The2nd meeting of the Capital Planning Advisory Board was held on Tuesday, July 7, 2009, at 9:00 AM, in Room 169 of the Capitol Annex. Representative Henley, Co- Chair, called the meeting to order, and the secretary called the roll.
Members:Senator Jack Westwood, Co-Chair; Representative Melvin B. Henley, Co-Chair; Senator David E. Boswell, Representative Ron Crimm; David Buchta, Laurie Dudgeon, Ben Fletcher, Carole Henderson, John Hicks, Bill Hintze, Mary Lassiter, Katie Quitter, Edmund Sauer, and Laurel True.
Guests: Dr. James Votruba, President, Northern Kentucky University; Major General Edward W. Tonini, The Adjutant General of Kentucky, Department of Military Affairs; Mr. Ken Lucas, Commissioner, Mr. David Worley, Executive Director of the Office of Kentucky Veterans Centers, Ms. Margaret Plattner, Deputy Commissioner, and Jeff Acob, Executive's Staff Advisor, Department of Veterans Affairs; Mr. Kevin Noland, Interim Commissioner, and Mr. Tom Engstrom, Division Director of Administrative Services, Department of Education; Dr. John Hayek, Vice President for Finance and Planning, Mr. Allen Lind, Vice President for Information and Technology, and Mr. Sherron Jackson, Assistant Vice President for Finance and Equal Opportunities, Council on Postsecondary Education; Mr. Ken Walker, Vice President, and Mr. Gary Cloyd, System Director for Facilities Management, Kentucky Community and Technical College System; Mr. John Osborne, Vice President of Campus Services and Facilities, and Mr. Brian Russell, Director of Planning, Design and Construction Department, Western Kentucky University; Dr. Randy Dunn, President, and Mr. Tom Denton, Vice President of Finance and Administrative Services, Murray State University; Mr. Michael Walters, Vice President of Administration and Fiscal Services, Morehead State University; Ms. Angela Martin, Vice President for Planning, Budget and Policy, and Mr. Dall Clark, Capital Construction Director, University of Kentucky; Mr. Larry Owsley, Vice President for Business Affairs, University of Louisville; Mr. Doug Whitlock, President, Harry Moberly, Executive Vice President for Administration, and Mr. James Street, Associate Vice President for Capital Planning and Facilities Management, Eastern Kentucky University; Mr. Stephen Mason, Sr., Chief of Staff and Executive Assistant to the President, and Mr. Jack McNear, Director of Capital Planning and Construction, Kentucky State University.
LRC Staff: Don Mullis, Shawn Bowen, and Jennifer Luttrell
Co-Chair Henley explained that he would be filling in for Co-Chair Westwood until he arrived.
Co-Chair Henley’s motion to approve the minutes of the June 4, 2009, meeting was seconded by Mr. Hintze and approved by voice vote.
Co-Chair Henley asked Mr. Mullis to go over the informational items on the agenda.
Mr. Mullis explained that the first information item was from the Council on Postsecondary Education concerning the Capital Projects Pool. This pool of funds was appropriated by the 2008 General Assembly and allocated to institutions on a formula type basis to be used for capital maintenance. Each institution was required to provide a dollar-for-dollar match. Maintenance pools have been a top priority for the Capital Planning Advisory Board to address the tremendous backlog of maintenance and renovation issues at each institution. Detailed information is provided in the staff analysis of each institution. Mr. True has expressed interest in a comprehensive review of all the maintenance and renovation appropriations, the pools that were created, and how they have been used to date. Capital Planning staff will provide that information at a future meeting.
The second information item Mr. Mullis discussed was a modification to the Kentucky River Authority’s (KRA) 2010-2016 Capital Plan. Mr. Mullis noted that KRA’s presentation at the June 4 Capital Planning Advisory Board meeting was slightly different from its original capital plan. KRA has modified proposed projects in Version 2 of the plan to reflect a decrease in funding for an agency bond funded project. The project, entitled “Repair Dam 7” will now be funded at $2,800,000 rather than $3,090,000. The project entitled “Renovate Locks 1 and 2” has been moved from the third to the second biennium (2012-14) of the planning period.
Mr. Mullis next reviewed the materials provided in the members' notebooks for the agency plans to be reviewed at this meeting. The format consisted of a CPAB staff overview, followed by the cabinet/agency presentation, and a period for questions from the Board.
Dr. James Votruba, President of Northern Kentucky University (NKU), presented the school’s plan.
Dr. Votruba spoke about the two most critical priorities facing NKU – a lack of classroom space and funding for maintenance and operation. He said data showed that there were 6,500 applications for 2,200 positions in the fall. He said the combination of the Health Innovations Center and the Old Science Building construction project should save the Commonwealth up to $20 million.
The second most critical need, funding for maintenance and operational costs, is traditionally provided by the state. Dr. Votruba stated that the health care industry represents one of the largest sectors for job growth in northern Kentucky between now and 2015. Another area of need is in information related fields such as health care and informatics. In 2005, the health care industry in northern Kentucky invested $315 million in capital improvement. Also in 2005, the tax revenue brought in by northern Kentucky by new jobs and investment from the health care industry topped $2.4 million. He said 50,000 new jobs is a goal of Vision 2015, the regional planning process. NKU plans to provide the talent needed for these industries.
Dr. Votruba introduced NKU staff Denise Robinson, Interim Dean of College of Health Professions as well as various members of the northern Kentucky business community in attendance.
Dr. Votruba stated that the College of Health Professions enrolls 1,500 students, but the college in the past has had to turn away 400 qualified students because of lack of classroom and laboratory space. To address this growth, NKU is requesting $92.5 million to create the Health Innovations Center. This project was CPE’s top priority for construction and renovation in 2006. NKU is recognized by CPE as one of the two fastest growing universities in the Commonwealth. CPE also recognizes that NKU has a space deficit. To reach the average of the regional universities, NKU would need 585,000 additional net square space.
Co-Chair Henley asked what the enrollment would be if NKU had adequate space. Dr. Votruba responded that enrollment could increase by up to 600 students. He also stated that by 2020, NKU should enroll 24,000 students.
Mr. True asked how many out of state students attend NKU. Dr. Votruba responded that about 30 percent of NKU’s student populations are from out of state. He added that most students select NKU because it is a more intimate campus with smaller class sizes.
Mr. Hintze asked where the students go who are turned away from NKU. Ms. Robinson responded that they did not know where students went that were turned away from NKU, but that many times the students will wait until the next semester to attend.
In response to a question from Senator Boswell, Dr. Votruba said that NKU’s goal is to accept all students no matter what their financial status.
Co-Chair Henley suggested that the universities as a group study the impact of extending sales tax to services and eliminating the income tax.
Mr. Hicks asked if being land-locked is a problem for NKU. Dr. Votruba said that acquiring land has become a challenge and therefore prudent decisions as to the use of the land must be made.
Relative to NKU’s capital plan, Mr. Hicks asked Dr. Votruba to discuss the university’s need for a new chiller plant. Dr. Votruba stated that the new energy efficient plant would service all the buildings on campus.
Co-Chair Westwood then introduced General Edward W. Tonini, Adjutant General of Kentucky, to present the Department of Military Affairs (DMA) capital plan.
General Tonini stated that DMA’s plan reflects military construction data based upon National Guard Bureau’s long-range construction plan and the Future Year Defense Plan. DMA is requesting $30.5 million in federal funds for state fiscal year 2010-12, which requires state matching funds of $7.5 million. The construction of the Readiness Center in Owensboro is the department’s highest priority. This is a 75/25 percent match for construction and the land is already available at the local airport. DMA is also requesting $45.25 million in 2010-12 for capital construction projects, which are to be self-funded from the proceeds of the defense tenant operations of Bluegrass Station. DMA is also requesting $13.5 million in appropriated general funds. General Tonini stated that there is no significant change in this six-year plan.
Senator Boswell asked if federal stimulus money would be used to advance the Owensboro project. General Tonini stated that DMA plans to execute this project by September 2009.
In response to a question from Senator Boswell concerning local cooperation, General Tonini stated that this has not occurred at this point, but that they will be able to execute the plan without any formal arrangements.
General Tonini said if a state fails to execute a project and there are additional stimulus funds remaining, Kentucky’s DMA would be ready to take advantage of that opportunity if that did occur.
Mr. True asked if Bluegrass Station would be self-sustained and if the income would cover the debt service of the bonds. General Tonini replied that it would.
In response to a question from Mr. True, General Tonini stated the Finance Cabinet supervises all DMA construction projects. He said Kentucky has been doing better than many other states as far as maintenance of its various military facilities.
Representative Crimm asked if any moneys have been spent on the Hopkinsville Armory in the last ten years and if Ft. Campbell allows the National Guard in Hopkinsville to work with them in certain facilities. General Tonini said he did not know the answer to this question, but that DMA has a great relationship with Ft. Campbell and that any need they may have could be addressed through this partnership.
Mr. Hicks asked the General to discuss DMA Emergency Management operations. General Tonini replied that communication problems were the major issue, a company in the process of launching a satellite that will allow a cell phone with a chip placed in it to communicate via satellite instead of cell phone towers. DMA has a tentative agreement with that company to do the first test in the world in Kentucky for that system.
Co-Chair Westwood asked the Department of Veterans Affairs (DVA) to present. Representing the department was Mr. Ken Lucas, Commissioner, Mr. David Worley, Executive Director of the Office of Kentucky Veterans Centers, Ms. Margaret Plattner, Deputy Commissioner, and Jeff Acob, Executive's Staff Advisor.
Mr. Worley stated that the number one priority for DVA is to build a fourth state veterans’ nursing home in Hardin County. DVA currently has 525 beds in three nursing homes. They plan to expand the western Kentucky veterans’ center by forty beds. He said the projects would be a combination of federal funds (65%) and state matching funds (35%).
Mr. True asked if DVA administers the veteran’s shelters. Mr. Worley stated that DVA runs a program with the Volunteers of America at the old Leestown VA campus that includes a 40-bed facility for homeless vets. He said they would like to build another facility because that facility stays full. He said Mr. Worley added that the Leestown road program this is a two-year program. Program participants are assisted with needed services to transition back into the community.
In response to another question from Mr. True, Mr. Worley replied that the organizations get a per diem rate or grant from the federal government and then DVA is funded $150,000 by the state to help with this program. Ms. Plattner added that DVA has a Homeless Veterans Shelter Coordinator who works with the DOA as a non-profit partnership.
Mr. True asked if this facility is built, would the federal government still provide a per diem to take care of clients. Mr. Worley stated that this would still happen, even though it would be a state-run facility.
In response to questions from Senator Westwood, Mr. Worley said the Thomson Hood Veterans Center is eighteen years old. Relative to DVA’s capital plan, he said the requested elevator project at Thomson Hood (2,002,000 GF), is a replacement project that will replace four original elevators. He said they plan to renovate the dining hall in the Jefferson facility.
Mr. Acob stated that DVA is requesting a grant for the Greenup County project for 100% funding from the federal government, and that the groundbreaking ceremony would be in August 2009.
Co-Chair Westwood asked the Department of Education (KDE) to present. Representing the department was Mr. Kevin Noland, Interim Commissioner, and Mr. Tom Engstrom, Division Director of Administrative Services.
Mr. Noland stated that the average age of the buildings at Kentucky School for the Deaf is 37 years. KDE would like to sell some of those buildings to fund the other construction projects. One building KDE would like to sell, the Walker Building, is a residential facility. Students would first need a building to be able to move into before this could happen. The Statewide Student Longitudinal Data System, which came from Senate Bill 1 (2008 Session), is also a priority. The federal government requires a commitment from KDE in terms of capital as well as operational funds to keep the data system going. Another priority is a comprehensive disaster recovery plan that would recover all the data for the 176 school districts in case there was a crash of their system.
Mr. True asked if KDE maintained the vocational schools. Mr. Noland replied that vocational schools are part of the Education and Workforce Development Cabinet.
Mr. True asked Mr. Noland to discussed KDE’s project entitled “Instructional Device Replacement, Phase 1” ($46,400,000 GF). Mr. Noland said the amount requested would update one-fourth of the computer workstations in public schools with modern workstations. The impetus behind this project is to develop a replacement schedule so they do not have computers in the schools that are eight to ten years old.
Mr. True asked why they were not using the capital expenditure accounts that the school districts have. Mr. Noland replied that it would be more difficult for the legislature to appropriate it that way and bonds are more efficient. Using bond funds provides the districts more flexibility in choosing technology.
Co-Chair Westwood asked if there would be any savings from using the Statewide Longitudinal Data System. Mr. Noland said that in the future there should be savings because there would only be the one system for all of the districts.
Co-Chair Westwood asked CPE to present. Representing CPE were Dr. John Hayek, Vice President for Finance and Planning; Mr. Allen Lind, Vice President for Information and Technology; and Mr. Sherron Jackson, Assistant Vice President for Finance and Equal Opportunities.
Dr. Hayek said approximately two-thirds of CPE’s projects are focused on postsecondary education and the rest are focused on the transition from K-12 to college and from college to the workforce. Half of the amount requested is for academic programs with about $28 million in facilities with the remaining projects focused on planning, development, and the educational pipeline. He added that they are still in the process of working with the institutions and will have a more streamlined plan in August.
Representative Crimm asked why the library system was moved from number six to number one on the priority list. Mr. Lind responded that the system is old and needs to be replaced now.
Co-Chair Henley asked how CPE was planning to run the fiber optic system. Mr. Lind explained that CPE has an irrevocable right of use, on strands of “dark” fiber from existing cables that telephone companies have in place. He added that CPE arranged with the electric municipals to use their right of way.
Mr. Hicks asked if the first priority is to buy more pipe. Mr. Lind replied that they would be buying larger pipe at an affordable rate so they can avoid the price increases. He added that the student demand for this larger pipe is great because there are many students who attend classes online.
Ms. Henderson asked why CPE’s number one request, the “Purchase P-20 Learning Object Repository (KyDepot)” project, had increased from $2 million in the last plan to $4 million in this plan. Mr. Lind explained that $2 million was an insufficient amount, and CPE has increased its request based on the review of a similar plan implemented in North Carolina.
Co-Chair Westwood asked Kentucky Community and Technical College (KCTCS) to present. Representing KCTCS was Mr. Ken Walker, Vice President, and Mr. Gary Cloyd, System Director for Facilities Management.
Mr. Walker explained that the first seven projects have been under discussion since the 2006 General Assembly. These projects were approved and then vetoed by the Governor. They brought the projects back in the 2008 session as contingency funded projects, but they do not anticipate that such funding will happen this biennium so these projects are being requested in the next biennium.
Mr. Walker said KCTCS has a number of new construction projects which consist of a postsecondary education center at Madisonville Community College which is a collaboration with Murray State University, a new campus at Maysville Community and Technical College which would replace the existing campus in Rowan County, a new Allied Health and Science Building at Hopkinsville Community College, a Phase III construction at the East Park Campus at Ashland Community College which is well underway and would complete this campus, a new Allied Health and Science Building at Hazard Community College, a project to complete the Springfield Campus at Elizabethtown Community College, North American Racing Academy, the first racing academy in North America, will be built at the horse park as a permanent facility; and the Community Intergenerational Center at the Lees Campus on the Hazard Community College.
Co-Chair Westwood asked Western Kentucky University (WKU) to present. Representing WKU was Mr. John Osborne, Vice President of Campus Services and Facilities, and Mr. Brian Russell, Director of Planning, Design and Construction Department.
Mr. Osborne said WKU is the fastest growing university in Kentucky. WKU’s top priority is to complete the renovation of the Science Campus. This has been an ongoing project for the last ten years. The last two buildings to be renovated are 42 years old and have been rated as inadequate facilities in a 2006 Vanderweil Facility Advisors, Inc. (VFA) study.
Representative Crimm expressed his concern for the universities reaching out to the regions. He said he thought the universities were going to keep the campuses more compact to avoid additional expenses.
Representative Henley asked what kind of research would be done in the USDA Building. Mr. Osborne stated that the agricultural research facility would focus its research on animal waste management.
Mr. Hicks asked Mr. Osborne to discuss WKU’s request for a project to “Renovate Underground Electrical Infrastructure” ($4,500,000 GF). The project is ranked as WKU’s #2 priority and entails renovation of the existing electrical distribution infrastructure. Mr. Osborne responded that due to increased demand and usage, there have been failures in the system that caused it to shut down. He said a phased managed approach will be used.
Co-Chair Westwood asked Murray State University (MuSU) to present. Representing MuSU was Dr. Randy Dunn, President, and Mr. Tom Denton, Vice President of Finance and Administrative Services.
Dr. Dunn stated MuSU’s top priority is completing a three-building complex for science. The second priority is the Resource and Sustainability Center, which is an annex to complete the complex. This center at $7 million would contain teaching and lab space and a demonstration site for “green” technologies. The third priority is the library, which would combine the two existing libraries that were rated as two of the top ten worst facilities according to the VFA study. The fourth priority is an $11 million upgrade to the electrical distribution system, which was also listed on the top ten worst in the VFA study. The fifth project is a new regional campus facility in Paducah, which the land for the construction site has already been purchased.
In reference to the Breathitt Veterinary Center project ($27,500,000 GF, #6), Co-Chair Henley asked if federal funds are available to assist with the project. Dr. Dunn replied that federal funds from a stimulus grant would assist with the purchase of equipment. Co-Chair Henley suggested that they look at the Crisp Center for only $7 million instead of the $17 million renovation of the facility.
Co-Chair Westwood asked Morehead State University (MoSU) to present. Representing MuSU was Mr. Michael Walters, Vice President of Administration and Fiscal Services.
Mr. Walters stated that the top priority is the renovation and expansion of the Student Center. This project is in Phase II of the process. In addition to the priorities, MoSU is requesting agency bonds for the renovation of two residence halls, the construction of a new apartment configured residence hall with 400 beds, and the construction of a new food service facility and parking structure for the new residence hall.
Mr. Hicks asked about the feasibility of the apartment configured residence hall. Mr. Walters responded that the request for this type of facility is based on a student assessment the university conducted in 2006.
Co-Chair Westwood asked University of Kentucky (UK) to present. Representing UK was Ms. Angela Martin, Vice President for Planning, Budget and Policy, and Mr. Dall Clark, Capital Construction Director.
Mr. Mullis gave a brief overview of UK’s current projects and priorities for the general fund during this planning process. Mr. Mullis said that the priorities listed on the power slide are different from what UK listed in its handout. He then asked Ms. Martin to clarify the difference further. Ms. Martin stated that the difference in the “Construct Science Research Building project” is that the $205 million reflects the full cost of the building and the $130 million is what they will need for the next two years. She added that UK has a deficit of almost 300,000 square feet of assignable research space, and this is why this project is the top priority for UK. The second priority is an academic building for $142.4 million, and the third priority is for equipment to support the university’s 2,000 faculty members and to help attract new faculty.
Mr. True asked how many students live on campus. Ms. Martin replied that approximately one-third of UK students live on campus. She said they are trying to reach a goal of thirty-seven percent of their students who live on campus.
In response to questions from Mr. Hicks, Mr. Clark stated that the location for the Gatton Building is on Euclid Avenue, between the coliseum and the new dorm complex. Ms. Martin stated that the University is reviewing Requests for Proposals on the possible expansion project.
Mr. Hintze asked when the Livestock Disease Diagnostic Lab would be completed. Mr. Clark stated that the goal is for this facility to be completed by 2010 before the Alltech FEI World Equestrian Games.
Co-Chair Westwood asked University of Louisville (UL) to present. Representing UL was Mr. Larry Owsley, Vice President for Business Affairs.
Mr. Owsley stated that UL’s number one priority, Construct – Belknap Classroom/Academic Building ($75,000,000), is a result of the 2007 space study by VFA. The university has a current classroom space deficit of 28% (the highest). The second priority is to renovate the 49-year-old Medical Dental Research Building in order to increase the university’s research space. He said the university also wants to create a renewal pool of $30 million to replace roofs, plumbing systems, or major renovations for new construction.
Mr. Owsley said UL plans to sign a contract with Siemens Buildings Technology to do $19 million worth of energy conservation improvements. He said these improvements would result in about a 30% reduction in the school’s utility bill. UL currently has three buildings, which should receive LEED certification at the silver level.
Representative Crimm commented that the completion of the science center should help in the development of many different chemical-related industries. He commended the university on the work it has done on the Shelby campus. Mr. Owsley added that they are very pleased with the new Biosafety Laboratory.
Co-Chair Westwood asked Kentucky State University (KSU) to present. Representing KSU was Mr. Stephen Mason, Sr., Chief of Staff and Executive Assistant to the President, and Mr. Jack McNear, Director of Capital Planning and Construction.
Mr. Mason stated that the “Expand & Renovate Betty White Nursing Building” ($7,825,000 GF) is the university’s top priority. The project will renovate and reallocate space to the nursing program. The university’s second priority “Replace Boiler and add Pollution Control” ($4,222,000 GF) will replace a secure a gas boiler to rectify the heating problems they have and to keep in line with the Environmental Protection Cabinet. This priority order represents a change from what was initially submitted by the university. The boiler project has been moved up from priority no. 4 to priority no. 2.
Mr. Mason added that a pedestrian walkway is needed for safety purposes to keep students from having to cross the road or go through the tunnel under East Main. Mr. McNear said they were able to replace some roofs with emergency funding, but that they need more funding to do complete replacements instead of patching of the roofs. Mr. McNear also stated that they are currently working on privatized housing.
Representative Crimm asked about the decrease in enrollment last year. Mr. Mason invited Dr. Ruby Jones to address this question. Dr. Jones explained that only fall enrollment decreased and that overall enrollment is actually up.
Mr. Hintze suggested that KSU work with the Transportation Cabinet for supplemental funding resources for the pedestrian walkway. Mr. Mason replied that the university has communicated with the Transportation Cabinet regarding overpass.
The final capital plan presentation was by Eastern Kentucky University (EKU). Co-Chair Henley asked Mr. Doug Whitlock, President, Harry Moberly, Executive Vice President for Administration, and Mr. James Street, Associate Vice President for Capital Planning and Facilities Management to discuss the university’s plan.
Mr. Whitlock stated that EKU’s top priority is the “Construct Science Building, Phase 2” ($65,040,000 GF).
Mr. True asked Mr. Whitlock to discuss EKU’s housing situation. Mr. Whitlock stated that most of the housing has been university owned since 1920. He added that 4,500 students (42%) live on campus.
In response to another question from Mr. True, Mr. Whitlock stated that EKU does have a remote campus, the new Manchester campus, which has been a success.
Mr. True asked if the educational pool for educating teachers was continuing to grow. Mr. Whitlock replied that it was.
Mr. Hintze asked if the Justice Cabinet plans to construct a facility on EKU’s campus for criminal justice training. Mr. Whitlock stated that a building to relocate the State Police Academy is listed in the university’s plan.
Co-Chair Westwood then requested that the Board set the next two meeting dates. The dates set were September 18 and October 9.
There being no further business, the meeting was adjourned at 2:54pm.