September 27, 2017
Item #4B
indicates the total projected expenses are 6.4% excluding SPEED projects and 8.0%
including SPEED pr ojects. NAU existing debt service as a percentage of total
expenses is 4.7% or approximately $26.9 million.
 Debt Ratio Impact: The debt ratio for the projects in the FY2019 O ne-Year Capital
Plan is est imated to be increas ed to 6.3% of projected total expenses. This is an
estimate based on the assumptions outlined inthe plan as well as previously approved
projects and are subject to adjustment in the Capital Development Plan and Project
Approval.
Occupancy Plan
 Projects included in the CIP create space that will allow for the expansion of academic
and research programs. The space the projects provide house programs that will fulfill
various objectives within the university strategic plan, including academic and
research excellence.
 Project justification reports submitted when these projec ts are transitioned to the
Capital Development Plans will provide addi tional detail on occupancy plans for new
space.
Requested Action
Northern Arizona University asks that the committee forward to the full board for approval
its FY 2019 – 2021 Capital Improvement Plan, as presented in this Executive Summary.
September 27, 2017
Item #4B
FY 2019 PROJECT DESCRIPTIONS
PROJECT NAME: Science Annex Renovation
PRIORITY: 1
DESCRIPTION:
The 3rd and 4th floors of Building 20 Science Annex (formerly Chemistry) are currently not
occupied due to numerous Building, Fire and ADA codes issues as well as general disrepair
affecting virtually all building components including HVAC, electrical, windows (common to
the entire building) and finishes. The sp ace also contains hazardous materials that do not
necessarily pose an immediate health threat but m ust be remediated prior to construction
activities. The inte nt of this pro ject is to bring thos e two flo ors into code c ompliance and
general modernization. These two floors will be left as shell spa ce suitable for open offices
or tenant improvements as needed by future occupants. The total renovation of the 3rd and
4th floors is 34,115 GSF, while the total building is 73,168 GSF.
JUSTIFICATION:
The university is b uilding a North Campus Science Corridor to maximize the benefits of
colocation of critical STEM programs. The Science Annex is an underutilized building as the
3rd and 4th floors are currently vacant and impaired for use. A renovation of this space allows
NAU to leverage its existing capital to create added usable square footage for these critical
programs. This renovation will enable the occupants of the Peterson building to mov e into
nearby space to permit the demolition of Pet erson to make wa y for a new Multi-Discipline
STEM Academic/Research Building (Priority 3).
ESTIMATED PROJECT COST: $17.4 million
FUNDING SOURCE: System Revenue Bonds

September 27, 2017
Item #4B
PROJECT NAME: Multi-Discipline STEM Academic/Research Building
PRIORITY: 2
DESCRIPTION:
This is the construction of a new 162,500 GSF building dedicated to multiple disciplines within
the STEM programs. A new multi-science building is needed to provide adequate space for
departments that have increased enrollments over the last several years in order to maintain
a high academic standard. The full programming of the building is yet to be determined. This
building would be located at the site of an existing building, Peterson. The cost to dem olish
Peterson is not included in this projected budget.
JUSTIFICATION:
The university’s top two strategic goals are student success and national recognized research
excellence. Space o n NAU’s mo untain campus is increasingly limited a nd there is n ot
adequate space to match the r esearch goals established. Attention to the ST EM fields is
vitally important for NAU to remain competitive in the m arketplace and deliver high-quality
graduates and research. Additionally, this building will become a vital component of the North
Science Corridor to maximize the benefits of colocation of critical STEM programs.
ESTIMATED PROJECT COST: $139 million
FUNDING SOURCE: System Revenue Bonds

September 27, 2017
Item #4B
FY 2020-2021 PROJECT DESCRIPTIONS
PRIORITY PROJECT NAME PROJECT DESCRIPTION
The Biological Scienc es building is 86,964 GSF and in a

deteriorating condition with an FCI of 42%. A complete
renovation of the facility wi ll modernize the space to
increase the building's research ability. It wi ll increase the
functionality and usability of the academic space to meet
enrollment and research growth projections for Biological
Biological
Sciences to meet the higher education Enterprise Plan. The
1 Sciences Building
space will provide opportuniti es for independent research
Renovation
and expand access for students and researchers. This
space will support academic programs that prepare
students for an increasingly te chnical world. Renov ating
existing space is a fiscally responsible plan for NAU to
reinvest into existin g capital. This buildin g is part of the
North Campus Science Corridor.
The Physical Sciences building is 51,318 GSF and is in a
deteriorating condition with an F CI of 42%. A complete
renovation of the facility wi ll modernize the space to
increase the building's research capacity. It will enhance the
functionality and usability of the academic space to meet
enrollment and research growth projections for Physical
Physical Sciences
Sciences to meet the higher education Enterprise Plan. The
2 Building
space will provide opportuniti es for independent research
Renovation
and expand access for students and researchers. This
space will support academic programs that prepare
students for an increasingly tech nical world. Renovating
existing space is a fiscally responsible plan for NAU to
reinvest into existin g capital. This buildin g is part of the
North Campus Science Corridor.
September 27, 2017
Item #4B

This project will address academic and athletic needs,
specifically for the athletic training and physical therapy
academic programs. This project will address academic
and training needs for university athletic programs as
outlined in the NAU athletic strategic plan. The project
Health Research
would provide space for faculty in health related programs
Sports
(athletic training/physical therapy), classroom space, and
3 Performance and
for student-athletes currently training in the Fieldhouse
Convocation
and Rolle Activity Center, which do not meet NCAA
Center
requirements. The performance component will provide
study spaces that promote academic excellence. This
consolidated academic/athletic facility will alleviate student
athlete travel, facilitate collaborative study, and provide a
sense of community.
Research labs in Engineering, Health Sciences and Social

and Behavioral Sciences are out of date and in a
Lab Upgrades and deteriorated condition. This project will a ddress needed
4
Renovations repairs and modernization of the labs, as well as the
functionality to optimize the research that can be performed
in the existing spaces.

The development of a new cl assroom/office building will

allow the university to remo ve red and orange buildings
Classroom/Office from the central core, which is consistent with the 2010
5
Building Master Plan. The university will be ab le to relo cate
residents of Babbitt A nnex to a new classr oom and office
building, to enable the demolition of Babbitt Annex.

This project will address the aging buildings utilized by

Social and Behavioral Sciences and Social Behavioral
Sciences West. A space needs assessment identified the
South Campus need to reconfigure the existing spaces into more
6
Academic Building functional and useable spaces, as well as accommodate
additional programs like Anthropology. Renovations to the
buildings or construction of a replacement are necessary
to address the space and the condition of the buildings.
September 27, 2017
Item #4B

Adel Mathematics was constructed in 1962 and has a
facility condition index approaching 40%. Current
inefficiencies in design and wear and tear make this a poor
classroom building. It is an ticipated that Adel will be
Adel Math renovated into offices pending and expanded to make more
7 Renovation and efficient use of its existing footprint. Mathematics is a
Expansion service department that s ees increased enrollment in
correlation with NA U's enrollment growth. As NAU' s
enrollment continues to increase to meet 2025 Enterpris e
Goals, Mathematics will need a correlating increas e in
space to accommodate.
A recent campus space assessment indicated that the

library is deficient over 30,000 square feet and needs
increased space to fully serv e the students. Student study
space is undersized and outdated. An aesthetic renovation
Cline Library
will build a creative environment that meets the students'
Renovation
8 needs and desires. Additionally , aging HVAC and FLS
and Study Space
infrastructure in the Special Collections and Archives are
Expansion
now more than 25 years old, putting these unique an d
valuable collections at cons iderable risk. An academic
strategic plan coupled with a space plan for Cline Library is
planned to further define the programming of this project.
One of NAU's strategic goal s is to become one of the

nation's leading universities serving Native Americans. By
expanding the existing 12,849 GSF Native American
Cultural Center, NAU will pos ition itself to have more
Native American
collaborative gathering spaces and academic spaces for
9 Cultural Center
the Native American community. Additionally, this
Expansion
expansion will bring the Instit ute for Tribal Environmenta l
Professionals to the Native American Cultural Ce nter
bringing unity and colocation for all Native American
services on campus.
A new c entral ITS and Ad ministration building will

ITS and
consolidate the administrativ e and core support functions
10 Administration
to a central campus location. The location of this building is
Building
to be determined.
September 27, 2017
Item #4B
Early Childhood The lack of child‐care facilities on campus has long been a source
of dissatisfaction for both students and faculty and was one of the
Education
strongest negatives in the COACHE s urvey. The Colleg e of
11 Teaching and
Education's specialization in early childhood education brings with
Research
it the potential to address the childcare issue while creating a "lab
Center school" environment that will benefit NAU's academic program.
This project constructs a new parking structure adjacent to Cline

Library, Ardrey Auditorium and the Performing and Fine Arts
Central Campus Academic building. Utiliz ing an existing parking surface for the
12 Parking site of the new parking structure is consistent with the 2010 Master
Structure Plan. The Master Plan guides relocation of parking from internal
campus parking surfaces to p arking structures sited along
campus perimeters. This project is needed to alleviate parking on
north campus as interior parking surfaces are a llocated for

instructional expansions and rest ored green space for stude nt
activities.
Parking
This project will address the need for a parking facility to support
Structure -
the faculty, staff, and students at the recently constructed
13 Phoenix
Phoenix Biomedical Campus in Phoenix. This project would be
Biomedical pursued through a third-party.
Campus
A project to construct a parking d eck to serv ice the southwe st
region of campus on the site of an old detention center acquired
from Coconino County, a use co nsistent with the 201 0 Master
Plan. The structure would be located on south campus so as to
South Campus
be accessible to th e highly used W. A. Franke College of
14 Parking
Business, the Ra ul H. Castro So cial and Behavioral Sciences
Structure Building, and the College of Engineering, Forestry and Natural
Sciences buildings. It is antic ipated this str ucture will include
space for a bus depot to provide increased student access and
services in navigating campus.
This project will continue utility improvements needed to support

increased research, academic programs, technology
requirements and en rollment projections. It will also address
Campus Utility
aging infrastructure. The project scope will include infrastructure
15 and
upgrades/replacements to improve and ensure stable delivery of
Infrastructure utilities for current and future campus development. The scope
will include metering, steam, electrical, chilled water, system
controls, and other systems support requirements.
September 27, 2017
Item #4B
FACILITY CONDITION INDEX MAP

Business & Finance Committee Meeting
September 27, 2017
Item #4C

Item Name: FY 2019–2021 Capital Improvement Plan (UA)
Action Item

Issue: The University of Arizona asks for approval of its FY 2019-2021 Capital


Impact Arizona
Compliance
Other:

Statutory/Policy Requirements:
Board Policy 7-106 requires Committee review and Board approval of the annual
Capital Improvement Plan.
Strategic Alignment with the University’s Institutional Priorities:
 The University of Arizona, guided by our integrated Academic, Business, Finance and
Capital planning, continues to advance our highest strategic priorities. Our resources
remain absolutely focused on teaching, research, service and innovation to improve
lives in Arizona and beyond. We are advancing the frontiers of interdisciplinary
scholarship and entrepreneurial partnerships as we prepare graduates to be real-world
ready. Our Capital Improvement Plan is a direct reflection of these priorities.
 In this CIP, the UA is addressing the critical needs of both growth and renewal. New
sustainable facilities are required to accommodate growth, to remain competitive, and to
facilitate modern paradigms. An investment in building renewal is required to address
critical deferred maintenance across campus. Part of this plan is being supported by
matching State Appropriation Funds and the UA is focused on maximizing this benefit.
 As noted in the CIP report, the amount of Building Renewal funding due to the UA under
the state formula this year is $81,078,300.
Gregg Goldman, Senior Vice President for Business Affairs and Chief Financial Officer
(520) 621‐5977, ggoldman@email.arizona.edu

September 27, 2017
Item #4C

Capital Improvement Plan One & Two-Year Forecast:
 One-Year Capital Plan for FY 2019: There are eight (8) First-Year projects being
presented by the UA in this CIP
PROJECT NAME PROJECT DESCRIPTION
Interdisciplinary
Research Innovation Physical Sciences and Engineering Programs
Building 1 (IRIB1)
Interdisciplinary
Research Innovation Translational sciences to detect, treat and prevent disease
Building 2 (IRIB2)
Deferred maintenance to highest priority buildings and building

Deferred Maintenance
systems across campus
Arizona Stadium
Upgrades to the East side of Arizona Stadium
Improvements
Indoor Sports Center Multipurpose indoor practice facility
Hillenbrand Softball
Dugout, shade, press box and backstop netting improvements
Facility Improvements
Hillenbrand Aquatic
Pool and equipment replacement
Center Improvements
Oro Valley Veterinarian

Medical Program Renovation of the UA Oro Valley Veterinary Medicine Facility
Improvement (OVVM)

September 27, 2017
Item #4C

 The Two-Year Capital Plan Forecast (FY 2020-2021): The following potential future
projects are under consideration as part of the UA’s Integrated Planning Process which
aligns the University’s academic, financial and capital priorities.
PROJECT NAME PROJECT DESCRIPTION
Laboratory
These renovations will facilitate the increased utilization of existing, inefficient research
Modernization and
lab space and reduce the new building needs.
Renovations
This renovation and expansion will address the most critical needs of patrons,
performance and support. The renovations will include improving seating and sight
Centennial Hall lines, acoustics/sound, adding restrooms, and improving point of sale opportunities.
Renovations This project will also prioritize future improvement opportunities for potential donors
including amenities such as additional rehearsal, lecture and lounge space, and will
investigate improved loading dock, lighting and parking opportunities.
Computational Lab A data-intensive new Computational Laboratory Facility that will meet the expanding
Building research needs of the University.
A facility to house a new and emerging Information School (iSchool) program bringing
together information technology, library science, informatics (bio and health),
information science and related tracks. Together with corporate and industry partners,
iSchool this program will serve to strengthen relationships between information, people and
technology while creating information leaders to help tackle key social and technical
problems in the information field.
Mid-campus infrastructure improvements to support increased utility loads from new

Campus
Infrastructure-
facilities.
Central
The University Information Technology Services (UITS) Communications Network plan
UITS
is a multi-faceted, long-term strategic initiative to upgrade and advance the network
Communications
and telecommunication systems on the Tucson and Phoenix campuses over the next
Network - Phase 1
10 years.
Real estate within the designated University planning area is limited; therefore
Land Acquisition acquisition of properties, as they become available is critical to accommodate future
growth.
The University of Arizona and Arizona State University are partnering to plan, fund and
The University of
develop a Chilled Water Central Plant that would accommodate the growing needs of
Arizona/Arizona
the two University Campuses in the Downtown Phoenix area. This collaborative effort
State University
will allow The University of Arizona and Arizona State University to provide Chilled
Chilled Water
Water to meet current and future needs at a substantially reduced rate, resulting in
Central Plant –
increasing savings as existing contracts with the current area-wide chilled water
Phoenix Downtown
supplier expire. This project is projected to consist of an initial 4,000 ton Chilled Water
Campuses
Plant that could expand to 10,000 tons as needed, along with the required piping

distribution systems needed to serve the two University Campuses.

September 27, 2017
Item #4C

Project Delivery Method and Process:
 The delivery method for each project in the Capital Improvement Plan is selected on a
project-by-project basis depending on which method provides the most efficient and
effective delivery. The anticipated delivery method will be identified when projects are
submitted in the Capital Development Plan.
Project Status and Schedule:
 Projects progress through the various capital project phases based on a variety of
factors, including priority and need for the project and programs, availability of funding
and financing, and consistency with strategic plans. Project schedules are sometimes
aligned to the academic calendar so that construction activity can occur during the
summer break or when there is limited activity on campus. In addition, project
schedules are developed so that projects are completed and functional in time for the
beginning of a new semester. Anticipated schedules for each project are submitted in
the Justification Report included for each project in the Capital Development Plan.
 The Annual Assessment of Debt Capacity report, contained in the FY 2019-2021 CIP,
provides a summary of the UA’s outstanding debt and debt ratios. The projected debt
ratio is the total annual debt service on bonds and certificates of participation to total
university expenses. The report demonstrates the UA’s ability to finance additional
capital projects through the issuance of debt while complying with ABOR policy and the
State statute debt ratio limit of 8%.
 Debt Ratio Impact: Based on the University’s current outstanding debt, projects in the
approved FY2018 Capital Development Plan (CDP), projects that have received ABOR
Project Approval, and the projects in the first year of the FY 2019-2021 Capital
Improvement Plan (CIP), the projected highest debt ratio is 6.0%. This ratio excludes
debt service on bonds associated with SPEED projects authorized by HB2211. The
projected highest debt ratio including SPEED Revenue Bonds debt service is 7.1%.
Occupancy Plan:
 Projects included in the Capital Improvement Plan typically create space that will allow
for the creation, expansion and/or relocation of programs. The space the projects
provide house programs that will fulfill various objectives within the university strategic
plan, including academic, research and student success goals. Project justification

September 27, 2017
Item #4C

reports submitted when these projects are transitioned to the Capital Development
Plans will provide additional detail on occupancy plans for new or renovated space.
Requested Action:
The University of Arizona asks that the committee forward to the full board for approval of the
proposed Capital Improvement Plan Fiscal Years 2019-202, as presented in this Executive
Summary.

September 27, 2017
Item 5
Item Name: Sun Devil Stadium Renovation Phase 3 Revised Project Approval
Arizona State University (ASU)
Action Item
Issue: Arizona State University asks approval for the Revised Project Approval of
$134.9 million for Phase 3 of the Sun Devil Stadium Renovation project.

Impact Arizona
Compliance
Other:
 ABOR Policy 7-102(B) requires that all capital projects with an estimated total
project cost of $5 million or more for renovation be brought to the Business and
Finance Committee for approval.
 Sun Devil Stadium, the university's largest athletic facility and public assembly
building, is a valley landmark in an iconic setting between the Tempe and Hayden
Buttes. Since 1958, the stadium has served as the home for a top-ranked
intercollegiate athletics program and as host to many other public events. In
recent years, however, the stadium has operated with substandard and
insufficient access to restrooms, concessions and points of sale for guests,
outdated programmatic spaces, and a lack of competitive premium seating
amenities.
 The Sun Devil Stadium Renovation project was designed to address these issues
and provide ASU with an opportunity to increase its impact in the communities it
September 27, 2017
Item #5
______________________________________________________________________
serves. ASU has garnered philanthropic support from its stakeholders to provide
stadium features that will meet the needs of today’s NCAA Division I athletic
programs and enhance fan experience.
 The Sun Devil Athletics program hosts an average of 180 annual events at its
facilities, for a total annual economic impact of more than $209 million. The
presence of major college football allows ASU to capture inherent media and
public interest to extend ASU’s prominence on a national stage and showcase the
university.
 The Sun Devil Stadium Renovation project was planned in three phases to
facilitate uninterrupted use of the stadium throughout the renovation process.
Phase 1 of the project began after the 2014 football season. Construction of
Phase 1, which included south end zone improvements and associated utilities,
was completed in August 2015.
 Phase 2 of the project began after the 2015 season and included replacing the
west and north lower seating bowl and one-third of the upper deck with a new
structure and seating. In addition, the shell of the Student-Athlete Facility was
constructed under the stadium north end and targeted for completion in Phase 3
of the project. Phase 2 is substantially complete.
 Phase 3 project scope includes all of the construction and improvements

associated with the east side of the stadium. This phase was placed on hold for
one year, in order to maximize the university’s opportunity to plan and design the
physical configuration of the stadium in a way that would best facilitate broad
usage of the venue for events other than athletics. During this time, options were
evaluated for use of the facility as a year-round resource for student, alumni and
community activities, in addition to athletic events. Supporting revisions to the
design plan that were determined to add value and demonstrate cost efficiency
were incorporated.
 The significant changes proposed to the Phase 3 design plan include changing the
floor-to-ceiling height at the stadium mid-level to enhance club and food service
operations; adding a fourth level to provide space for expanded academic program
use; and modifying the upper deck, as well as the infrastructure, to accommodate
these changes.
 The Phase 3 plan is similar to the one used for Phase 2, where project construction
was phased over two years around the football season. Phase 3 construction is
scheduled to start in December 2017 and continue through the start of the next
season that begins in August 2018. A limited construction schedule would be
implemented during the football season to avoid any negative impact on the user
experience. Phase 3 construction would resume in November 2018 and Phase 3
September 27, 2017
Item #5
______________________________________________________________________
completion is targeted for June 2019.
 The proposed revisions to the project plan are designed to enhance fan experience
and expand the use of the stadium to incorporate year-round activities that will
strengthen the university’s connections and impact in the communities it serves.
The Phase 3 budget increase of $38.9 million to support this expanded scope will
be funded by charitable gifts.
 This project is being delivered through the Construction Manager at Risk (CMAR)
method. This approach was selected to save time through fast-track project
scheduling, enable contractor design input and coordination throughout the
project, improve potentially adversarial project environments, and allow for the
selection of the most qualified contractor team. With the use of two independent
cost estimates at each phase and low-bid subcontractor work for the actual
construction, this method also provides a high level of cost and quality control.
 ASU selected Hunt/Sundt Construction, a joint venture, as the CMAR and

HNTB and Gould Evans as the design professionals for this project. During
the selection process for the CMAR, there were three responses and three
contractors were interviewed. The selection process for the design professionals
included seven responses and four firms were interviewed.
 Design and construction was planned in three phases to enable Sun Devil
football games to be scheduled in the stadium throughout the construction
period without a temporary relocation or a significant negative impact on the
student-athlete or fan experience. Phase 1, completed for the fall 2015 season,
included construction of a new student section in the south end zone that created
a continuous concrete lower seating bowl. The new section includes improved
infrastructure, enhanced concessions and food service, renovated restrooms,
upgraded Wi-Fi and cellular signal and Americans with Disabilities Act (ADA)
enhancements.
 Phase 2 replaced the west and north lower seating bowl and one-third of the
upper deck with new seating and structure. A new club level was incorporated
in place of the old loge. Stadium seating upgrades were made throughout
most areas in the lower bowl. Phase 2 west seating bowl improvements were
substantially completed for the fall 2016 football season.
September 27, 2017
Item #5
______________________________________________________________________
 In Phase 2, new and improved restrooms, concessions and elevators were also
added along the new main concourse. The new main concourse now connects
the south end zone concourse to the new plaza at the north, via the west side,
with greatly improved field visibility. Also completed in Phase 2 was a new
kitchen, operations center, loading area, and back-of-house operations area.
Additionally, a grand staircase was added at both the southwest and northwest
entrances to the stadium.
 This phase also included the completion of the west side club and suite space
and the complete buildout of the Student-Athlete Facility. A large plaza deck,
attached to the main concourse and on top of the structure of the new Student
Athlete Facility, was added at the stadium north end in this phase.
 Phase 3 of the project was delayed for one season to evaluate and integrate into
the design the components needed to expand the use of the facility beyond
athletic events. This integration will enable the facility to be used year-round for
academic purposes, event forums and student, alumni and community
engagement activities. In order to enable this year-round, multi-use concept, one
additional floor will be added to the east side and infrastructure will be added to
enhance the concourse and accommodate future use requirements.
 In Phase 3, the interior buildout of the Student-Athlete Facility will be integrated

into the north end zone stadium structure and all of the structural components
associated with the east sideline, including the lower bowl, loge level, upper deck
seating, and the main and upper deck concourses will be demolished. The
reconstructed lower bowl will provide improved seating options, wider treads, and
easier seat access.
 The main concourse will be replaced to connect seamlessly with the new south
end zone concourse elevation. A new upper deck concourse will be constructed
and new upper bowl seating will augment existing upper bowl seating. New
premium seating will be constructed between the upper deck and the main
concourse level on the west side, with improved amenities and access to premium
seating lounge areas. Associated infrastructure issues will also be addressed,
including waste lines, domestic water, electrical and mechanical systems, and
ADA upgrades.
 Stadium patrons will appreciate the new concession areas, expanded restrooms,
enhanced technology, and improved circulation on all levels of the renovated
stadium. Phase 3 of this renovation project is targeted for completion in June 2019.
 The expanded space and fourth level will support utilization of stadium spaces as
a resource for year-round student, alumni and community programs and activities.
September 27, 2017
Item #5
______________________________________________________________________
Plans for the most effective and impactful use of these facility spaces are currently
in development.
Project Cost
 The revised total budget for all three phases of this approximately 850,000 gross-
square-foot project is $307.6 million. The Sun Devil Stadium Renovation project
also creates the potential to develop additional finished amenity space that will
be built out as separate projects, as funding becomes available in the future.
 The revised Phase 3 budget, including the requested budget increase of $38.9
million, is $134.9 million based on a construction budget of $106.5 million. The
revised Phase 3 scope will enable expanded use of the facility to accommodate
year-round student, alumni and community activities, as well as an enhanced user
experience.
 For Phase 3 Revised Project Approval, the DP and CMAR teams have provided
external cost estimates based upon independent programming and estimating
efforts. The estimates are in alignment for both Phase 3 and the overall project
budget.
 The CMAR will be at risk to provide the completed project within the agreed-upon
Guaranteed Maximum Price (GMP). A final report on project control procedures,
including change orders and contingency use, will be provided at project completion.
Fiscal Impact and Financing Plan
 In September 2016, the university issued system revenue bonds to fund

$75.7 million of the Phase 3 project. The remaining project cost of $59.2 million,
including the proposed $38.9 million increase, will be funded with capital gifts.
 Debt service on the bonds will be funded from Sun Devil Athletics revenues,
including enhanced stadium income, conference revenue distributions, charitable
gifts, and in the longer term, Novus Innovation Corridor revenue.
 Debt Ratio Impact: The project budget increase will not impact the university’s
debt ratio.
 The following table presents the current status of gift funding for the Sun Devil
Stadium Renovation project.
September 27, 2017
Item #5
______________________________________________________________________
Table 1
Sun Devil Stadium Renovation Project Gift Funding
Total
Intended Project Current Gifts
ABOR Occupancy Cost Gift Target (Cash/Pledges)
Project Name Approval Date (In Millions) (In Millions) (In Millions)
PA
Sun Devil
Ph1 11/2014
Stadium 6/2019 $307.6 $94.9 $80.5
Ph2 9/2015
Renovation
Ph3 6/2016
 Once the project is complete, operations and maintenance costs are estimated
to increase by $39,030 annually. The university will fund operations and
maintenance cost increases through Sun Devil Athletics revenues.
Occupancy Plan
 This project is being completed in three phases between football seasons to

allow uninterrupted use of the stadium during renovation. The three phases of
this project are scheduled for substantial completion in June 2019.
Requested Action
Arizona State University asks that the committee forward to the full board for approval to
provide Revised Project Approval for the Sun Devil Stadium Renovation Phase 3, as
presented in this Executive Summary.
September 27, 2017
Item #5
______________________________________________________________________
Capital Project Information Summary
University: Arizona State University
Project Name: Sun Devil Stadium Renovation Revised Phase 3
Project Description and Location:

This project, depicted in Attachments A and B, will provide revisions to the Phase 3
plan of record for the renovation of Sun Devil Stadium. These revisions are designed
to expand the use of the stadium to accommodate year-round student, alumni and
community activities, as well as to enhance user experience.
Project Schedule:
Planning January 2012
Design-Start December 2015
Construction Start January 2015
Construction Completion, Phase 1 August 2015
Construction Completion, Phase 2 September 2016
Construction Completion, Rev Phase 3/Total Project June 2019
Project Budget:
Total Project Cost $ 307,600,000
Total Project Construction Cost $ 238,500,000
Total Phase 1 Cost $ 65,700,000
Total Phase 2 Cost $ 107,000,000
Total Phase 3 Revised Cost $ 134,900,000
Total Phase 3 Construction Cost $ 106,500,000
Total Project Cost per GSF $ 362

Total Construction Cost per GSF $ 281
Change in Annual Operations and Maintenance Cost:

Utilities $
A. Personnel 0
All Other Operating 39,030
Subtotal $ 39,030
Funding Sources:
Capital
A. Gifts $ 59,200,000
Operation/Maintenance $ 39,030
Funding Source: Auxiliary Revenues
September 27, 2017
Item #5
______________________________________________________________________
Capital Project Budget Summary
University: ASU Tempe Campus Project: Sun Devil Stadium Renovation Revised Phase 3
Phase 1 Phase 2 Phase 3 Phase 3
Project Project Project Revised Project
Approval Approval Approval Approval
Capital Costs
1. Land Acquisition
2. Construction Cost
A . New Construction $ 28,500,000 $ 91,258,000 $ 75,000,000 $ 96,000,000
B . Renovation
C . Special Fixed Equipment
D . Site Development (excl. 2.E.) 1,500,000
E . Parking and Landscaping
F . Utilities Extensions 7,200,000 3,000,000
G . Other* (Demolition) 1,000,000 4,042,000 3,400,000 6,000,000
Subtotal Construction Cost $ 36,700,000 $ 95,300,000 $ 78,400,000 $ 106,500,000
3. Fees
A. Construction Mgr $ 2,000,000 $ 250,000
B . Architect/Engineer 16,900,000 1,250,000
C . Other 1,500,000 $ 450,000 $ 535,000 450,000
Subtotal Consultant Fees $ 20,400,000 $ 450,000 $ 535,000 $ 1,950,000
4. FF&E Movable $ 1,500,000 $ 5,300,000 $ 6,300,000

5. Contingency, Design Phase $ 3,000,000
6. Contingency, Constr. Phase 3,000,000 1,500,000 2,000,000 7,600,000
7. Parking Reserve
8. Telecommunications Equipment 4,700,000 6,450,000 8,000,000
Subtotal Items 4-8 $ 6,000,000 $ 7,700,000 $ 13,750,000 $ 21,900,000
9. Additional University Costs

A. Surveys, Tests, Haz. Mat. Abat $ 500,000 $ 300,000 $ 300,000 $ 300,000
B. Move-in Costs
C. Printing Advertisement 1,500
D . Keys, Signage, Facilities Supp 15,000 104,200 44,446 100,000
E . Project Mgmt. Cost (2.9066%) 1,854,370 2,789,276 2,703,994 3,788,753
F . State Risk Mgt. Ins. (.0034 **) 229,130 356,524 266,560 368,730
Subtotal Addl. Univ. Costs $ 2,600,000 $ 3,550,000 $ 3,315,000 $ 4,557,483
Total Capital Cost $ 65,700,000 $ 107,000,000 $ 96,000,000 $ 134,900,000
* Universities shall identify items included in this category

** State Risk Management Insurance factor is calculated on construction costs and consultant fees.
September 27, 2017
Item #5
______________________________________________________________________
EXHIBIT “A”
Sun Devil Stadium Renovation Revised Phase 3
September 27, 2017
Item #5
______________________________________________________________________
EXHIBIT “B”
Sun Devil Stadium Renovation Project in Three Phases
September 27, 2017
Agenda Item 6
Item Name: Extension of Lease Term for ASU California Center at 725
Arizona Ave., Santa Monica, CA (ASU)
Action Item
Issue: Arizona State University (ASU) asks for approval of ASU's extension of the
term of the Leases between ASU and 725 Arizona Avenue (SM), LLC, for
ASU's California Center for an additional five-year term.

Impact Arizona
Compliance
Other:
 ABOR Policy 7-207(A)(2) requires Board approval for the l ease of real property if
the term i s in exces s of ten years or if the total annual re ntal including tax,
insurance and maintenance payable exceeds $500,000.
Background/History
 In 2012, ASU entered into two Leases with 725 Arizona Avenue (SM), LLC for 9,412
square feet of space in a building located at 725 Ariz ona Avenue, Santa Monica,
California (the "Leased Premises") to house the ASU California Center. Subsequent
to executing the Leases, two additional su ites were added to the Leased Premises,
bringing the total leased space to 11,849 square feet.
 ASU uses the Leased Premises to furthe r ASU's mission in the areas of student
recruitment, expanding ASU's entrepreneurship networks, supporting national idea s
September 27, 2017
Agenda Item #6
exchanges, providing student internships and fellowships and offering courses and
workshops.
 The initial term of the Leases was five years, at a blended monthly rental rate of $4.15
per square foot, with a right to renew for an additional five-year term at a to-be
negotiated rental rate. Annual increases through the base and extension terms were
not projected to exceed $500,000 annually.
 The initial five-year lease terms expire in October 2017. As of July 31, 2017, ASU and
Landlord agreed on a rental rate for the five-year renewal term, which, due to
improving market conditions in Santa Monica, CA, will now exceed $500,000 annually,
but will not exceed fair rental value.
Discussion
 The California Center provides ASU signi ficant opportunities to expand its programs
and accomplish its mission.
 The value of real estate in Santa Monica , California has increased significantly over
the last five years. N egotiations resulted in a new blended rate of $4.94 per square
foot, or a 20% increase over the initial-year base term rental rate.
 Due to the increase in real estate market values and the associated fair market rental
rate, the 3 percent annual increases through the extension term result in total annual
lease payments that exceed $500,000 annually.
 The total of Lease payments for the five-year extension is $3,665,529.
 Funding for the Lease payments will come from general University Funds.
Requested Action
Arizona State University asks that the commi ttee forward to the full board to authoriz e
the ASU President, the ASU Executive Vic e President, Treasurer and Chief Financial
Officer, and the ASU Assistant Vice Presi dent for R eal Estate Development, o r any
successor titles to such positions, each separat ely, to take all appropriate actions to
extend the term of the Leases between ASU and 725 Arizona Avenue (SM), LLC, for an
additional five-year term, as presented in this Executive Summary.
September 27, 2017
Agenda Item #6
EXHIBIT A - LOCATION MAP OF LEASED PREMISES
725 Arizona Avenue, Santa Monica, CA 90401

September 27, 2017
Item #7
Item Name: Arizona State Museum Fee (UA)
Action Item
Issue: The University of Arizona asks for adoption of the Arizona State Museum
rate and fee structure, pursuant to ARS § 15-1631, as amended by SB
1418. The rate and fee structure applies to mandated cultural resource
management services provided by the Arizona State Museum.
Enterprise Strategic Plan

Impact Arizona
Compliance
Other:
ARS § 15-1631, as amended by SB 1418 (State Museum, Management, Fees)

ARS § 41-841, et seq., § 41-865 (Arizona Antiquities Act and Arizona Burial Laws)
ABOR Policy Manual Chapter 8 (Arizona State Museum and Fees for Services)
Background/History of Previous Board Action
- Arizona State Museum (ASM), a unit of the University of Arizona, is mandated by

State statutes and ABOR policies as the permitting authority for archaeological
activities in Arizona and is a public repository for the in-perpetuity curation of
archaeological materials recovered from state, county, and municipal lands in Arizona.
- ABOR policies provide ASM rules and regulations to implement Federal and State
statutes for the curation in perpetuity of archaeological collections resulting from
archaeological activities.
Kimberly Andrews Espy, Senior VP for Research, kespy@email.arizona.edu, 520.621.3513.
September 27, 2017
Item #7
- ASM has met State statutory requirements to post public notice of intent and to
provide a public comment process, all of which has informed revisions to the current
final rate proposal (see ASM website for all supporting materials -
http://www.statemuseum.arizona.edu/services )
o ASM submission of Notice of Intent to Increase Fees for Services to ABOR

(December 2016).
o Posting of Notice of Intent to Increase Fees for Services on ASM website
(December 2016)
o ABOR submission of Notice of Intent to Increase Fees for Services to Secretary
of State (January 2017; published in Arizona Register February 2017)
o E-mail notification sent to stakeholders (January 2017).
o Posting of Draft Proposal to Increase Fees for Services on ASM website
(January 2017)
o First Public Comment Period (February – March 2017)
o Posting of Revised Draft Proposal to Increase Fees for Services (April 2017)
o Second Public Comment Period (April – May 2017; extended to August 2017)
o Posting of Final Rate Proposal to Increase Fees for Services in preparation for
ABOR review (August 2017).
- In addition to its statutory responsibilities, ASM has also engaged with multiple
stakeholder groups including:
o Presentation of Preliminary Proposal to Increase Fees for Services to
stakeholders (September and December 2016, in Tucson)
o Presentation of Draft Proposal to Increase Fees for Services to ABOR
(February 2017)
o Convening of three stakeholder forums throughout the state, and a tribal
summit (June – August 2017). Participants included 121 total representatives
of 44 different organizations, including cultural resource management firms,
tribes, state agencies, municipalities, and project proponents.
Discussion
- Per ARS § 41-844, the expenses that ASM incurs in providing its state-mandated
cultural resource management services shall be borne by the construction or similar
project to which they relate.
- The final fee and rate structure provides clients a transparent model that is scalable to
the specific project scope of work and enables full recovery of costs.
September 27, 2017
Item #7
Requested Action
The University of Arizona asks that the committee forward to the full board for adoption
of the Arizona State Museum rate and fee structure, pursuant to ARS § 15-1631, as
amended by SB 1418, as presented in the Executive Summary.
Table of Contents
Notice of Intent and Proposal to Increase Rates and Fees for Mandated Cultural Resource Management Services
performed by the Arizona State Museum (Final, August 25, 2017) ..................................................................................... 2
Museum Background .............................................................................................................................................................. 2
Justification for the Development and Application of Rates and Fees ................................................................................... 2
Proposed Rates and Fees for Cultural Resource Management Services ................................................................................ 2
Justification for Proposed Increases in Rates and Fees .......................................................................................................... 3
Description and Explanation of the Methodology Utilized to Calculate the Proposed Fees.............................................. 3
Background and Facts ..................................................................................................................................................... 3
Framework for Rate and Fee Structure .......................................................................................................................... 4
Costs Included Within the Proposed Rates and Fees ......................................................................................................... 6
Costs Wholly Allocable to the Specified Rates and Fees................................................................................................ 6
Costs Allocable to Multiple Rates ................................................................................................................................... 7
Allowable Costs not included in the Proposed Rates and Fees .......................................................................................... 9
Independent Review of Proposed Rates and Fees ............................................................................................................. 9
Quantification of the Rate and Fee Increase .................................................................................................................... 10
Entities Directly Affected by Rate and Fee Increases ....................................................................................................... 10
Explanation of the services ASM will provide with the proposed increased rates and fees ............................................ 11
Project Registration....................................................................................................................................................... 11
Burial Agreements......................................................................................................................................................... 12
Consultation Regarding the Discovery of Human Remains on State Lands.................................................................. 12
Collections Intake (accession, inventory, and cataloguing of collections and associated records) ............................. 12
Curation of Collections and Associated Records in Perpetuity..................................................................................... 12
Burial Excavation and Analysis ...................................................................................................................................... 13
Efforts to Avoid Fee Increases or Reduce Costs and/or Regulatory Burden .................................................................... 13
Cost Mitigation Efforts .................................................................................................................................................. 13
Proposed Cultural Resource Management Business Practices............................................................................................. 15
Schedule of Mandated Cultural Resource Management Service Rates and Fees ................................................................ 16
1
Notice of Intent and Proposal to Increase Rates and Fees for Mandated Cultural
Resource Management Services performed by the Arizona State Museum (Final,
August 25, 2017)
Laws 2016, Chapter 166, amends Arizona Revised Statutes (ARS) § 15-1631 to require that rate or fee increases for
mandated cultural resource management services performed by the Arizona State Museum (ASM) shall be enacted via
specified procedures, including public notice and adoption by the Arizona Board of Regents (ABOR).
The University of Arizona hereby requests that ABOR consider and adopt in its September 27-29, 2017 session the fees
proposed herein for services performed by the state museum pursuant to title 41, chapter 4.1, article 4 and § 41-865, in
adherence to the process specified under ARS § 15-1631.
Museum Background
ASM was established in 1893 by the Arizona Territorial Legislature, and is the official repository for archaeological
collections from state, county, and municipal lands in Arizona and the permitting agency for archaeological projects on
these lands. ASM also administers Arizona’s human burial protection law on state, county, municipal, and private lands.
Under the auspices of ABOR, the University of Arizona directs and manages ASM and sets apart sufficient space to
accommodate it, per ARS § 15-1631.
Justification for the Development and Application of Rates and Fees

There is no anticipated fiscal impact to the state General Fund associated with this legislation. In accordance with ARS §
41-844(I) and ABOR Policy 8-205(I)(1) Duty to Report Discoveries, the proposed rates and fees are commensurate with the
expenses incurred in the provision of services provided in the removal, curation, or reburial of human remains, sacred
ceremonial objects, or objects of national and tribal patrimony as the result of a construction or similar projects. The
proposed rates and fees recover the costs for service provision and do not gift to or subsidize external entities that contract
with the University by improperly using State Funds allocated for educational purposes, consistent with requirements in
ARS Titles 15 and 35, and Article 9, Section 7 of the Arizona State Constitution.
Proposed Rates and Fees for Cultural Resource Management Services

Pursuant to ARS § 41-844(I), ARS Titles 15 and 35, ABOR Policy 8-205(I)(1) and Article 9, Section 7 of the Arizona State
Constitution, ASM's Proposed Cultural Resource Management Services rates and fees are calculated to recover the costs
associated with providing mandated cultural resource management services, under ARS § 41-841 et seq. and § 41-865, to
non-University of Arizona entities requiring these services (i.e., persons, corporations, institutions, state agencies other
than the University of Arizona, and federal agencies). The proposed rates and fees for cultural resource management
services for mandated programs are provided below, and the entire proposed schedule that will be posted per the
statutory process can be found at the end of this document.
Proposed Hourly Service Rates Proposed In-Perpetuity Curation Fees

$38 Assistant $1,502/half box Curation of 1 half cubic foot box of artifacts 1
$83 Specialist $214.75/inch Curation of 1 linear inch of documents
$125 Professional
1
The half-box will be used as a minimum storage and billing unit where ASM deems appropriate and feasible, as subdividing a box
into two equal parts is easily and efficiently accomplished (further subdivision into smaller, reliably measured units needed for
consistent cost assessment is not).
2
Arizona Antiquities Act Permit
No charge Permit application review, up to 30 calendar days turnaround
Justification for Proposed Increases in Rates and Fees

ASM has under‐recovered from project sponsors the costs to provide services mandated by state and federal law. Analysis
has revealed that, in the past, substantial portions of the employee effort and other costs necessary to provide the services
associated with mandated programs were not properly recovered due to the use of task‐based fees that relied on
estimated averages of time spent per task, rather than rates based on hours to execute the specific task. Furthermore,
costs of in‐perpetuity storage, despite statutory requirement, were not included in the previous fees.
The proposed new rate and fee structure generates funds for services to be provided in association with the initiation of
new projects. The proponents of new projects will not be charged additional funds in order to recover costs associated
with past projects. ASM will continue to submit proposals to external entities to fund the processing and curation of older
collections.
The University of Arizona will restrict the use of the funds received through the new proposed ASM rate and fee structure.
ASM reports to the office for Research, Discovery, and Innovation (RDI). RDI has a separate Business Center that reports
directly to the Associate Vice President for Research, who has responsibility for administrative and compliance services.
The RDI Business Center is responsible for the financial management of all ASM activities. This structure provides
monitoring and oversight of expenditures independent of the ASM management structure. The University also
independently monitors funds through the Financial Services Office and the Budget Office.
Description and Explanation of the Methodology Utilized to Calculate the Proposed Fees
Background and Facts
As previously documented, ARS and the Arizona State Constitution dictate that construction and similar projects
shall bear all costs incurred to recover, process, and curate artifacts, as well as the costs associated with the
treatment and disposition of human remains and funerary objects disturbed as a result of such projects.
To develop the proposed rates and fees, the standards and foundational processes that the university utilizes to
determine appropriate rates for the delivery of services were employed (see http://www.fso.arizona.edu/rate-
studies). These standards and processes are guided by the federal government which has issued uniform guidance
to ensure that only allowable costs incurred by the institution in the delivery of services are billed to the federal
government in the execution of grants or contracts.
In order to ensure that the revised rate and fee structure meets these requirements, analysis of the services
historically provided by ASM was conducted, with a focus on the inputs necessary to provide those services, and
the current business and regulatory environments in which ASM operates in delivering these services. Through
multiple meetings and discussions with ASM faculty and staff over several months, as well as several tours of the
facility, the following facts have been gathered and used in the framing of the proposed rate and fee structure.
1. ASM is required by state law to provide services necessary to ensure proper documentation and curation of
artifacts and the treatment and disposition of human remains and funerary objects disturbed through
construction activities across the state. These services are collectively referred to as mandated programs.
2. All of the services provided under mandated programs consist of some combination of professional services
and the curation of documents and/or artifacts in perpetuity.
3. The time and effort involved in completing the services associated with any one project within mandated
programs is highly dependent on a variety of factors, including:
3
a. Distribution of archaeological sites across the landscape and areas of potential development.
b. Proximity of construction project to archaeological site(s).
c. Distribution of archaeological artifacts relative to ground disturbance within the construction site.
d. Artifact population density within the construction site.
e. The quality of documentation and record keeping provided by project sponsors or their agents regarding
artifacts collected and deposited with ASM.
4. ASM is subject to many regulations that dictate services to be provided, professional standards by which they
must be provided, for which services charges may be assessed, and even who must bear the burden of the
cost for such services. This regulatory framework includes:
a. Curation of Federally Owned and Administered Archeological Collections, 36 CFR 79

b. State law, including but not limited to ARS §§ 15-1631, 41-865 and 41-841, et seq.
c. ABOR Policy, including but not limited to 8-101 through 8-110 and 8-201 through 8-207
d. Professional Standards as set out by the American Alliance of Museums
5. The ASM Director and professional staff are responsible for determining the appropriate staff classification
for completion of a given task in order to ensure compliance with the aforementioned obligations and
standards. Much of the day-to-day, hands-on work is performed by lower-cost employees, and then reviewed
by senior personnel to ensure compliance with the statutory obligations and professional standards previously
mentioned. However, there are certain activities that for various reasons (e.g., they require more training or
experience to conduct) require the direct effort of professional staff.
6. The work of mandated programs typically relates directly to construction and similar projects on state or
private lands across the state.
7. It is our current understanding that ARS § 41-1008 prohibits ASM from charging fees for the issuance of
permits. With the exception of permit issuance, all other ASM rates and fees were determined to be
authorized under ARS § 41-844(I) and A.R.S. §15-1631(C), which provides that “The Arizona board of regents
shall adopt any fees for services performed by the state museum pursuant to title 41, chapter 4.1, article 4
and section 41-865.”
8. Paper records related to mandated programs must be physically maintained in perpetuity.
Framework for Rate and Fee Structure

Given fact 2, above, all services provided under mandated programs primarily consist of a combination of
personnel and associated costs, as well as in-perpetuity storage costs. Fact 5, above, informs us that there are
multiple tiers of employee skill and related compensation level that need to be accounted for in establishing rates
to properly recover costs. Based on these facts, there were two methods identified by which cost recovery could
be achieved: task-based fees or time-based rates.
Maintaining a task-based fee structure would keep the fees in a format comparable to how they were historically
assessed. This method requires the outlining of each specific task and sub-task necessary to complete each service
for which a fee is to be developed. It is then necessary to determine the average amount of time required from
each tier of personnel to complete each specific task and sub-task. Flat fees are then set to recapture the costs
associated with the total average amount of time necessary to complete each service, taking into account the
various costs for each employee tier. However, given fact 3 above, it was noted that models based on average
4
time requirements could create substantial disparities between the costs incurred and charges assessed to a given
project. Small projects having little to no impact on archaeological sites, and subsequently little costs incurred,
could be assessed unduly disproportionate fees, and projects with large archaeological impact could be under-
assessed in comparison to incurred costs.
Therefore, given the aforementioned potential variance in time requirements/fees assessed among the
mandatory projects undertaken by ASM (see fact 3 above), and feedback from stakeholders requesting more
scalability and transparency in the assessed charges, the time-based rate methodology was selected.
Based on employee classifications within ASM and their related salary levels, three service rates were determined
(Assistant, Specialist and Professional) for all services to be provided. Service rates consist primarily of the average
hourly pay rate of the employees within each class and the necessary operating costs to support their activities.
See the Assistant, Specialist and Professional sections below for a full list of the expenses included within these
rates.
In addition to the three hourly service rates developed for the various labor classes, fees for the curation of
documents and artifacts in perpetuity also were developed. The vast majority of the artifacts curated within ASM
are stored within standard one-cubic-foot boxes. Multiple artifacts will typically fit within a single box, and
artifacts from up to two construction sites, or projects, may be co-located within a single box in the museum, in
situations where ASM deems this to be appropriate and feasible based on best practices. Projects can, therefore,
be assessed a flat fee for each box, or half-box, required to store in perpetuity the artifacts found within their
respective construction sites. Artifacts too large for boxes are relatively infrequent, and will simply be charged
the per-box fee for curation in perpetuity. Per fact 8 above, paper records also must be kept in perpetuity. Based
on this fact, the fee for curation of documentation in perpetuity was developed on a per-linear-foot basis, a
standard archival measure. Fees assessed for curation of documentation will be based on each linear inch
submitted. These fees (per box and linear inch of documentation) were calculated based on the formula for a
perpetuity due:
periodic storage costs
Fee = current year costs +
periodic discount rate
See the Costs Wholly Allocable to Fee for In-Perpetuity Curation of a Box of Artifacts section and the Costs Wholly
Allocable to the Fee for In Perpetuity Curation of Documents section below for a list of the expenses included
within current year costs and periodic storage costs, as well as the periodic discount rate used in this calculation.
Costs associated with the provision of services under AZSITE and NAGPRA (see definitions below), and costs
associated with the issuance of permits were tracked separately, and are not included in the calculation of service
rates or in-perpetuity curation fees.
AZSITE is a Geographic Information System (GIS) that serves as a consolidated informational network of recorded
cultural resources, including prehistoric and historic sites and properties, as well as surface surveys within the
state of Arizona and a 40-mile buffer around the state. AZSITE is a collaborative project of the Arizona State
Museum on the University of Arizona campus, Archaeological Research Institute on the Arizona State University
campus, the State Historic Preservation Office and the Museum of Northern Arizona. Use of AZSITE is not
mandated under ARS § 41-841 et seq. or § 41-865. The AZSITE expenses are not related to mandated programs,
have been separately accounted in order to prevent them from being misallocated to mandated programs, and
thus are not included in the mandated services rates or in-perpetuity curation fees.
The Native American Graves Protection and Repatriation Act (NAGPRA; 25 USC § 3001, et seq.) is a federal law
that imposes responsibilities and costs on all museums that have ever received federal funding and that curate
Native American human remains and/or funerary objects, sacred objects, and objects of cultural patrimony. The
5
responsibilities and costs associated with NAGPRA are not borne by project sponsors but by curatorial institutions
and federal agencies. The NAGPRA expenses are not related to mandated programs, have been separately
accounted for in order to prevent them from being misallocated to mandated programs, and thus are not included
in the mandated services rates or in-perpetuity curation fees.
Per fact 7, above, charges related to the issuance of permits are currently understood to be impermissible under
Arizona Revised Statutes. Therefore, the costs for permit issuance have been separately accounted in order to
prevent these costs from being misallocated to other mandated programs, and are not included in the assessed
service rates or the in-perpetuity curation fees.
Costs Included Within the Proposed Rates and Fees

First and foremost, all of the revised ASM rates and fees have been derived using a cost basis, ensuring that they are
commensurate and proportionate to the scope of services provided. According to professional accounting principles,
all costs included within the proposed rates and fees must be allowable. Allowability of a cost is determined prior to
its incurrence and inclusion within the rates and fees, and requires that the following criteria be met:
1. Costs must be both necessary and reasonable for the provision of services. Transactions must be entered into
“at an arm’s length” using sound business practices, and adhering to established University and ABOR policies.
2. Costs must be properly allocable in part or in whole to services provided in accordance with the relative benefits
received or some other equitable relationship to the costs incurred.
3. Costs must be readily determinable for inclusion within rates/fees.
4. Costs must be consistently and uniformly applied according to generally accepted accounting principles and
relevant University and ABOR policies and procedures.
5. Costs must be substantiated with adequate documentation, given the nature of the expense involved.
UA Financial Policies and Procedures are available on the web at policy.fso.arizona.edu/fsm
Costs Wholly Allocable to the Specified Rates and Fees

The benefits of these costs can be directly associated with the provision of a single service.
Costs Wholly Allocable to the Assistant Rate

Salary and Employee Related Expenses (ERE 2) for time spent directly providing services to clients ($16,821.74;
0.67 FTE combined).
Salary and ERE for Managerial, Security & Administrative support ($12,023.81).
Costs Wholly Allocable to the Specialist Rate

Salary and ERE for time spent by Specialists providing services to clients ($289,473.95; 4.75 FTE combined).
Costs Wholly Allocable to the Professional Rate
Salary and ERE for time spent by Professionals providing services to clients ($123,969.45; 1.06 FTE combined).
Costs Wholly Allocable to the Issuance of a Permit (and not included in the assessed rates and fees)
Salary and ERE for time spent issuing permits to clients ($53,357.08; 0.84 FTE combined).
Net Present Value of cost of storing documentation related to permits in perpetuity ($748.14 per permit).
Costs Wholly Allocable to Fee for In-Perpetuity Curation of a Box of Artifacts

Current Year Costs
Shelving cost per box, assuming 80% long-term efficiency, and based on historic cost of shelving units.
2
Employee Related Expenses (ERE) are the expenses the University is responsible for as an employer. ERE is comprised of FICA,
Retirement, Unemployment Compensation, Worker's Compensation, Liability Insurance, Health/Dental/Life Insurance, and
Dependent Care Assistance. See http://www.fso.arizona.edu/financial-management/ere-rates for further information.
6
Space cost per box, assuming 80% long-term efficiency, and based on the UA’s Responsibility Centered
Management (RCM) Budget Model.
Costs of box, bags, acid free cardstock, archival pens, curation supplies, etc.
Periodic Costs
Cost recovery for shelving (est. 20-year useful life), space and inventory labor in perpetuity.
Costs Wholly Allocable to the Fee for In-Perpetuity Curation of Documents

Current Year Costs
Shelving cost per linear foot of documents, assuming 80% long-term efficiency, and based on historic cost
of shelving units.
Space costs per linear foot of documents, assuming 80% long-term efficiency, and based on the cost per
square foot under the RCM model.
Costs of document boxes, folders, curation supplies, etc.
Periodic Costs
Cost recovery for shelving (est. 20-year useful life), space, and inventory labor in perpetuity.
Applicable Interest Rates for Calculation of Perpetuities

The discount rate of 7.2% was used in calculation of the perpetuities due associated with curation of both
boxes of artifacts and documentation. This rate was deemed appropriate, as it is approximately the average
annual return of the S and P 500 Index over the period of 1950 to 2009. 3, 4 The inflation rate of 1.7% was used
based on projections from tradingeconomics.com. Similar sites predict higher inflation rates, but the 1.7%
figure has been used to produce more conservative costs for ASM customers. 5
Sensitivity of Curation Fees to Applicable Discount Rate

7.0% Net Discount Rate: $1,200.50 per half-box and $172.42 per linear inch of documentation
2.0% Net Discount Rate: $3,967.00 per half-box and $561.00 per linear inch of documentation 6
Costs Allocable to Multiple Rates

There exist costs that are required for the conduct of mandated programs, but which cannot be assigned directly
to any one rate or fee. These costs are therefore aggregated and then allocated amongst the rates and fees either
in accordance with the relative benefits thereby received, or in proportion to the resources consumed.
Managerial, Security and Administrative Support Salaries and ERE

A total of $84,837.30 of Salary and ERE are incurred for managerial duties, ASM security, and general
administrative support. These costs were pooled and allocated based on relative services provided. The cost
pool for Professional services was not allocated managerial salary and ERE as individuals in this category work
independently and are, by definition, professionals within their respective fields.
Managerial, Security, and Administrative support allocated to Assistants $12,023.81.
Managerial, Security, and Administrative support allocated to Specialists $58,011.27.
Managerial, Security, and Administrative support allocated to Permits $1,159.27.
Security and Administrative support allocated to Professionals $14,802.22.
3
http://www.simplestockinvesting.com/SP500-historical-real-total-returns.htm
4
http://www.thesimpledollar.com/where-does-7-come-from-when-it-comes-to-long-term-stock-returns/
5
http://www.tradingeconomics.com/united-states/inflation-cpi/forecast
6
This is the average rate of return on Operating Funds within the University of Arizona, per the Comptroller.
7
Environmental Control Costs
PEM2 Dataloggers cost recovery (est. 5-year useful life), eClimate Notebook, lift cost recovery (est. 15-year
useful life) and repair. These costs are allocated between the Fee for In-Perpetuity Curation of a Box of
Artifacts and the Fee for In Perpetuity Curation of Documents based on relative number of units processed
($3,905.53 per annum).
Office Equipment
Cost recovery for computers (est. 5-year useful life), photocopier (est. 7-year useful life) and large bed scanner
(est. 5-year useful life). These costs are allocated across the three labor rates and the permit issuance rate
based on relative number of units provided ($7,755.58 per annum).
Office Supplies
Paper, ink/toner, pens, pencils, plastic bags and other operating supplies. These costs are allocated across
the three labor rates and the permit issuance rate based on relative number of units provided ($5,007.97 per
annum).
Communication User FTE Network Charges

$776 per year per FTE assigned to mandated programs. These costs are allocated across the three labor rates
and the permit issuance rate based on relative number of units provided, which is proportionate to the
number of FTEs within each category. This rate is set annually by the University Information Technology
Services (UITS) unit. The Communication User FTE Network charge recovers a portion of the costs of providing
data and voice connectivity to UA campus users. This charge applies to all University FTEs ($10,112.67 per
annum based on current staffing levels).
Desktop Computing Support Costs

$800 per year per FTE assigned to mandated programs. These costs are allocated across the three labor rates
and the permit issuance rate based on relative number of units provided, which is proportionate to the
number of FTEs within each category. Desktop computing support is provided under a service contract by
University Information Technology Services (UITS) unit. UITS sets the annual rate ($10,425.43 per annum
based on current staffing levels).
Server Maintenance and Storage Costs

Annual costs for the proportion of server space utilized to support mandated programs and maintenance
thereof. These costs are allocated across the three labor rates and the permit issuance rate based on relative
number of units provided. Server maintenance and storage costs are provided under a service contract by
University Information Technology Services (UITS) unit. UITS sets the annual rate ($12,500 per annum).
Facilities and Administrative Costs

Facilities and Administrative Costs are those costs associated with maintaining a viable place of business in
which to conduct the mandated programs, which are determined officially by review and approval of the
federal authority, the Department of Health and Human Services, the cognizant agency for the University of
Arizona. The following components of the official University of Arizona Facilities and Administrative Cost rates
have been applied and included within the proposed rates (30.39% for services; 13.26% for curation).
Building Expense 7
Equipment Costs
Interest Expense 7
7
These components of the Facilities and Administrative Rate have been excluded from the fees for curation in-perpetuity,
in which space charges are directly applied based on net square footage of space occupied.
8
Operations and Maintenance Expense 7
Administrative Service Charges, including Financial Services
Allowable Costs not included in the Proposed Rates and Fees

There are substantial pools of costs that were not included within these rates and fees in order to mitigate the burden
borne by project sponsors and to keep charges as low as possible. These allowable but excluded costs include the
following:
1. Retrofitting of UA warehouse space for the curation of artifacts and documentation. In order to meet the space
requirements of providing curation of artifacts and documentation in perpetuity, ASM must expand its storage
space within the next five years. Rather than assuming and including additional on-campus space, ASM has
identified a more cost-effective alternative location at an off-campus warehouse recently purchased by the
University. This space requires retrofitting in order to be suitable for ASM storage and related activities. The
current estimate of the cost of this retrofit is $1,600,000. ASM is currently pursuing external funding via grants
and a donor-based philanthropic campaign, and thus no portion of these costs are included within any of the
proposed rates or fees for mandated programs.
2. Costs associated with the maintenance of a skilled workforce. Employee training is an integral part of maintaining
ASM’s professional workforce, thereby ensuring capacity to fulfill the mandated duties of curation and
preservation of artifacts in a manner that comports with professional standards and practice expectations. ASM
estimates that each continuing employee requires approximately $1,000 worth of training each year to maintain
skills consistent with these standards. New hires require substantially greater investments in training for
appropriate skill development.
3. Costs for space where compactor shelving is not yet installed. The physical framework for existing compactor
shelving contains enough space for an additional nine (9) carriages of shelving. Rather than apportioning the costs
for this currently-dead-space amongst the shelving carriages that currently exist (which would have resulted in a
higher fee), a rate consistent with the long-term efficiency achievable via the additional capacity in this dead-
space was utilized. Had the dead-space been allocated across current capacity, the fee for in-perpetuity curation
of either a box of artifacts or a linear foot of documentation would have increased by $1,791.89.
4. Costs for the new Consolidated Collections Information System. ASM currently operates with an information
system that is approximately 15 years old. The total estimated cost to replace ASM’s antiquated information
system with a modern consolidated collection information system is $625,628. Rather than include the allowable
proportionate amount of these costs in the rates and fees for mandated programs, ASM staff have submitted
federal grant proposals and pursued a donor-based philanthropic campaign to underwrite these costs.
5. Salaries for UA’s office for Research, Discovery & Innovation (RDI) Business Center personnel utilized by ASM were
not included within the rates and fees. ASM is provided accounting, HR and other business service support by the
RDI Business Center. The personnel, equipment, office supplies and other costs associated with the provision of
these services were wholly excluded from the rates and fees for mandated programs.
6. The cost of engaging an external accounting firm in an attestation on the rates and fees herein proposed. RDI
expects this engagement to cost a minimum of $10,000.
Independent Review of Proposed Rates and Fees

The Financial Services Office (FSO) at the University of Arizona conducted an independent review of the methodology
used in the development of ASM’s proposed rates and fees, and has validated the methodology. Additionally, RDI is
9
in the process of engaging BeachFleischman, PC to perform an attestation on the proposed rates and fees. The opinion
letter from this engagement will be made available by the September 27th ABOR meeting.
Quantification of the Rate and Fee Increase

The proposed changes herein relate not only to the rates and fees charged, but to their structure and the method by
which they are applied. Due to this fundamental change in structure, the old and proposed new rates are not directly
comparable.
Nonetheless, despite the different structure resulting in non-comparability, estimates for hypothetical project charges
for the mandated services provided under the new structure have been generated for the purposes of illustrative
comparison using historical averages of hours for task completion and the proposed services rates.
Example for Illustration:
New Structure
Old Example Project Charges using
Structure estimated historical average
Service Fee hours for execution*
Project Registration for Monitoring Project (curated at ASM) $3,000.00 $0.00 $1,079.00
Project Registration for Testing/Excavation Project (curated at ASM) $6,000.00 $0.00 $1,283.00
Project Registration for Survey Project (must be curated at ASM) $0.60/acre $0.00 $650.00
Project Registration for Monitoring Project (not curated at ASM) $150.00 $0.00 $249.00
Project Registration for Testing/Excavation Project (not curated at ASM) $150.00 $0.00 $249.00
Collections Intake $1,000.00 $0.00 $1,321.00
(curated at ASM; assumes 2 half-boxes, 1 cataloged object, 1 inch of documentation)
Not
Curation of Artifacts in Perpetuity (per half-box) included $1,502.00 $0.00
Not
Curation of Documents in Perpetuity (per linear inch) included $ 214.75 $0.00
General Burial Agreement $250.00 $0.00 $250.00
Project-Specific Burial Agreement $300.00 $0.00 $2,375.00
Consultation Regarding Human Remains Discovery on State Lands (assumes 8 hours) $300.00 $0.00 $1,000.00
Burial Excavation and Analysis (assumes 8 hours) $440.00 $0.00 $1,000.00
*based on calculated historical average hours to complete tasks and Proposed Service Rates for Assistant and/or Specialist and/or Professional
Entities Directly Affected by Rate and Fee Increases

The entities directly affected by these costs are project sponsors and cultural resource management firms
(archaeological consultants) engaged by project sponsors.
The entities who will bear the costs are project sponsors, with the exception of the costs associated with the issuance
of permits (as these costs cannot be included in cultural resource management service rates or fees under ARS § 41-
1008).
The proposed structure of the new rates and fees is designed to be responsive to concerns expressed by project
sponsors, while at the same time, complying with regulatory requirements for service delivery and cost recovery. The
proposed rate and fee structure is transparent, consistent, and scalable to the differing scopes of various projects.
The entities who will directly benefit from the proposed rate and fee increases are project sponsors and the people
of the state of Arizona, including the state’s tribal communities.
10
Project sponsors will benefit from the greater predictability, transparency, and scalability in charges for ASM to
provide the mandated cultural resource management services that support and enable their commercial, residential,
and infrastructure development projects to proceed under federal and state law.
The people of Arizona, including the state's tribal communities, will benefit not only from the development projects
facilitated by ASM's mandated mission, but also in that the information and objects recovered as a result of
archaeological activities in advance of development will be studied, documented, and curated in perpetuity for
ongoing research and use in educational programs and exhibitions, in compliance with federal and state law.
Explanation of the services ASM will provide with the proposed increased rates and fees
Mandated services provided pursuant to ARS § 41-841 et seq., ARS § 41-865, and ABOR Policy Manual Chapter 8
include:
1) project registration, including the development of curation agreements if the collection associated with a given
project is to be curated by ASM;
2) development of burial agreements;
3) consultation regarding the discovery of human remains on state lands;
4) collections intake, if the collection associated with a given project is curated by ASM;
5) curation of collections and associated records in perpetuity, if the collection associated with a given project is
curated by ASM and;
6) burial excavation and analysis, when required.
Project Registration
ASM is responsible for ensuring the care of all archaeological materials recovered from state lands and the lands
of all political subdivisions of the state, as well as the records associated with these collections, whether they are
to be curated at ASM or at another public repository. Under federal and state law, a permit for archaeological
activity cannot be issued by ASM until ASM is presented evidence that the project sponsor and/or that entity's
agent has secured a curation agreement from a public repository. Project registration is the process by which ASM
either develops a curation agreement for curation at ASM or obtains information required to track collections and
records to be curated by other public repositories.
Project Registration for Monitoring (Collections Curated at ASM)

The specific tasks associated with this service include:
Creating an accession file and database record.

Creating a curation agreement and obtaining signatures.
Preparing cover letters and mailing documents.
Consulting with clients as needed.
Reviewing submitted documentation.
Project Registration for Testing or Excavation (Collections Curated at ASM)


Creating a curation agreement and obtaining signatures.
Preparing cover letters and mailing documents.
11
Project Registration for Survey (Collections Curated at ASM)
Processing a Notification of Intent to Conduct Survey.

Issuing site numbers and updating the site number database.
Plotting sites on maps, checking landownership, updating the site database.
Project Registration for Monitoring, Testing, or Excavation (Collections Not Curated at ASM)

Creating a permanent record file and database entries.
Burial Agreements
Reviewing the work plan and sending comments to the client.

Writing the draft burial agreement, addressing client comments, and preparing the final agreement.
Reviewing the draft report of human remains, preparing comments, and sending comments to the client.
Reviewing the project report and sending comments to the client.
Preparing paper and electronic records for curation in perpetuity.
Consultation Regarding the Discovery of Human Remains on State Lands

Telephone consultation.
Organizing and attending face-to-face consultation meetings, regardless of whether a burial agreement is
required.
Collections Intake (accession, inventory, and cataloguing of collections and associated records)
Arranging for and accepting delivery of collections and associated records.

Reviewing the electronic inventory and physically checking the contents of boxes against the inventory.
Rehousing artifacts as needed.
Cataloguing and photographing objects.
Creating database records for each catalogued object.
Inventorying and rehousing documents.
Creating database records for documents.
Inventorying and uploading digital images and other digital files to servers.
Creating database records for digital files.
Curation of Collections and Associated Records in Perpetuity

Providing space, shelving, and environmental controls.

Providing archival-quality curation supplies (acid-free boxes, folders, etc.).
Conducting an annual inventory.
12
Burial Excavation and Analysis
Site visit and assessment.

Documentation and removal (excavation) of human remains and funerary objects.
Analysis of remains in secured laboratory (including, at a minimum, inventory and morphological and
metric observations).
Determination of cultural or religious affinity.
Consultation with groups of cultural or religious affinity and possible site visit.
Disposition of human remains and funerary objects, which may include reburial,
repatriation, or permanent safekeeping at ASM.
Efforts to Avoid Fee Increases or Reduce Costs and/or Regulatory Burden

ASM’s mandated mission consists of serving our stakeholders and communities in ensuring that construction or similar
projects remain compliant with the regulatory framework to which they are subjected under federal and state law.
Although the burden imposed upon such projects as a result of this regulatory framework is outside ASM’s purview
and well beyond the University’s authority and control, the University and ASM have pursued several efforts to reduce
the charges assessed to project sponsors in meeting our mutual responsibilities under the law.
There are substantial pools of costs that are allowable in the development of the proposed rates and fees that were
not included in order to mitigate the burden borne by project sponsors and to keep charges as low as possible.
Cost Mitigation Efforts

RDI Business Support to ASM
ASM is provided accounting, human resource and other business service support by the RDI Business Center.
The personnel, equipment, office supplies and other costs associated with the provision of these services were
wholly excluded from the rates and fees for mandated programs in order to reduce charges to project
sponsors.
Leveraging ASM Expertise

ASM, as part of the University of Arizona, is also able to leverage the expertise of its faculty and staff in
archaeology and museum conservation such that only a small percentage of each highly trained professional’s
effort is expended in supervising lower-cost employees who complete the great majority of the tasks
comprising mandated cultural resource management services.
Compactor Shelving
ASM’s utilization of compactor shelving significantly reduces the space costs associated with curation in
perpetuity of both boxes of artifacts and linear feet of documentation. Excluding consideration of the
necessary costs associated with environmental controls, the per-box or per-linear-foot savings from
employing compactor shelving is a net present value of $1,432.56. These savings are a direct result of the fact
that compactor shelving makes 45% more efficient use of square footage of storage space than standard
shelving. The cost differential between compactor and standard shelving is recuperated within the first 85
boxes of artifacts or linear feet of documentation curated, and each compactor carriage can store an average
of 336 boxes or linear feet of documentation. These savings are incorporated in the proposed rates and fees,
and the benefits passed on directly to the entities that engage ASM for services under mandated programs.
Future Curation in UA Warehouse

Currently all curation at ASM is carried out within two historic buildings on the University of Arizona campus.
The curation fees for both boxes of artifacts and linear feet of documentation are based on facilities cost of
$25.19 per square foot per month, the cost that is levied to all university units within the University’s Budget
13
Model. This rate takes into account operations, utilities, and debt payments associated with facilities and
grounds. To date, ASM has raised more than $245,000 and has submitted five grant proposals requesting a
total of $1M toward the estimated $1.6M necessary to secure and outfit 30,000 square feet of archaeological
collections curation and research space in an off-campus facility. Once ASM is able to secure the remaining
funding, this off-campus facility will be retrofitted to meet ASM’s specific storage needs. This off-campus site
will enable ASM to continue to meet its mission relating to the curation of artifacts and documents even as
its historical space reaches capacity, and it is anticipated that this off-campus location can be operated at
lower cost than the historical buildings that currently serve as the storage space. If realized, these cost
reductions will be built into the rates and fees for mandated programs and the benefit passed through to
project sponsors.
Consolidated Collections Information System

In September of 2016, ASM faculty submitted a grant proposal under the Humanities Collections and
Reference Resources funding announcement offered by the National Endowment for the Humanities’ division
of Preservation and Access. If funded, this grant will provide $289,502 towards the total estimated cost of
$625,628 needed to replace ASM’s current antiquated information system with a modern consolidated
information system. This new system will enable ASM staff to more efficiently, accurately, and adequately
complete the process of cataloguing its holdings, thereby minimizing costs to projects associated with
processing artifacts deposited. The simplified infrastructure of the new consolidated system is also
anticipated to drive reductions in IT costs associated with server maintenance and storage.
Independent IT Assessment for Museums

In December of 2015, ASM's parent organization, the University’s Office for Research, Discovery & Innovation
(RDI), engaged WTC Consulting to formulate a strategy for complex networking, IT & telecommunications to
be implemented across ASM, the Center for Creative Photography and the University of Arizona Museum of
Art. After their analysis of server and storage infrastructures, user systems, applications and data
management, and existing IT support, WTC formulated a strategy to create a shared IT support model across
the three RDI units, which leveraged existing University Information Technology Services (UITS) services with
targeted internal IT support. RDI and ASM are currently implementing this plan in stages, including submission
of the aforementioned CCIS grant to the National Endowment for the Humanities, and a reduction in direct IT
support staff. The recommendations included within the strategy have assisted in reducing the costs
associated with the provision of mandated services and providing greater security to ASM’s digital records.
14
Proposed Cultural Resource Management Services
Rate and Fee Schedule
Effective July 1, 2018
Proposed Cultural Resource Management Business Practices

• ASM will provide scope-dependent quotes within two business days of a client’s request.
• Quotes will be generated based upon information submitted by clients through the online Request for
Services form.
o Information submitted includes estimates of half-boxes of artifacts, individually catalogued artifacts,
digital images and linear inches of documentation to be submitted for curation in perpetuity.
o ASM will evaluate the client’s submitted data for completeness and reasonableness based on
historical data.
 Quotes will be based upon the client’s reasonable and complete estimates.
 In the event the client’s submitted estimates materially differ from ASM’s historical data,
ASM will work with the client to determine estimates for inclusion within the quote. The two-
business-day guarantee for quotes does not apply in such cases.
• Quotes are binding, barring any material variance in the scope of the project.
• Materiality is defined as a +/- 10% or more difference in the count of half-boxes of artifacts, individually
catalogued artifacts, digital images or linear inches of documentation:
o As measured between client submitted estimates and ASM historical data, or;
o Estimates embedded within the binding quote and collections submitted for intake and curation.
• All on-curation services requested of ASM, including collections intake, will be quoted based upon the
estimated time to complete tasks, the necessary staff classification to complete each task, and the
appropriate hourly service rate thereof.
• In-perpetuity curation fees will be charged per half-cubic-foot box of objects, per individually catalogued
artifact, and per linear inch of documents deposited.
• ASM will provide permits at no charge to the project.
• ASM will bill in two installments, similar to current business practices.
o The initial invoice will be based on the estimated costs of activities undertaken by ASM to complete
work up to the point of collections intake, and will be issued at the inception of the project.
o The second invoice will be issued at the time collections are submitted for intake, or project
completion. The second billing will cover collections intake services and in-perpetuity curation for
projects curated at ASM. For projects generating objects not curated at ASM, the second billing will
cover the costs of document curation in perpetuity.
o CRM firms may be subject to additional costs if submitted collections do not comport with state
standards and must be returned for remediation and resubmission.
• Quotes will be based upon current rates and fees.
• Rates and Fees are subject to change through the process described in ARS § 15-1631.
15
Proposed Cultural Resource Management Services
Rate and Fee Schedule
Effective July 1, 2018
Schedule of Mandated Cultural Resource Management Service Rates and Fees
Proposed Hourly Service Rates

$38 Assistant
$83 Specialist
$125 Professional
Proposed In-Perpetuity Curation Fees

$1,502.00/half box Curation of 1 half-cubic-foot box of artifacts 8
$214.75/inch Curation of 1 linear inch of documents

8
The half-box will be used as a minimum storage and billing unit where ASM deems appropriate and feasible, as subdividing a box
into two equal parts is easily and efficiently accomplished (further subdivision into smaller, reliably measured units needed for
consistent cost assessment is not).
16
ARIZONA STATE MUSEUM
SCHEDULE OF MANDATED CUITURAI RESOURCE

MANAGEMENT SERVICES RATES AND FEES
TABTE OF CONTENTS
CONTENTS
Page
lndependent auditors' report t-2

Schedule of mandated cultural resource management services rates and fees 3
Notes to schedule of mandated cultural resource management services rates and fees 4-6
BFCC
BEACHFLEISCHMAN
lndependent Auditors' Report
Management
Arizona State Museum
Tucson, Arizona
We have audited the accompanying schedule of mandated cultural resource management services rates and fees of
Arizona State Museum (in accordance with ARS S4L-844) and the related notes to the schedule .
Management's Responsibility of the Schedule
Management is responsible for the preparation and fair presentation of this schedule in accordance with accounting
principles generally accepted in the United States of America; this includes the design, implementation and
maintenance of internal control relevant to the preparation and fair presentation of the schedule that is free from
material misstatement, whether due to fraud or error.
Auditors' Responsibility
Our responsibility is to express an opinion on this schedule based on our audit. We conducted our audit in
accordance with auditing standards generally accepted in the United States of America. Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether the schedule is free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosure in the schedule.
The procedures selected depend on the auditors' judgment, including the assessment of the risks of material
misstatement of the schedule, whether due to fraud or error. ln making those risk assessments, the auditor
considers internal control relevant to the Company's preparation and fair presentation of the schedule in order to
design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion
on the effectiveness of the Company's internal control. Accordingly, we express no such opinion. An audit also
includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting
estimates made by management, as well as evaluating the overall presentation of the schedule.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.
BeachFleischmanPC . beachfleischman.com
1
l9S5EastRiverRoad,Suite#201 . Tucson,4285718-7176 . 1'520.321.4600 . F 520.321.4040
2201 East Camelback Road, Suite #200 . Phoenix, AZ 85016-3431 . T 602.265.7011 . F 602.265.7060
Opinion
ln our opinion, the schedule of mandated cultural resource management services rates and fees (in accordance with
ARS 54L-844) referred to above presents fairly, in all material respects, mandated cultural resource management
services rates and fees, in accordance with accounting principles generally accepted in the United States of America.
Emphasis of Matter
As discussed in footnote L to the schedule of mandated cultural resource management services rates and fees, the
Arizona State Museum has used a lower fixed asset capitalization threshold. Our opinion is not modified with
respect to that matter.
Restriction on Use
This report is intended solely for the information and use of management of Arizona State Museum and proper
officials at Arizona Board of Regents and is not intended to be and should not be used by anyone other than these
specified parties.
l3¿^./.72*¡,/r-,---,PC
Tucson, Arizona
September 22,2017
2
SCHEDUTE OF MANDATED CUITURAL RESOURCE MANAGEMENT SERVICES RATES AND FEES
Proposed hourly service rates:

o Assista nt $ 38
o Specialist s 83
o Professional s L25
Proposed ln-Perpetuity Curation Fees:
o Half box $1,502

a lnch S zrs
See notes to schedule 3

NOTES TO SCHEDULE OF MANDATED CULTURAT RESOURCE

MANAGEMENT SERVICES RATES AND FEES
t. Description of Museum and summary of significant accounting policies:
Museum Background:
Arizona State Museum (ASM) was established in 1893 by the Arizona Territorial Legislature, and is the
oldest and largest anthropology museum in the region focusing on the indigenous cultures of the US
Southwest and northern Mexico. ASM serves as the official repository for archaeological collections from
state, county, and municipal lands in Arizona, as well as being the permitting agency for archaeological
projects on these lands. ASM also administers Arizona's human burial protection law on state, county,
municipal, and private lands. ASM has never wavered in its commitment to the people of Arizona,
ensuring that the state's cultural resources are protected, shared, and cared for in perpetuity.
Mandated programs:
Arizona State Museum is the state's official museum. ASM's archaeological repository is the nation's largest
and busiest state-run curation facility. Other government-mandated functions include:
a ASM administers the Arizona Antiquities Act, making it the permitting authority for all archaeological
activity conducted on more than 9.5 million acres of state land. Objects and associated
documentation produced as a result of that activity fall under ASM's curatorial responsibilities.
a Under the Arizona Antiquities Act, ASM assists other state agencies, and in some case federal
authorities, in the investigation and prosecution of crimes that result in damage to the archaeological
record.
a Arizona's official inventory of more than 100,000 archaeological and historic sites, , is housed at ASM.
AZSITE is an internet-based geographic information system and nationally recognized as a model of
best practices in cultural resource data management.
a ASM administers the state statues that protect human burials on both state and private lands and is a
leader in working with tribes to implement the federal Native American Graves Protection and
Repatriation Act ( NAG PRA).
Collections:
ASM's collections are held in trust for the people of the state of Arizona. Numbering more than 3 million
objects, these include 300,000 catalogued archaeological artifacts, 40,000 ethnographic artifacts, 500,000
photographic negatives and original prints, 90,000 volumes of rare and hard-to-find titles, 6,000 maps,
l-,500 linear feet of archival documents, and more than 1,000 sound recordings.
4
NOTES TO SCHEDUTE OF MANDATED CUTTURAL RESOURCE

MANAGEMENT SERVTCES RATES AND FEES (CONTTNUED)
t. Description of Museum and significant policies (continued)
Preservation:
ASM's Preservation Division is passionate about protecting the collections entrusted to its care. The
treatment of objects is guided by the principle that the integrity of the object should be preserved in every
way possible.
Calling on its state-of-the-art laboratory, the Preservation Division provides preventive and interventive
conservation of ASM's vast collections, serves the public through workshops and queries, instructs scores
of conservation students, and continues to conduct cutting-edge research in areas such as nano-particle
technology, imaging technology, and frozen technology, or the use of dry ice "snow," which has been
found to safely remove dust, soot, and other contaminates from delicate surfaces without causing
scratches or other damage.
Accounting policies:
All of the ASM rates and fees have been derived using a cost basis, ensuring that they are commensurate
and proportionate to the scope of services provided. All costs included within the proposed rates and
fees must be allowable. Allowability of a cost is determined prior to its incurrence and inclusion within
the rates and fees, and requires that the following criteria be met:
1. All costs comply with University of Arizona Financial Policies and Procedures, which are
available on the web.
2. Costs must be both necessary and reasonable for the provision of services. Transactions
must be entered into "at an arm's length" using sound business practices, and adhering to
established University and Arizona Board of Regents policies.
3. Costs must be properly allocable in part or in whole to services provided in accordance with
either the relative benefits received, or in proportion to the resources consumed.
4. Costs must be readily determinable for inclusion within rates/fees.
5. Costs must be consistently and uniformly applied according to accounting principles

generally accepted in the United States of America and relevant University and ABOR
policies and procedures.
6. Costs must be substantiated with adequate documentation, given the nature of the
expense involved.
5
NOTES TO SCHEDULE OF MANDATED CULTURAL RESOURCE

MANAGEMENT SERVTCES RATES AND FEES (CONTINUED)
1. Description of Museum and significant policies (continued):
Capital assets:
All assets are depreciated over their estimated useful lives on a straight line basis, using the full year
convention. All equipment within this rate study falls within the University of Arizona's "Various
equipment, machinery, vehicles and other" category which has a range of useful lives spanning between
3 and 25 years. This category has a capitalization threshold of 55,000 for financial reporting at the
University of Arizona. Given the dollar amounts included within this rate study it was determined that
expensing of all items below the 55,000 capitalization threshold, regardless of their relative useful lives,
could potentially cause material misstatements within the rates. ln order to avoid such misstatements,
the threshold was lowered to 51,000 for the purposes of this rate study. Management of ASM believes
this treatment, which reduces annual costs, better reflects the utility that these assets bring to the
services being provided, and better matches expenses to the periods which derive benefits from those
assets.
Significant accounting estimates:

A number of estimates were made in calculating ASM's Mandated Cultural Resource Management Service
Rates and Fees. Because of the inherent uncertainties in estimating costs on calculated rates and fees
which relate primarily to fees for in-perpetuity curation it is at least reasonably possible that the
estimates used will change in the near term. ln these instances ASM has taken an approach to
approximate long-term behavior. Management of ASM believes that this approach will provide greater
stability in rates and fees, while simultaneously mitigating costs to be borne by their clients.
Discount rate applied for perpetuity calculations:

The discount rate applied to calculating net-present-values has substantial effect on calculated amounts.
ASM believes that application of a long-term yield rate is more accurate with the nature and duration of
the curatorial services to which the fee relates, and therefore more appropriate for use within their
costing model. Use of a discount rate that approximate the actual historical yield on operating funds
would result in fees approximately 3 times those proposed.
Efficiency of curatorial space utilization:

Unlike typical warehouses, items entering ASM's inventory never leave. As a direct result the efficiency
with which space and shelving is utilized to fulfill ASM's curatorial duties is in constant flux. As items are
curated into current warehouse space, ASM will approach maximum capacity (i.e. maximum efficiency).
However, as space utilization approaches capacity additional space must be identified and outfitted to
accommodate future collections to be curated. When new warehouse space is incorporated into ASM's
operations there is a corresponding drop in the efficiency of space utilization. Management of ASM has
elected to utilize an 80% long-term efficiency metric when apportioning space costs. This estimate allows
for service rates to normalize versus paying for excessive amounts of empty space. Use of 40% space
efficiency nearly doubles calculated fees for in-perpetuity curation of artifacts and documents.
6
Update and Request for Adoption:
Proposed Rates and Fees for
Mandated Cultural Resource Management Services
Pursuant to A.R.S. § 15‐1631
Dr. Kimberly Andrews Espy, Senior Vice President for Research
Dr. Patrick D. Lyons, Director, Arizona State Museum
R. Brooks Jeffery, Associate Vice President for Research September 27, 2017
Background
 ASM was established in 1893 by Territorial Legislature, at UA, under
oversight of ABOR.
 Derives its authority from A.R.S. § 15‐1631 and ABOR Policy
Chapter 8.
 Official repository for archaeological collections from state, county,
and municipal lands in Arizona.
 Permitting agency for archaeological projects on these lands.
 Administers Arizona’s human burial protection laws on state,
country, municipal, and private lands.
Update on Process (per A.R.S. § 15‐1631 as amended by SB 1418)
 Post Notice of Intent on ASM website before 1 January
 Provide Notice of Intent to ABOR
 ABOR submit Notice of Intent to Secretary of State for publication in Register
 Post Draft Proposal on ASM website on or before second Monday of the
calendar year
 Public Comment Period of at least 30 days after publication in the Register
 If applicable, post Revised Draft Proposal after 30‐day public comment period
 Second Public Comment Period (if necessary) of at least 20 days after posting
of Revised Draft Proposal
 ASM posts Final Draft Proposal
 ABOR reviews for adoption
3
Update on Process
 Initial stakeholder engagement (Sep‐Dec 2016) N Entities
 ABOR Presentation (Feb 2017) Stakeholder Category N Attendees
CRM firms 40
Represented
16
 First Comment Period (Feb‐Mar 2017) Tribes 20 5
State Agencies 13 4
• 11 written comments SHPO 11 1
Municipalities 10 3
• Revised proposal Proponents/Lobbyists 10 5
Federal Agencies 7 4
 Second Comment Period (Apr‐May 2017) Museums 4 1
• 17 written comments Other 3 3
AZ Assoc Cons Dists 2 1
 Extended Second Comment Period (May‐Aug 2017) AZ Farm Bureau 1 1
TOTAL 121 44
• 16 additional written comments
• Convened three public forums and a tribal summit
(Jun‐Sept 2017)
 Revised proposal again
Summary of Comments
 More scalability to project scope of work and more transparency
in cost structure
 Independent evaluation of proposed rate and fee structure
 Appreciation for outreach efforts and responsiveness
 Proposed rates and fees are too high
 Potential for unintended negative consequences
 Alternatives to reduce project costs
 Phase in rate and fee increases over time
 Formal, government‐to‐government tribal consultation
under AZ Executive Order 2006‐14
5
Responses to Stakeholder Input
 Delayed implementation of proposed rate and fee structure to 1 July
2018 (one year later than originally planned)
 Agreed to honor all existing commitments under current rate and fee
structure for project submitted before 1 July 2018
 Reduced base billing units
 Evaluated alternative proposals to reduce costs
 Modified ASM business practices to align with the needs of CRM firms
 Obtained independent review (BeachFleischman PC) of proposed rate
and fee structure
6
Efforts to Increase Efficiency and Minimize Costs
 Efficiencies:
• Leveraging ASM expertise
• Repository compactor shelving
• Future curation in UA warehouse
• Independent IT assessment for museums
 Leveraging capacity supported by other fund sources:
• UA Office of Research, Discovery and Innovation business support
• Consolidated Collections Information System
• Service management and billing software
Rationale and Justification for Fee Increase
 Per A.R.S. § 41‐844, the expenses that ASM incurs in providing state‐
mandated cultural resource management services shall be borne by
the construction or similar project to which they relate.
 Previous fees were standardized and based on estimated average time
spent per task:
• not well scaled to project scope
• some costs were under‐recovered
 Costs of in‐perpetuity curation, despite statutory requirement, were
not included in the previous fee structure.
Results
Proposed Hourly Service Rates
$38 Assistant
$83 Specialist
$125 Professional
Proposed In‐Perpetuity Curation Fees
$1,502/half box Curation of 1 half cubic foot box of artifacts
$214.75/inch Curation of 1 linear inch of documents
BeachFleischman PC reviewed the proposed rates and fees and attested that
they are presented, in all material respects, in accordance with A.R.S. § 41‐844.
Comparing Costs: Monitoring Projects
 83% of monitoring
Monitoring Project Curated at ASM (records only) Old Structure Proposed Structure
projects produce
Project Registration $3,000.00 $1,079.00
Subtotal $3,000.00 $1,079.00 no objects, only
In‐perpetuity curation: documents (1 linear inch) not recovered $214.75 records
Subtotal $0.00 $214.75
TOTAL $3,000.00 $1,293.75
(documents)
Monitoring Project Curated at ASM  70% of monitoring
(objects and records) Old Structure Proposed Structure
Project Registration $3,000.00 $1,079.00
projects that
Collections Intake (1 box) $1,000.00 $1,321.00 produce objects
Digital Curation (1GB) $90.00 included in Collections Intake generate one box
Subtotal $4,090.00 $2,400.00
In‐perpetuity curation: objects (1 box) not recovered $3,004.00
or less
In‐perpetuity curation: documents (1 linear inch) not recovered $214.75
Subtotal $0.00 $3,218.75
TOTAL $4,090.00 $5,618.75
Comparing Costs: Testing/Excavation Project
Testing/Excavation Project Curated at ASM Old Structure Proposed Structure  The median testing
Project Registration $6,000.00 $1,283.00 or excavation
General Burial Agreement $250.00 $250.00
Collections Intake (3 boxes) $3,000.00 $3,963.00 project produces 3
Digital Curation (1 GB) $90.00 included in Collections Intake boxes
Subtotal $9,340.00 $5,496.00
In‐perpetuity curation: objects (3 boxes) not recovered $9,012.00
In‐perpetuity curation: documents (3 linear inches) not recovered $644.25  74% of testing or
Subtotal $0.00 $9,656.25 excavation projects
TOTAL $9,340.00 $15,152.25
generate 10 boxes
or less
Concluding Summary
 Proposed rate and fee structure balances needs of ASM and diverse
stakeholders:
• Heard initial stakeholder need for more transparency and scalability to
scope of work
• Used standard cost‐recovery methodology based on federal Uniform
Guidance
• Engaged stakeholders repeatedly and persistently
• Throughout the process, made many modifications to the proposed rate
and fee structure and ASM’s business practices with balance in mind
• Outside accounting firm engaged for independent review
Legal Mandates Rate Calculation
 Questions? Mandated Services Business Processes

September 27, 2017
Item #8
Item Name: Novus Innovation Corridor Master Plan Approval and

Reporting Structure
Action Item
Issue: The board office and Arizona State University ask for review and approval of
the Novus Innovation Corridor master plan and proposed reporting structure.

Impact Arizona
Compliance
Other: Governance
 A.R.S. § 15-1626(A)(1) General Administrative Powers and Duties of Board
 ABOR Policy 7-207.A.1.a requires Board approval for any lease with a term that
exceeds 120 months
 The Novus Innovation Corridor is a branded mixed-use project that will be developed
by ASU and third parties, a significant portion of which is currently known as the
Athletic Facilities District (the "AFD").
 In March 2016, the board approved authority for ASU to execute ground leases
within the AFD with certain reporting requirements.
John Arnold 602-229-2507 john.arnold@azregents.edu
Morgan R. Olsen 480-727-9920 morgan.r.olsen@asu.edu
September 27, 2017
Item #8
 Since the March 2016 approval, ASU has branded the mixed-use project as the
Novus Innovation Corridor™, which includes the AFD and certain additional
property. The current boundaries of the Novus Innovation Corridor are shown on
Exhibit A, and may be expanded from time to time by ASU. The Business and
Finance Committee received executive session updates regarding the Novus
Innovation Corridor on June 7, 2017, August 8, 2017, and August 29, 2017.
Discussion
Athletic Facilities District (AFD) and Novus Innovation Corridor (Novus)
 The processes, reporting structure and other matters described herein apply only to
property within the Novus Innovation Corridor that is ground leased to third parties
for development. Property that is subject to development for ASU use is subject to
ABOR capital project policies.
 The prior lease authority provided for AFD will be replaced with new authority as
outlined in the Requested Action section of this executive summary.
Novus Reporting Structure
 In order to ensure timely updates, the ABOR office proposes a reporting structure
that has 3 primary components. Exhibit B outlines the main components and
information elements. The 3 main components of reporting include:
o An annual report submitted by August 15 every year for board review. The report
will provide a year in review and a preview of the upcoming year, as well as
progress against baseline financial and development timelines.
o Preliminary takedown notice reports to the chair of the Business and Finance
Committee, and a presentation to the Business and Finance Committee that
reviews the development plan for the phase included in the takedown notice.
o Updates to the Business and Finance Committee as necessary when significant

events related to the master plan or developments are anticipated.
Novus Development Partnership
 Exhibit C provides an outline of the responsibilities for the major participants in the
Novus Innovation Corridor (ABOR, ASU and Catellus).
Next Steps
 The ABOR office is coordinating an effort to revise board capital project and real
estate policies to streamline the capital development process while ensuring the
September 27, 2017
Item #8
board continues to meet its fiduciary responsibility. The authority and reporting
associated with Novus Innovation Corridor will inform some of the changes to ABOR
policy. The ABOR office anticipates working with the universities to have a first
reading of policy change proposals for committee and board consideration in
November.
Requested Action
ASU asks that the committee forward to the full board for approval, authority related to
executing ground leases within the Novus Innovation Corridor that supersedes and
replaces the prior board action related to the AFD.
The approval includes the responsibilities outlined in Exhibit C and authorizes the ASU
President, the ASU Executive Vice President, Treasurer and Chief Financial Officer,
and the ASU Assistant Vice President for University Real Estate Development, or any
successor titles to such positions, each separately, to take all appropriate actions to
execute future ground leases within the Novus Innovation Corridor as shown on the
map in Exhibit A, as the boundaries may be expanded from time to time, as approved
by the board, and with the following parameters:
i. Ground leases shall be based on market conditions with leasing terms reported
to the ABOR office.
ii. For properties in the Athletic Facilities District, in lieu assessments shall be
collected on all ground leases in accordance with the statutory framework
establishing the Athletic Facilities District.
iii. Ground leases shall be issued for an initial term of no more than 99 years, with
exceptions requiring ABOR approval.
iv. The standard form of ground lease has been reviewed and approved by ABOR
General Counsel. Material changes shall be reviewed and approved by ABOR
General Counsel.
v. Interim and annual reporting on the status of the Novus Innovation Corridor shall
be provided as outlined in Exhibit B, and an updated master development plan
shall be provided with the annual report.
September 27, 2017
Item #8
Exhibit A
Novus Innovation Corridor

Current Master Development Plan Map
September 27, 2017
Item #8
Exhibit B
Reporting Structure
Annual Report
ASU shall submit a Novus Innovation Corridor annual report by August 15 of every year
for board review. The report shall include at least the following:
 Updated master development plan

 General Project Update
 Updated pro forma schedules
 Timeline for project milestones
 Leases signed during the reporting period
 Updated projections for gross square feet of development
 Horizontal development expenditures for the reporting period
 Horizontal development project budget (updated)
 District financial statements including assessment revenue
 Projected development scheduled for upcoming year
Preliminary Takedown Notice Report

Takedown notice reports to the Business and Finance Chair shall include:
 Description of the parcel(s) included in the takedown

 Planned development timeline
 Projected gross square feet of development
 Development plan (square footage, uses, open spaces, etc.)
 Lease terms
ASU shall provide a presentation to the Business and Finance Committee reviewing the
development plan for the phase included in the takedown notice.
As Necessary Updates
ASU shall provide updates on the Novus Innovation Corridor to the Business and
Finance Committee as necessary outside the above defined reporting structure for
anticipated significant changes to the current master development plan.
September 27, 2017
Item #8
Exhibit C
Development Responsibilities Table
Area ABOR Responsibilities ASU Responsibilities Catellus Responsibilities

Project  Approve material  Approve Master Plan and any  Prepare draft Master Plan
Implementation modifications to the amendments thereto (3.1; 3.1.d) (including Land Use Plan, and
Master Plan Master Backbone Infrastructure
 Determine changes to Property Plan) for ASU approval, and
 Review and understand Classifications (3.2) update as appropriate for ASU
post development approval (3.1; 3.1.d)
operations  Approve Entitlement Plan (3.3.a)
 Prepare a draft Entitlement Plan
 Provide oversight for Entitlements for ASU approval and process
(3.3.a; 3.3.b) Entitlements (3.3.a; 3.3.b)
 Approve CC&Rs and Design  Prepare CC&Rs and Design

Guidelines (3.4; 3.5) Guidelines for ASU approval (3.4;
3.5)
 Approve Business Plan (4.4)
 Prepare Business Plan for ASU
 Oversee due diligence (6.2) approval and update annually
(4.3)
 Manage relocation of Athletic
Facilities (4.1; 4.3.h; 4.4; 4.6.a;  Estimate the cost of complete
4.12; 5.1) Backbone Infrastructure (5.1)
 Maintain Developable Property until  Manage timely construction of

leased (6.4) approved Backbone
Infrastructure (5.2)
 Provide guidance on ASU
procurement standards (6.6.a)  Retain third-party consultants as
necessary (4.1; 5.2.b)
September 27, 2017
Item #8

 Approve any affiliate transactions  Monitor Project Costs and report
(6.7) to ASU regarding same (5.2.d)
 Approve senior staff of Catellus  Conduct due diligence on

(1.87; 8.6.e; 12.4) Developable Property and report
findings to ASU (6.1; 6.6.c)
 Inform the Board of changes to the
Master Plan, progress of
development and newly identified
risks
Real Estate  Review Takedown Notice  Approve Preliminary Business Plan  Prepare Preliminary Takedown
Transactions Report (4.5) Business Plan (as part of the
Business Plan) identifying the
 Board counsel approves  Approve Takedown Notice for each Development Parcels that Catellus
form of Development Development Parcel (4.6) desires to lease in the upcoming
Lease year (4.3; 4.5)
 Provide forms of letter of intent and
Development lease for use in  Prepare Takedown Notice for
negotiations (1.78; 4.10.a; 1.79; each Development Parcel that is
4.7) readied for lease, which will
include a Takedown Infrastructure
 Approve each Letter of Intent Plan for the Development Parcel
Submittal (4.7) (4.5)
 Obtain appraisals per ABOR  Diligently market property and

requirements to determine rent pursue non-binding letters of intent
under Development Lease (4.9.a) (4.7)
 Approve and execute Development  Negotiate Development leases,

Lease (4.10) with ASU input (4.10)
September 27, 2017
Item #8
 Approve any changes to the  Conduct property analysis and

approved Takedown Infrastructure investigation (due diligence) (6.1)
Plan (5.1)
 Enforce Development Leases
 Assist to resolve any property during construction period (6.8.b)
issues revealed by due diligence
 Maintain Property Pre-Leasing (6.4)
 Enforce Development Leases post-

construction (6.8)
Reporting  Review annual report  Review financial reporting (8.6.b)  Keep complete and accurate
books and records relating to (i)
 Prepare annual report for Board the entitlement development and
disposition of the Property, (ii)
Project Costs and (iii) Project
Revenues and the Project
Revenue Fund (8.6.a)
 If requested by ASU, conduct an

annual audit of books and
records (8.6.a.2)
 Provide financial reporting

certified by Developer’s CFO
(8.6.b)
September 27, 2017
Item # 9
Item Name: Ground Lease with American Campus Communities for

Development of the UA Honors College Housing (UA)
Action Item
Issue: University of Arizona asks for approval to execute a ground lease and
associated agreements with American Campus Communities (ACC) for the
development of an Honors College Housing Community on the northern
edge of the UA campus.
FY 2018-2020 Capital Development Plan September 2016

FY 2018 Revised Capital Development Plan June 2017

Impact Arizona
Compliance
Other:
 ABOR Policy 7-109 requires approval of new construction projects with a total
project cost over $10 million before contracts can be executed and construction can
begin.
 ABOR Policy 7-109 requires approval of renovation or infrastructure projects with a

total project cost over $5 million before contracts can be executed and construction
can begin.
Gregg Goldman, Senior Vice President for Business Affairs and CFO,
ggoldman@email.arizona.edu, (520) 621-5977
September 27, 2017
Item #9
 ABOR Policy 7-102 requires approval of the issuance of bonds, lease-purchase

agreements, certificates of participation issuance, or any debt instrument regardless
of total project cost.
ABOR Policy 3-501 requires matters relating to the issuance and sale of debt to be
presented for board action as outlined in board policy.
Project:
A public-private partnership with American Campus Communities to develop and

construct new UA Honors College Housing.
By separate development agreement, the UA will develop and ACC will construct, in
conjunction with the Honors College Housing, a 370 space parking garage along with
322 surface parking spaces, a 49,700 square foot satellite Campus Recreation Center
with space for Campus Health services, a 14,600 square foot dining facility and 24,500
square foot Honors College classrooms, administrative and faculty offices and
academic support and learning spaces.
Project Justification
The re-envisioning of the UA Honors College was established by the board as a major
priority over the past two years. The UA worked extensively with various stakeholders
on campus and throughout the community to determine how best to enhance and
recreate the Honors College to recruit and serve the best and brightest students in
Arizona and throughout the country and the world. One of the key elements that
emerged from this process was the need for a home that will allow Honors students and
faculty to live, learn, connect and collaborate in a central space.
In addition to creating a home for the Honors College, the UA recognizes that first-time,
full-time freshmen who live on campus typically achieve significantly greater academic
success in all measure of academic achievement, including higher graduation rates and
higher grade point averages. The UA has therefore established a goal of having all of
these first-time, full-time freshmen live on-campus. The UA currently does not have
sufficient housing to serve the increasing population of first-time, full-time freshmen,
together with other upper class, graduate and international students who seek on-
campus housing. Finally, many UA housing facilities are aging and will need to be taken
off-line for remodeling or for new construction, further increasing the need for additional
beds.
September 27, 2017
Item #9
This project supports UA’s strategic goals, including:
Design an accessible and extraordinary learning experience, tailored to each student,

and improve and expand the UA Honors experience for students participating in UA
Honors
The Honors College Community will create the first full-service, living-learning
community on the UA campus. The combination of classrooms, housing, academic
support offices, food service, Honors College administration and health and health
facilities give students the unique opportunity to see the Honors College Housing
Community as a campus within a campus. Honors students will be able to: interact with
faculty in a variety of settings, in and out of the classroom; carry conversations from
their living spaces into the academic spaces and vice versa; be exposed to unique
programming specific to a diverse community of Honors learners; receive on-site
advising and support from Honors College staff and administrators; and, participate in a
vibrant culture of active learners throughout their entire day.
Partner with businesses, community groups, other academic institutions, and

governments, enhancing local and global collaborations to support meaningful teaching,
discovery, and public service outcomes
Through a public-private partnership with ACC, the UA will be able to create the
extraordinary living and learning experience described above by leveraging the
extensive residential community design and construction experience and private equity
funding to accelerate the design/build timeline, achieve multiple facility outcomes and
minimize impact to the UA’s debt capacity for future needs.
Project Description and Scope
Through its agreement with UA, ACC will construct new semi-suite and suite style
Honors housing on UA-owned property immediately adjacent to the campus planning
boundary. The proposed project is 1056 beds and will serve first-year Honors students
and, if space is available, upper class Honors students who wish to live on-campus.
The Honors College Housing facility will include24,500 square feet of academic space
for the Honors College, including faculty and administrative offices, classrooms, study
spaces and academic learning spaces. It will also include a 14,600 square foot dining
facility which will serve residents of the Honors Community, but will also be open to all
UA students, staff, faculty and the public. Honors Community residents will be required
to purchase a meal plan to be serviced primarily by the Honors College dining facility.
The housing will include a landscaped courtyard and amenity spaces including a lobby,
residence life offices, study and social spaces, computer lab and mail area. This facility
September 27, 2017
Item #9
will be built as a Class A student housing facility, and will be maintained in Class A
condition throughout the term of the lease.
ACC will construct the dining facility, Honors College academic spaces, satellite
Campus Recreation Center and parking to serve the Honors College Community,
pursuant to a separate development agreement.
The 40,700 square foot satellite Campus Recreation Center will be built immediate
across Fremont from the Honors College Housing facility, and will include space for
Campus Health services. The UA has had initial conversations with the City of Tucson
regarding the closure of Fremont Street to vehicular traffic, so that it can be converted to
a pedestrian and bicycle-friendly mall and signature entry to both the residence hall and
the Campus Recreation Center.
Construction documents are subject to UA approval and permitting. Pending ABOR

approval and review from JCCR, UA will enter into the following agreements with ACC:
 Ground Lease (land and improvements owned by ABOR/UA)

o Dining and academic spaces to be “reserved premises” owned by ABOR
o Easements for shared ingress/egress and other access
 Master Sublease from ACC to UA for all residential beds

 Development Agreement for ACC to design and construct recreation center and
parking garage, surface parking, dining and administrative and academic space.
Construction is scheduled to begin in December 2017, with an anticipated completion

date of August 2019.
Alignment with Campus Masterplan
 The 2009 University of Arizona Comprehensive Campus Plan Update showed

“possible mixed use projects or graduate, faculty staff housing” in the area that will
house the Honors College community.
 In 2010, the UA issued an RFP for student housing projects on the perimeter of
campus, specifically recognizing the benefits of public-private partnerships and
seeking proposals that would include recreational facilities and other amenities.
 In fall 2016, as negotiations were continuing with ACC, the UA was looking to
identify a location on campus for an Honors College community. There were no
locations available on campus that would have provided enough space to develop
an Honors College community with the necessary number of beds and the desired
September 27, 2017
Item #9
auxiliary and support facilities.
 The UA and ACC then entered into negotiations to re-envision the previously
proposed apartment-style housing development as an Honors College community,
with dorm-style housing, integrated dining facility, and satellite Campus Recreation
and Health Center.
Project Cost/Financial Structure
 Operating Expenses – ACC is responsible for all costs and expenses of

maintaining the housing portions of the project, including reasonable reserve
deposits. UA is responsible for maintaining the academic administrative and dining
spaces. Minimum Standards of Operation (both maintenance and staffing) are
defined as equal to “Class A” privatized student housing.
 Management – UA will manage and provide the residence life programing and
staffing, as well as enforce the UA Student Code of Conduct, under a Master
Sublease. ACC will employ a site manager and maintenance staff. ACC and UA will
establish a Joint Advisory Committee responsible for the day-to-day operations of
the housing facility, including review and approval of the annual operating budget,
capital budget, staffing plan and any proposed changes in programs, policies and
procedures. ACC retains ultimate control of those decisions that result in a material
economic consequence to ACC provided that minimum standards of operation have
been satisfied.
 Ground Lease – The residence hall will be administered by a Ground Lease

Agreement between the UA and ACC. The Ground Lease is for a period of 40 years
with four 10-year options to renew. Under the terms of the ground lease, the
improvements constructed by ACC become the property of ABOR/UA upon
completion without any further action.
 Lease Payments – UA will receive rental payments in the form of annual base rent
(i.e. Ground Rent) plus out-performance rent should the project yield revenue in
excess of the required return threshold.
 Master Sublease – The Ground Lease provides the UA two options under which it
can exercise control over the marketing, leasing and programming of the residence
hall – a Master Sublease or a Marketing & Licensing Agreement. UA anticipates
entering into a Master Sublease that will continue for five years from opening in Fall
2019, and may extend the Master Sublease beyond that term.
September 27, 2017
Item #9
 Reserved Premises - The dining facility and academic spaces (classroom and
faculty offices) will be defined as “Reserved Premises” in the Ground Lease, and will
be funded, owned and operated by UA, with appropriate cross-easements for
access and other shared spaces within the residence hall.
 Parking Garage – the parking garage and surface parking lots will be designed and
constructed by ACC, but will be owned and operated by the UA, through its Parking
& Transportation Services (“PTS”). Honors College residents will be given the first
option to purchase permits in the garage, and will not be permitted to purchase
permits in other UA parking facilities or surface lots.
 ACC will fund the entire project cost for the Honors Housing, estimated at
$83,500,000,
 UA will fund the entire project cost for the dining facility, estimated at $9,300,000 by
issuing system revenue bonds (SRBs) . The estimated annual debt service on the
SRBs is $602,000 and operating and maintenance cost is $ 105,200. The debt
service and operating and maintenance costs will be borne by UA Residence Life
and the Student Union dining program, and will be funded primarily by meal plan and
“walk-in” revenues from the dining facility.
 UA will fund the entire project cost for the Honors academic spaces, estimated at
$6,800,000 by issuing system revenue bonds (SRBs). The estimated annual debt
service on the SRBs is $440,000 and operating and maintenance cost is $177,000.
Debt service and operating and maintenance costs will be paid by revenue
generated through a space charge to the Honors College of $25.19 per square foot
(as this may be adjusted from time to time) from tuition and other Honors College
revenues.
 UA will fund the cost of the parking garage, estimated at $8,700,000 with parking
reserve funds. Operations and maintenance costs is estimated to be $309,300 and
will be covered with parking revenue.
 UA will fund the cost of the Surface Parking Spaces, estimated at $2,500,000, with
parking reserve funds. Operations and maintenance costs are minimal, and will be
covered with parking revenues.
September 27, 2017
Item #9
 UA will fund the design and construction costs for the satellite Campus Recreation
Center, estimated at $26,000,000, by issuing system revenue bonds (SRBs). The
estimated annual debt service on the SRBs is $1,700,000 and operating and
maintenance cost is $ 358,700. The debt service and operating and maintenance
costs will be covered by the student recreation and health fee and with concession
revenues.
Debt Ratio Impact
 The estimated total debt service associated with the SRBs listed above is $2.7
million and will increase the UA’s debt ratio by percent .12 percent. The projected
UA highest debt ratio is 4.86 percent excluding SPEED debt, and 6.04 percent
including SPEED debt.
 The UA intends to utilize a financial advisor, a bond counsel, and a bond trustee
previously approved by the Board. The SRBs will be marketed and sold on a
negotiated basis to one or more investment banking firms previously approved by
the Board or through a direct sale of the SRBs to a bank or banks.
The University plans to issue System Revenue Bonds to finance the projects
mentioned above in the winter 2017. The table below shows the anticipated pricing
parameters for the SRBs
Item Comments
Project Costs $ 42,100,000 Not to exceed amount
Issuance Costs (not to $ 414,000 Not to exceed amount
exceed)
Credit TBD Only executed if

Enhancement/Insurance provides benefit that
Cost exceeds cost of
insurance
Fixed Interest Rate 4.1%/6% Not to exceed based on
(anticipated rate /not to maximum the UA is
exceed rate) willing to pay
Maturity Range 2018 - 2043 Final maturity is June 1,
2043
Average Instrument Life 15.06 years Approximately 25 year
financing period
September 27, 2017
Item #9
Requested Action
University of Arizona asks the committee to forward to the full board for approval UA’s
request to enter into a Ground Lease with American Campus Communities for the
development of third-party student housing in accordance with the terms and conditions
outlined above, and that the President and Chief Financial Officer each be separately
authorized in the name of and on behalf of the board to take all appropriate actions
necessary to finalize negotiations and to facilitate and execute the Ground Lease and all
related documents with American Campus Communities for the development of student
housing, dining and recreational and health facilities, as presented in this Executive
Summary.
September 27, 2017
Item #10
Item Name: Honors College Community Support and Auxiliary Services

Project and Financing Approval (UA)
Action Item
Issue: The University of Arizona asks for project approval and financing approval
of the Honors College Community Support and Auxiliary Services
Project. To serve the third-party privatized Honors Residence Hall
Community, the UA will enter into a development agreement with American
Campus Communities to construct a 370-space garage, 322 surface
parking spaces, a 49,700 square foot recreation and campus health center,
a 14,600 square foot dining facility, and 24,500 square feet of office,
classroom, academic and support spaces at cost of $53.3 million. Parking
reserves will fund $11.2 million and system revenue bonds will fund the
remaining $42.1 million and issuance costs. The bonds would be repaid
over 25 years.

FY 2018-2020 Capital Improvement Plan – September 2016
FY 2018 Capital Development Plan – June 2017

Impact Arizona
Compliance
Real Property Purchase/Sale/Lease
Other:
Statutory / Policy Requirements
 ABOR Policy 7-109 requires approval of new construction projects with a total
project cost over $10 million before contracts can be executed and construction can
begin.
Gregg Goldman, Senior Vice President and CFO, (520) 621-5977, ggoldman@email.arizona.edu
September 27, 2017
Item #10
 ABOR Policy 7-102 requires approval of the issuance of bonds, lease-purchase

agreements, certificates of participation issuance, or any debt instrument.
 ABOR Policy 3-501 requires matters relating to issuance and sale of debt to be
presented for Board action.
Project Justification / Description / Scope
 The University of Arizona seeks to create a new, exciting and innovative Honors
Community that will bring together the Honors College students currently dispersed
across campus. The Honors College Community would bring a robust set of Honors
offerings and support into a single location that will help to attract and sustain a
growing population of honors students. Providing on-campus housing options with
academic and other support has proven to improve student recruitment, retention
and success.
 The Honors College Community will create the first full-service, living-learning
community on the UA campus. The combination of classrooms, housing, academic
support spaces, faculty offices, food service, Honors College administration and
Campus Recreation and Campus Health facilities give students the unique
opportunity to see the Honors College Community as a campus within a campus.
Honors students will be able to: interact with faculty in a variety of settings, in and
out of the classroom; carry conversations from their living spaces into the academic
spaces and vice versa; be exposed to unique programming specific to a diverse
community of Honors learners; receive on-site advising and support from Honors
College staff and administrators; and, participate in a vibrant culture of active
learners throughout their entire day.
 The University of Arizona’s FY2018 CDP included a third-party privatized Honors

College Development. This project will include a negotiated ground lease and
separate development agreement between American Campus Communities (ACC)
and the University of Arizona in which ACC will construct this Honors College
development together with the support and auxiliary services facilities. UA is
seeking approval to enter into a ground lease in a separate Board action item, as
well as seeking JCCR review prior to beginning construction in accordance with
applicable state law and ABOR policy.
 Through its Ground Lease with UA, ACC will finance, construct and operate the new
Honors College Housing immediately adjacent to our Tucson campus. The
proposed 1056 beds will serve Honors students in a single community.
 The UA will finance and ACC will construct, as part of the Honors College
September 27, 2017
Item #10
development, support and auxiliary services facilities including a campus dining

facility, a recreation/health center, a parking garage and surface parking, Honors
College administrative and faculty offices and academic space.
 The Honors College Community Support and Auxiliary Services project will be
delivered through a third-party Development Agreement with ACC. The Ground
Lease with ACC is a separate Board action item.
 Pending ABOR approval and review from JCCR, UA will enter into the Ground
Lease, Master Sublease and Development Agreement with ACC. Construction will
begin in December 2017 with an anticipated completion date of August 2019.
Project Cost
 ACC is responsible for all costs and expenses of financing, constructing and
operating the new Honors Housing project. UA is responsible for financing and
operating the Honors College Development Support and Auxiliary Services facilities.
The estimated cost of these support and auxiliary services facilities is $53,300,000
and will be funded from System Revenue Bonds and UA Parking Reserve funds.
Fiscal Impact and Financing Plan
 ACC will fund the entire project cost for the Honors Housing, estimated at $83.5
million.
 UA will fund the entire project cost for the dining facility, estimated at $9.3 million by
issuing system revenue bonds (SRBs). The estimated annual debt service on the
SRBs is $602 thousand and operating and maintenance cost is $105 thousand.
The debt service and operating and maintenance costs will be borne by UA
Residence Life and the Student Union dining program, and will be funded primarily
by meal plan and “walk-in” revenues from the dining facility.
 UA will fund the entire project cost for the Honors academic spaces, estimated at
$6.8 million by issuing system revenue bonds (SRBs). The estimated annual debt
service on the SRBs is $440 thousand and operating and maintenance cost is $177
September 27, 2017
Item #10
thousand. Debt service and operating and maintenance costs will be paid by
revenue generated through a space charge to the Honors College of $25.19 per
square foot (as this may be adjusted from time to time) from tuition and other Honors
College revenues.
 UA will fund the cost of the Honors College parking facilities estimated at $11.2
million with parking reserve funds. Operations and maintenance costs is estimated
to be $310 thousand and will be covered with parking revenue.
 UA will fund the design and construction costs for the recreation and wellness
center, estimated at $26 million by issuing system revenue bonds (SRBs). The
estimated annual debt service on the SRBs is $1.7 million and operating and
maintenance cost is $ 359 thousand. The debt service and operating and
maintenance costs will be covered by the student recreation fee and concession
revenues.
Debt Ratio Impact
 The estimated total debt service associated with the SRBs listed above is $2,7
million and will increase the UA’s debt ratio by .12 percent. The project UA highest
debt ratio is 4.86 percent excluding SPEED debt, and 6.04 percent including
SPEED debt.
 The UA intends to utilize a financial advisor, a bond counsel, and a bond trustee
previously approved by the Board. The SRBs will be marketed and sold on a
negotiated basis to one or more investment banking firms previously approved by
the Board or through a direct sale of the SRBs to a bank or banks.
The University plans to issue System Revenue Bonds to finance the projects
mentioned above in the winter 2017. The table below shows the anticipated pricing
parameters for the SRBs
Item Comments
Project Costs $ 42,100,000 Not to exceed amount
Issuance Costs (not to $ 414,000 Not to exceed amount
exceed)
Credit TBD Only executed if

Enhancement/Insurance provides benefit that
Cost exceeds cost of
insurance
September 27, 2017
Item #10
Fixed Interest Rate 4.1%/6% Not to exceed based on

(anticipated rate /not to maximum the UA is
exceed rate) willing to pay
Maturity Range 2018 - 2043 Final maturity is June 1,
2043
Average Instrument Life 15.06 years Approximately 25 year
financing period
Occupancy Plan
 The Honors College Community will be a residence for Honors students, opening for
the Fall Semester of 2019. Additionally, Honors program faculty offices and Honors
classrooms will be located in the academic space of the Honors College Community.
Current Honors housing in the disbursed Residence Life locations will be allocated
to enrollment growth and relocated capacity from aging facilities taken off-line for
remodeling and deferred maintenance.
Requested Action
The University of Arizona asks that the committee forward to the full board for approval
for the Project and Financing Approval of the Honors College Community and Auxiliary
Services project, as presented in this Executive Summary.
September 27, 2017
Item #10
University: The University of Arizona Project Name: Honors College Community Support and
Auxiliary Services – 370 Space Parking
Garage
Project Description/Location: The University of Arizona seeks to bring together the currently disbursed
Honors students housing and to create a new, exciting and innovative Honors Community, at the University
of Arizona, Tucson.
Project Schedule (Beginning Month/Year) Project Approval

Planning October 2016
Design February 2017
Construction December 2017
Occupancy August 2019
Project Budget:
Total Project Cost $8,700,000
Total Project Cost per Space $23,514
Change in Annual Operation/Maintenance Cost $309,300
Funding Sources:
Capital:
 Parking Reserve Funds $8,700,000
Operation/Maintenance:
 Parking Revenue $309,300
September 27, 2017
Item #10
Auxiliary Services – 322 Surface Parking
Spaces
of Arizona, Tucson.

Project Budget:
Total Project Cost per Space $7,764
Funding Sources:
Capital:
 Parking Reserve Funds $2,500,000
September 27, 2017
Item #10
Auxiliary Services – 49,700 gsf Recreation and
Health Center
of Arizona, Tucson.

Project Budget:
Total Project Cost per GSF $523
Change in Annual Operation/Maintenance Cost
 Utilities $109,600
 Personnel $167,100
 Other $82,000
Funding Sources:
Capital:
 System Revenue Bonds $26,000,000
 Student Recreation Fee and Concession Revenues $358,700
September 27, 2017
Item #10
Auxiliary Services – 14,600 gsf Dining Facility
of Arizona, Tucson.

Project Budget:
 Other $24,100
Funding Sources:
Capital:
 Meal Plan and “walk-in” revenues $105,200
September 27, 2017
Item #10
Auxiliary Services – 24,500 gsf Administrative
Offices and Academic Support Spaces
of Arizona, Tucson.

Project Budget:
 Other $40,500
Funding Sources:
Capital:
 RCM and tuition $177,000
September 27, 2017
Item #10
Project Site Location Map

September 27, 2017
Item #11
Item Name: Fremont Street Acquisition Approval (UA)
Action Item
Issue: The University of Arizona asks for approval to acquire a segment of

Fremont Street from the City of Tucson, in connection with the development
of the Honors College Community.

Impact Arizona
Compliance
Other:
ABOR Policy 7-203 requires Board approval for any real property acquisitions outside
the campus planning boundary.
 This request is being submitted in conjunction with the Ground Lease with
American Campus Communities and the Project and Financing Approval for the
Honors College Community being developed immediately to the north of the UA
campus planning boundary.
Discussion
 The UA has been in discussions with the City of Tucson regarding the proposed
Gregg Goldman, Senior Vice President and CFO, (520) 621-5977, ggoldman@email.arizona.edu
September 27, 2017
Item #11
acquisition and closure of a segment of Fremont Street that runs between Mabel
Street on the south and Drachman Street on the north, and that is adjacent to the
proposed Honors College Housing on the east and the proposed satellite
Campus Recreation and Health Center on the west. (Exhibit A)
 The closure of this segment of Fremont Street to vehicular access facilitates

development of a pedestrian mall and signature entry to the Honors College
Community. Fremont Street will be regraded and re-profiled to enhance
drainage as desired by the City of Tucson within the project to benefit the entire
neighborhood. These enhancements will also reduce potential traffic to the north
as requested by the adjacent neighbors. (Exhibit B)
 The UA currently owns or will acquire, in connection with the Honors College
Community development, all of the property on the blocks adjacent to this
segment of Fremont Street.
 City of Tucson staff supports this proposal, and it will be presented to the City of
Tucson Mayor and Council for approval at their meeting scheduled for
September 19, 2017.
 The section of Fremont Street to be acquired contains 17,993 square feet, and
the City and UA have an agreed-upon rate for right-of-way acquisition of $10.50
per square foot, for a total acquisition cost of $188,926.50.
 Maintenance of the street segment, when closed and incorporated into the
Honors College Community, will be minimal, and will be included in the Honors
College Housing and satellite Campus Recreation and Health Center budgets.
Requested Action
The UA asks that the committee forward to the full board for approval of the acquisition
of a 17,993 square foot segment of Fremont Street as shown on Exhibit A, and
authorize the President or the Senior Vice President for Business Affairs and CFO to
execute any documents necessary to implement this acquisition, as presented in this
Executive Summary.
September 27, 2017
Item #11
Exhibit A
Exhibit B

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ARIZONA BOARD OF REGENTS

Business and Finance Committee

Wednesday, September 27, 2017

1:00 p.m. CALL TO ORDER, GREETINGS, AND ANNOUNCEMENTS FROM THE

1:05 p.m. 1. Approval of Minutes

1:40 p.m. 4. FY 2019-2021 Capital Improvement Plans (ASU, NAU, UA)

Arizona State University, Northern Arizona University and the University of

6 Extension of Lease Term for ASU California Center (ASU)

2:00 p.m. EXECUTIVE SESSION (Rees Room)

Pursuant to A.R.S. § 38-431.03 (A), the committee will convene in executive

2:20 p.m. RECONVENE IN PUBLIC SESSION (Humphreys Room)

8. Novus Innovation Corridor Master Plan Approval and Reporting

9. Ground Lease with American Campus Communities for Development

University of Arizona asks for approval to execute a ground lease and

10. Honors College Community Support and Auxiliary Services

11. Fremont Street Acquisition Approval (UA)

The University of asks for approval to acquire a segment of Fremont Street

2:30 p.m. ADJOURN

I. ARIZONA STATE UNIVERSITY

(A.3, 4 and 7) A. Phoenix Biomedical Campus Lease Parcel

The committee will convene in executive session for legal advice,

B. Novus Innovation Corridor Master Plan Approval and

The Committee will convene in executive session for legal advice,

II. UNIVERSITY OF ARIZONA

(A.3, 4 and 7) A. Honors College

The Committee will convene in executive session for legal advice

DRAFT ARIZONA BOARD OF REGENTS

By Phone: Regent Rick Myers, Regent Ron Shoopman,

Regent Heiler called the meeting to order at 10:05 a.m.

BASE TUITION AND MANDATORY FEES, DIFFERENTIAL TUITION, PROGRAM FEES,

BASE TUITION AND MANDATORY FEES (A)

No increases in NAU’s mandatory fees are proposed.

DIFFERENTIAL TUITION/PROGRAM FEES/CLASS FEES (B)

Mark Denke provided an overview, including a PowerPoint presentation of differential tuition,

HOUSING AND MEAL PLANS (C)

In response to Regent Ridenour inquiry concerning progress of looking at outside sources,

BASE TUITION AND MANDATORY FEES (A)

DIFFERENTIALTUITION/PROGRAM FEES/CLASS FEES (B)

Mr. Denke provided an overview, including a PowerPoint presentation of differential tuition,

HOUSING AND MEAL PLANS (C)

For housing, the UA proposes to increase undergraduate student housing by an average of

 Renegotiated and refinanced debt saving over $18 million in FY 2016

BASE TUITION AND MANDATORY FEES (A)

DIFFERENTIAL TUITION/PROGRAM FEES/CLASS FEES (B)

Mr. Denke provided an overview, including a PowerPoint presentation of differential tuition,

HOUSING AND MEAL PLANS (C)

President Crow presented an overview, including a PowerPoint presentation of the logic,

The meeting adjourned at 2:40 p.m.

DRAFT - ARIZONA BOARD OF REGENTS

Absent: Regent Rick Myers (Chair)

APPROVAL OF MINUTES (ITEM 1)

Public Session reconvened in the Humphreys Room at 3:50 p.m.

FY 2018 ANNUAL BUDGETS FOR ARIZONA STATE UNIVERSITY, UNIVERSITY OF

In response to Regent Penley’s question regarding continuous decline of net revenues as a

 Regents Set-Aside (formula-driven, need based financial aid) – Approximately $2 million

 Arizona Financial Aid Trust – Approximately $1.3 million

 Institutional merit based financial aid – Approximately $10.7 million

FY 2018 CAPITAL DEVELOPMENT PLANS (ASU, NAU, UA) (ITEM 3)

RECITAL HALL EXPANSION AND RENOVATION PROJECT AND FINANCING APPROVAL

LAND EXCHANGES WITH THE CITY OF FLAGSTAFF INCLUDING WAIVER OF POLICY

GREEK LEADERSHIP VILLAGE COMMUNITY CENTER PROJECT APPROVAL (ASU)

INFRASTRUCTURE, CLASSROOM AND LABORATORY RENOVATION PROJECTS

ACKNOWLEDGEMENT AND APPROVAL FOR ASU ENERGY CENTER, LLC COMPONENT