Payson, Asu Near Signing Agreement

Plan to bring four-year campus to Rim Country ready to clear next hurdle, but state budget meltdown could still crush hopes

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Payson is poised to sign a memorandum of understanding (MOU) with Arizona State University next week, taking the next step toward building a four-year college campus in the Rim Country, Payson Mayor Kenny Evans said this week.

“We’re on track,” said Evans of the ambitious plan to build a low-cost campus that would start with perhaps 1,500 students and offer a limited list of B.A.s for perhaps half as much tuition as the same degree on ASU’s campuses in the Valley.

The Payson Town Council had previously given the town staff the authority to negotiate such a memorandum with ASU, so signing the paperwork won’t require an additional council vote. Evans said ASU and Payson could sign the memorandum next week.

“Once we have the MOU, we go to work big time,” said Evans.

That would open the way to draw up detailed legal contracts and negotiate the details of the innovative relationship — a process that could take another year, assuming the state budget crisis doesn’t so devastate ASU that the university can’t survive in its current form.

The Legislature has put on the May 18 ballot a three-year increase in the sales tax that would raise $1 billion annually, leaving Arizona with a projected $2 billion deficit for the coming fiscal year.

The MOU commits ASU and Payson to working out the details of a four-year college on some 300 acres of Forest Service land across from Gila Community College.

The tentative agreement calls for Payson to establish a Community Facilities District that would use some $70 million in pledged, private donations to build a campus and dorms on half of the Forest Service parcel. The district would then build related facilities on the other half of the parcel — including perhaps a convention hotel, a research park, student housing and other commercial and retail development.

The Community Facilities District would then lease the campus buildings to ASU and the other buildings to private firms, generating enough money to keep ASU’s lease low enough to offer tuition at no more than a federal Pell Grant level — about 50 percent less than the projected tuition at ASU’s main campus.

ASU’s tuition has risen rapidly in recent years, as state support has dwindled. This year ASU slapped a surcharge on tuition due to the budget problems, boosting the total to nearly $3,400 per semester. State inflation-adjusted support peaked at $9,151 per student in 1999, but declined to $5,970 per student in 2010.

In that period, tuition rose from $2,200 to nearly $7,000 annually.

Evans said the two sides have agreed in principle on most of the key issues, but must still work out lease payments, the campus design and other vital questions.

The $70 million in pledged private donations are “still solid, to the extent we get the deal done,” said Evans.

He said about half the money comes from donors interested in bringing a college to Rim Country and about half comes from donors to ASU.

Several major hurdles remain once the two sides sign the MOU.

For starters, the Forest Service will have to facilitate the sale of the 300 acres with frontage on Highway 260 on the boundary between Payson and Star Valley. Congress designated the parcel for sale or exchange back in the 1990s, but repeated efforts to use the land for the designated educational purposes have fallen through in the ensuing decades.

Rim Country officials have orchestrated a succession of high-level federal visits in the past few months to line up political support for the land exchange. The most recent appearances have included a town hall by Arizona Senator John McCain and Secretary of Agriculture Tom Vilsack, whose department includes the Forest Service. Both Vilsack and McCain promised to push for the sale of the parcel once Payson sets up a Community Facilities District.

At one time, the town and ASU had major disagreements about the use of the Community Facilities District and control of the land not needed for the campus buildings.

The two sides hope to work out an arrangement with Gila Community College that would perhaps allow ASU to assume management of the adjacent campus, which is now managed as a provisional college under the terms of a contract with Eastern Arizona College.

Such an arrangement would require an exception to state law that would relax the present ban on contracts between universities and community colleges. Proposals to make those changes are bogged down in the current legislative pre-occupation with the deepening state budget crisis. However, any such arrangement isn’t essential to completing the deal to bring ASU to town, said Evans.

The state’s budget shortfall poses perhaps the single biggest problem for the developing deal between ASU and Payson, said Evans.

The $70 million in pledges provides enough money to build the first phase of the campus — classrooms and dorms to accommodate 1,000 to 2,000 students, according to ASU officials.

However, Evans and others have been pushing to lay the foundation for a build-out plan that would enable the campus to one day accommodate up to 6,000 students.

“What makes this campus unique is that we’re not shoehorning it into an abandoned storefront — we’re building a concept campus from the ground up.”

Ultimately, the campus could cost $500 million, said Evans. That means the Community Facilities District would have to borrow money by selling revenue bonds, to avoid any financial impact on the town’s long-term budget.

Normally, a community facilities district could count on selling bonds at a very low rate based on a long-term commitment from ASU to pay a certain lease for those facilities — with the cost of the lease based on keeping tuition low. However, if draconian budget cuts cast doubt on ASU’s ability to make future lease payments, then the bonds would cost more and become much harder to sell.

“So I think it’s still kind of a 50/50 proposition, which is more a function of my anxiety about the state not being able to resolve its budget problems” rather than any outstanding issues between Payson and ASU, said Evans.

Comments

Dan Varnes 4 years, 9 months ago

"Ultimately, the campus could cost $500 million, said Evans."

Throw in the inevitable cost overruns, of course, so, I'd venture a guess that the bottom line would end up somewhere near 750 MILLION dollars that the state doesn't have (and looks grim on getting in the future).

All so that they can build a Taj Mahal in the "cool pines" for students that surely won't have many jobs waiting for them after graduation.

Sounds like a real winner to me!

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frederick franz 4 years, 9 months ago

$500 million in bonds! The outcome of the school override and the Home Rule election has yet to be decided, and they are now proposing more bond, override, and debt elections. If Home Rule fails, the town budget will go back to $19 million annually. How long would it take to pay back the additional debt? A very long time! This is a very poor proposal. -Fred

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