Gov. Jan Brewer on Friday vetoed a bill crucial to Payson’s plan to build an Arizona State University campus here.
Payson Mayor Kenny Evans said the veto will add millions to the cost of the project and threatens to unhinge crucial timelines, but he vowed to complete the project regardless.
The governor’s veto statement promised to do anything necessary to avoid delaying the Payson project but cited “potential unintended consequences” in vetoing SB 1497, which would have allowed the Arizona Board of Regents and Payson to form a Separate Legal Entity to build a campus for up to 6,000 students.
Evans said “that’s like shooting you in the foot, then promising to help you finish the race.”
Evans said that at minimum, the veto will force project backers to line up a new interest rate on up to $500 million in promised financing, which will cost the project millions in higher interest costs.
Evans spent Monday in meetings with private backers and ASU officials, struggling to salvage a timeline that would welcome the first 1,000 to 2,000 students in 2013.
The most immediate fallout could involve a $50 million plan to cover the Event Center stadium and parking lot with solar cells, a project that must break ground by August to take advantage of major federal incentives.
The veto will impose far more “challenges” in creating a special district to assume the liabilities of the campus that can use money from a convention hotel, research park and solar generating facilities to keep the cost to ASU low enough to ensure tuition set at half the level of its other campuses.
“We’ll make the dream go forward, but we may have to scale back some of our ideas,” said Evans. “I’m still hopeful, but obviously not as bright a hope as I had this morning.”
The governor’s office did not return calls seeking an explanation for the unexpected veto of a technical bill that passed both the House and Senate with big majorities.
The veto statement said, “My review of this bill suggests that the language is not necessary for the associated project. Because of the potential unintended consequences of providing broad authority for no clear purpose, I have vetoed the bill. I do not believe this will delay the advancement of the Payson project and if additional legislation is needed, I am willing to work with the community to develop and thoroughly vet any such legislation.”
In a prepared statement, Evans said: “We are profoundly disappointed and saddened by the veto of SB 1497. The veto will not kill our dream but will cost Arizonans or its future students and their parents more than $200 million over the next two decades. The minor changes to the Separate Legal Entity statutes included in SB 1497 were critical to our hopes for keeping the cost of college education within reach of the average Arizona student.”
Evans added, “However, just as we have had to do so many times in the past three years, we will prevail. We want to thank Senator Sylvia Allen for her hard work and persistence. She deserves a real vote of thanks from Payson and those who understand the value of higher education.”
SB 1497 would have allowed the Arizona Board of Regents to participate with Payson in the formation of a Separate Legal Entity (SLE) to build the college and related businesses, including a convention hotel and research park. The SLE could buy land, float bonds and enter into contracts. It could also legally lease facilities to ASU at little cost, which was the key to charging low tuition even with only minimal state support. Moreover, use of the SLE would insulate both Payson and ASU from any potential legal liability in the event the campus encountered legal or financial problems.
Evans said he spent much of last week, prior to the veto, in conference calls with members of the governor’s staff, trying to explain the arrangement. Many of the questions from the governor’s staff seemed to focus on whether the Board of Regents could use the legal structure of the SLE to enter into other kinds of partnerships.
Both houses of the Legislature passed SB 1497 by large margins. However, the Legislature has also cut per-student state funding for the three universities by about 50 percent in the past several years, prompting a near-doubling of tuition at ASU to more than $9,000 annually.
In addition to the cuts, the Legislature has required ASU to propose a system that would link state support to student achievement, including things like test scores and graduation rates. The Legislature has also directed the Board of Regents to study some version of a voucher system, in which the state would give students vouchers they could use at the three universities, community colleges or even private colleges.
In the meantime, both the Board of Regents and the governor’s office have adopted goals that would double the number of bachelor’s degrees the system can grant by 2020.
Evans said he hopes to sort through the implications and alternatives in the course of the week as backers scramble to figure out how the collapse of the planned financial structure will affect their plans.
In his prepared statement, Evans said: “Although some have suggested that this is just another example in Arizona’s history of promoting urban areas at the expense of rural communities, we hope that is not the case. Many have observed that the urban centers take their water from rural areas, enjoy our open spaces and recreate in our forests and parks, but do not want to allow us to share equally in economic development and prosperity. SB 1497 was designed to allow rural towns to compete with the larger urban centers for higher education facilities. We will push on and will continue to work with the Governor’s staff to facilitate creation of this dream.
“After receiving the distressing news, we worked with our financial alliance throughout the weekend and are meeting with ASU today to develop an alternate strategy that hopefully will allow us to move forward in a timely way.”
Evans said the veto will certainly make the venture more costly, probably force planners to consider a higher tuition, and perhaps force the adoption of new timetables, but said he hoped to pull together an alternative plan in the next few weeks.
“We’ll go through all these options,” said Evans.
“We’ll find a way to make this happen. We’ll just have to see if there are other ways we can accomplish the same things.”