Key Law To Allow Payson Campus Passes Committee

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Prospects for an Arizona State University campus in Payson brightened last week with the advance of key state legislation.

The House Education Committee Friday unanimously approved SB 1997, which has already won approval from the full Senate.

The new law would give the Arizona Board of Regents the legal ability to form a “separate legal entity” (SLE) — the key to Payson’s effort to build and operate a college campus for 1,000 to 6,000 students.

Meanwhile this week, supporters of the campus here have continued their all-out effort to convince House members not to support the state Senate’s budget plan, which would kill the Payson campus by cutting an additional $65 million from university budgets.

Payson Mayor Kenny Evans said the easy passage of SB 1997 in the key House Committee and progress in blocking the Senate budget plan have revived hope that the campus plan will go forward.

SB 1997 holds the key to the complicated framework for financing and operating the campus.

Evans and other backers of the project have been working for more than two years to come up with a way for Payson to build the campus and related facilities, like a convention hotel and a research park. Payson officials had to find a way to take advantage of up to $500 million in donations and promised loans, while protecting Payson taxpayers from liability and not drawing on ASU’s nearly exhausted capacity to use bonds to finance the campus.

The plan that emerged relies on setting up the campus and related facilities as a world unto itself, operating as a Separate Legal Entity (SLE). The town council would serve as the board for a newly created district for the roughly 300-acre campus. The SLE could buy land, levy taxes, build facilities and enter into contracts — but just within that little world.

Evans said the SLE would serve the same purpose as when a private individual forms a Limited Liability Corporation (LLC). For instance, if a doctor forms an LLC and faces a ruinous lawsuit — his personal assets outside the corporation are protected. By the same token, Payson taxpayers wouldn’t have any legal obligations if some disaster overtook the plans to build the campus, costing people their investment or leaving the special legal entity unable to pay off bonds.

The town hoped to take advantage of existing law concerning these special legal entities. However, existing legislation didn’t include universities on the list of public agencies that could set up such an entity.

SB 1997 essentially adds the Board of Regents to the existing list. It also makes some other changes.

For instance, the measure gives the entity the same powers as the town within its boundaries — including an immunity from taxation by other agencies. It also makes it clear that the entity can make up its own zoning regulations within its boundaries. That would give the town council broad authority to adapt the existing zoning requirements to the specialized needs of the campus.

Evans said the overwhelming support of the measure in the key House elections committee means it should now win easy passage from the full House.

He said the lawmakers understood the connection between the bill and Payson’s attempt to build a college campus here.

“One of the questions they asked was: why do you need to change the statute now? I explained that if we had the size and bonding capacity of Phoenix or Glendale — we wouldn’t need it. But we’re a little town with limited bonding capacity. We did this to ensure that this project that is many, many times bigger than any project that will ever come down the pipe in the future is a stand-alone deal.”

Fortunately, Evans said, he also sensed a shift in the budget debate at the state Capitol last week, as the effort to convince the House to stick more closely to Gov. Jan Brewer’s budget took hold.

The state Senate adopted a budget that included an additional $600 million in spending cuts beyond the $1.2 billion in cuts included in Gov. Jan Brewer’s budget plan. The Senate budget would have increased the cuts in the university budget from $170 million to $235 million.

ASU officials said that they could still handle the Payson campus if the governor’s budget passed, but would likely abandon the effort if the state Senate budget passed.

Moreover, the state Senate budget could also cost the town of Payson about $2 million and the Payson Unified School District about $520,000, according to local officials.

“I am much more optimistic than I was a week ago” that the Senate budget won’t pass the House, said Evans. “I think this week, the House will have to decide whether to go along with the Senate budget or adopt their own —then sit down with the Senate and the governor and work something out,” said Evans.

He noted that although town officials continue to meet with campus planners, he doesn’t expect ASU to take the next decisive step forward until the state adopts a budget plan.

“I think they have to know that the Draconian measures in the Senate budget are not going to be foisted on them. Otherwise, finding a way to get all the money out of their budget is the only thing they’ll be focused on in the next five months.”

On the other hand, if Gov. Brewer’s less drastic cuts in university funding prevail, the ASU-Payson plan could move quickly, he said.

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