Joint Committee Committee on Capital Development (12/14/2015)

Final
STAFF SUMMARY OF MEETING

COMMITTEE ON CAPITAL DEVELOPMENT

Date:	12/14/2015	ATTENDANCE

Time:	09:00 AM to 04:26 PM	Becker K.	*
		Brown	X
Place:	SCR 356	Kefalas	*
		Sonnenberg	X
This Meeting was called to order by		Vigil	X
	Senator Baumgardner	Baumgardner	X

This Report was prepared by
	Kori Donaldson
		X = Present, E = Excused, A = Absent, * = Present after roll call

Bills Addressed:		Action Taken:
OSPB FY 2016-17 Budget Requests CCHE FY 2016-17 Prioritized Capital Construction Requests Overview of FY 2016-17 Capital Construction Requests and Available Revenue Colorado Mesa University Auraria Higher Education Center Metropolitan State University of Denver Department of Agriculture Adams State University University of Northern Colorado Colorado Department of Transportation Staff Briefing on Capital Briefing to JBC		Witness Testimony and/or Committee Discussion Only Witness Testimony and/or Committee Discussion Only Witness Testimony and/or Committee Discussion Only Witness Testimony and/or Committee Discussion Only Witness Testimony and/or Committee Discussion Only Witness Testimony and/or Committee Discussion Only Witness Testimony and/or Committee Discussion Only Witness Testimony and/or Committee Discussion Only Witness Testimony and/or Committee Discussion Only Witness Testimony and/or Committee Discussion Only Witness Testimony and/or Committee Discussion Only

09:01 AM -- OSPB FY 2016-17 Budget Requests

The committee was called to order. Mr. Henry Sobanet, Director, and Mr. Erick Scheminske, Deputy Director, Governor's Office of State Planning and Budgeting (OSPB), presented the office's FY 2016-17 capital construction requests, and provided an overview of the budget for the upcoming fiscal year. Committee members received a binder prepared by Legislative Council Staff containing written descriptions of FY 2016-17 capital construction requests from all of the state's executive departments and higher education institutions, as well as some supporting materials. The materials in the binder are posted to the Capital Development Committee website: https://www.colorado.gov/pacific/cga-legislativecouncil/staff-documents. Committee members also received a packet of slides providing an overview of the FY 2016-17 state budget outlook, prepared by OSPB (Attachment A). Mr. Sobanet discussed the state's budget outlook, and responded to questions regarding potential program cuts and funding sources that may help balance the budget. Mr. Sobanet responded to questions regarding commitments of money under transfers triggered by Senate Bill 09-228, and the outlook for refilling in FY 2017-18 those funding sources that will be tapped to balance the budget in FY 2016-17. Mr. Sobanet also discussed the impact of these repayments on the FY 2017-18 capital construction budget. Mr. Sobanet discussed the refunds to the public that will be triggered by Article X Section 20 of the Colorado Constitution (TABOR), and the impact of these refunds on capital construction, transportation, and other state spending priorities.

151214 AttachA.pdf

09:15 AM

Mr. Sobanet returned to briefing the committee based on the contents of Attachment A. Mr. Sobanet responded to questions regarding the amount of revenue allowed to be captured under the TABOR limits, and the impact of TABOR on General Fund spending. Mr. Sobanet responded to further questions regarding spending for K-12 education as impacted by TABOR and other constitutional requirements, and the hospital provider fee issue. Discussion ensued regarding a line item entitled "Transfer to Funds" on page 4 of Attachment A.

09:26 AM

Mr. Sobanet responded to questions regarding the likelihood that federal mineral lease moneys will be accessed to help balance the budgets in FY 2016-17, and the long-term solvency of proposed solutions to the hospital provider fee issue. Mr. Sobanet wrapped up his presentation by reviewing the capital construction and controlled maintenance spending outlook for FY 2016-17. Discussion ensued regarding OSPB's capital spending priorities for FY 2016-17, and spending in particular on controlled maintenance. Discussion returned to the hospital provider fee issue.

09:37 AM -- CCHE FY 2016-17 Prioritized Capital Construction Requests

Mr. Luis Colon, Vice Chair, Colorado Commission on Higher Education (CCHE), and Mr. Andrew Rauch, Lead Finance Analyst, Department of Higher Education, presented CCHE's FY 2016-17 prioritized capital construction requests. Commissioner Colon provided opening remarks on the commission's priorities. Mr. Rauch provided background on CCHE's charge with regard to capital construction, and recapped higher education capital spending in recent years. Mr. Rauch also provided background on enrollment trends, and the impact of these trends on capital need. Mr. Rauch then provided an overview of higher education capital requests and forecasted capital need, and explained how CCHE prioritizes capital projects.

09:49 AM

Mr. Rauch responded to questions regarding how institutional resource stewardship and planning factors into prioritization of capital projects. Discussion ensued on this point. Commissioner Colon provided input on how CCHE prioritizes capital projects, and provided an overview of the commission's FY 2016-17 request package.

10:05 AM -- Overview of FY 2016-17 Capital Construction Requests and Available Revenue

Ms. Kori Donaldson, Legislative Council Staff, provided an overview of the FY 2016-17 capital construction and controlled maintenance requests from all state department and higher education institutions and the costs associated with these, as well as the amount of funding available for capital construction. Committee members received a memorandum outlining these issues, prepared by Legislative Council Staff (Attachment B). Ms. Donaldson responded to questions regarding transfers to be made for capital construction under Senate Bill 09-228, and the potential for these transfers to offset any transfers for capital from the General Fund. Ms. Donaldson responded to questions regarding how the hospital provider fee issue will impact available revenue for capital construction.

151214 AttachB.pdf

10:16 AM

Ms. Donaldson returned to briefing the committee on FY 2016-17 capital requests and available funding. Ms. Donaldson next briefed the committee on the 20-year history of revenues committed to capital construction, and the priorities for capital projects forwarded by OSPB and CCHE. Ms. Donaldson responded to questions regarding a request for capital funding by the Colorado Department of Transportation for unspecified highway projects, and the ability of other departments to request capital funding for unspecified projects. Discussion ensued regarding the potential for requiring the department to specifically identify a project for funding under this line item. Discussion ensued regarding the total cost of the projects that OSPB suggests funding in FY 2016-17. Mr. Matt Becker, Legislative Council Staff, provided input on these costs.

10:28 AM

Ms. Donaldson noted some adjustments made to the FY 2016-17 capital budget requests list. Ms. Donaldson noted some features added to the staff-created project write-ups for FY 2016-17, and discussed some other staff-created documents available to the committee. Ms. Donaldson also explained that one project was moved from the committee's scope to the Joint Technology Committee, and noted some trends and anomalies in the capital requests for FY 2016-17.

10:40 AM

Ms. Donaldson responded to questions regarding the threshold for determining whether a project falls under the domain of the Joint Technology Committee. Discussion ensued regarding the ramifications of not funding certain continuation projects in favor of funding controlled maintenance projects, as proposed by Joint Budget Committee Staff. Ms. Donaldson noted a capital construction budget request funded by depreciation moneys, and discussed some forthcoming capital requests not included in the members' project binders.

10:48 AM

The committee recessed.

11:07 AM -- Colorado Mesa University

The committee reconvened. Mr. Tim Foster, President, and Ms. Laura Glatt, Vice President for Finance and Administration, both representing Colorado Mesa University (CMU), presented the university's four FY 2016-17 capital construction requests. Committee members received a handout prepared by the university regarding its requests and updates on its current capital projects (Attachment C). President Foster updated the committee on its Health Sciences, Phase I, Nurse Practitioner project. Committee discussion ensued on the hospital operations associated with the project.

151214 AttachC.pdf

11:14 AM

President Foster explained the request for the Computer Science and Engineering Building project and Colorado Mesa University's partnership with the University of Colorado Boulder and a local nonprofit organization for its engineering program. He also discussed recent enrollment trends for the engineering program. He then explained the university's cash-funded project requests, including the Garfield Hall residence hall and Kinesiology Expansion projects. Committee discussion ensued on the financing mechanism and revenue streams for the cash-funded projects.

11:23 AM -- Auraria Higher Education Center

Ms. Barb Weiske, Chief Executive Officer, and Mr. Carl Meese, Senior Campus Planner, both representing the Auraria Higher Education Center (AHEC), presented AHEC's FY 2016-17 capital budget request for the King Center Renovation and Addition project. Ms. Weiske discussed a recent space utilization study for the campus which identified a 187,000-GSF space deficit for the campus. She also discussed the growth of recent academic programs that will benefit from the project and how the project aligns with the campus master plan.

11:31 AM

Committee discussion ensued on the cost per GSF and the source of cash funds for the project.

11:39 AM

The committee recessed.

01:31 PM -- Metropolitan State University of Denver

President Stephen Jordan, Mr. Steve Kreidler, Vice President of Administration, Finance, and Facilities, and Mr. Sean Nesbitt, Director of Facilities Planning, all representing Metropolitan State University of Denver, presented one FY 2016-17 capital budget request: Aerospace Engineering Sciences Building. President Jordan discussed capital initiatives recently completed and planned for future years. He responded to a question from the committee about the sale of blighted property on campus. President Jordan provided an update about the status of construction to date of the Aerospace Engineering Sciences Building.

01:48 PM -- Department of Agriculture

Commissioner Don Brown and Mr. Steve Bornmann, Director of Inspection and Consumer Services (ICS), presented one FY 2016-17 capital budget request: Biochemistry Laboratory Facility Pesticide Laboratory Equipment. Mr. Bornmann explained the type and use of equipment requested under the project. Discussion ensued about the use of the equipment requested under the project. Mr. Bornmann responded to a question about the location of ICS.

02:00 PM

Mr. Bornmann and Commissioner Brown also explained that the ICS lab does all of the testing of marijuana products for the Colorado Department of Public Health and Environment. Discussion ensued on this topic.


BILL:	Department of Agriculture
TIME:	02:06:22 PM
MOVED:	Sonnenberg
MOTION:	Reclassify CDA project: Biochemistry Laboratory Facility Pesticide Laboratory Equipment as a FY 2015-16 supplemental request (pending verification that funding is available for FY 2015-16). The motion passed without objection.
SECONDED:
		VOTE
	Becker K.
	Brown
	Kefalas
	Sonnenberg
	Vigil
	Baumgardner

YES: 0 NO: 0 EXC: 0 ABS: 0 FINAL ACTION: Pass Without Objection

02:08 PM -- Adams State University

President Beverlee McClure, Mr. Kurt Carey, Vice President for Finance and Administration, and Mr. Scott Travis, Director, Facilities Services, all representing Adams State University, presented two FY 2016-17 capital budget requests. President McClure discussed the population served by the university. The committee members received a summary and pictures of the issues with the HVAC system in Plachy Hall (Attachment D). Mr. Travis presented information about the Plachy Hall HVAC Upgrade and Replacement (Capital Renewal) project. Discussion turned to the priority order of the project.

151214 AttachD.pdf

Larry Friedburg, State Architect, came to the table to discuss the Plachy Hall project and a Level 1 controlled maintenance request for HVAC upgrades in the Music Building. President McClure discussed alternative funding scenarios the may be available to the university.

02:21 PM -- University of Northern Colorado

President Kay Norton, Dr. Robyn Wacker, Provost, and Mr. Kirk Leichliter, Assistant Vice President for Facilities Management, all representing the University of Northern Colorado, presented one FY 2016-17 capital budget request for its Campus Commons project. Committee members received a memo addressing a recommendation made to the Joint Budget Committee during its staff briefing on capital construction to delay state funding for the next phase of the project (Attachment E). President Norton said that the university has achieved one-third of its fund raising goal on behalf of the project. Provost Wacker described the goals of its Campus Commons project regarding the one-stop student services model.

151214 AttachE.pdf

02:30 PM

President Norton, Mr. Leichliter, and Provost Wacker described the potential ramifications of delaying state funding for the next phase of the project.

02:33 PM -- Colorado Department of Transportation

Mr. Joshua Laipply, Chief Engineer, Colorado Department of Transportation, presented two FY 2016-17 capital budget requests. Mr. Laipply responded to a question about the availability of federal funds for truck chain-up stations. Discussion ensued on the source of funding for the capital request and for the future maintenance of new chain-up stations. Mr. Laipply responded to a question about the $500,000 prioritized for funding by OSPB from the General Fund Exempt Account. Discussion ensued on this topic.

02:47 PM

Mr. Laipply next presented the I-70 Fall River Road Pedestrian Bridge project. Ms. Donaldson and Mr. Laipply addressed questions about the capital projects submitted by CDOT. Mr. Laipply addressed questions and comments about CDOT's authority to establish or enforce certain policies.

02:55 PM

Mr. Laipply discussed a new headquarters building for CDOT. He also addressed a question about why CDOT is not required to seek legislative authorization to construct the new facility or to finance the construction through the sale of certificates of participation. Discussion ensued about maintenance shops scheduled for closure.

03:07 PM -- Staff Briefing on Capital Briefing to JBC

Mr. Bo Pogue, Legislative Council Staff, discussed the format and strategy for presenting information about the Joint Budget Committee (JBC) staff budget briefing for capital construction. Committee members received a copy of the briefing document. The document is available on the JBC website and can be found here: http://www.tornado.state.co.us/gov_dir/leg_dir/jbc/2015-16/capbrf.pdf. Mr. Alfredo Kemm, JBC staff, came to the table to discuss issue one in the briefing document regarding the Governor's FY 2016-17 budget request for capital construction. He discussed specific recommendations in the briefing, including funding controlled maintenance before funding continuation projects for new buildings. Ms. Donaldson discussed the JBC staff recommendation to fully fund Levels 1 and 2 of controlled maintenance and the recent investment in capital construction by certain state agencies. She also discussed the ability of state agencies to adequately manage a larger number of controlled maintenance projects and the possibility of increasing the appropriation to the Emergency Controlled Maintenance Account.

03:18 PM

Mr. Pogue provided input about the JBC staff recommendation to incrementally sell state buildings equal to 1.0 percent of the insured replacement value each year. Committee discussion ensued on whether any buildings have been specifically identified for sale, the cost savings associated with owning a building over leasing it, and other advantages and disadvantages of replacing owned space with leased space.

03:26 PM

Ms. Donaldson discussed the JBC staff recommendation to finance the Adams County Youth Services Center and Digital Trunked Radio System Microwave Infrastructure projects using certificates of participation (COPs). She explained how initial costs of the project compare to COP financing. Committee discussion ensued on the current COPs for the Department of Corrections.

03:33 PM

Mr. Kemm presented issue two from the capital briefing document. Mr. Kemm responded to a question about whether an enterprise created to manage state assets would be a state agency. Discussion ensued on this topic. Mr. Becker discussed how costs associated with controlled maintenance could be paid from interest earnings on the Controlled Maintenance Trust Fund and the possibility of making the FY 2016-17 SB 09-228 General Fund transfer to the Controlled Maintenance Trust Fund rather than to the Capital Construction Fund. Mr. Pogue responded to the recommendation in issue two to create an enterprise to manage state assets. Mr. Kemm responded to a question from the committee about legislation authorized during the 2015 legislative session concerning setting aside an amount equal to the depreciation of assets funded through the capital budget.

03:52 PM

Discussion returned to the topic of creating an enterprise entity to manage state assets.

03:58 PM

Mr. Kemm next presented issue three from the capital briefing document. Ms. Donaldson presented some thoughts about the JBC Staff recommendation to pursue legislation that creates a State Management Trust Enterprise to manage all of the Department of Human Services (DHS) real property assets. Ms. Donaldson responded to questions regarding the ability to quantify economies of scale for DHS facilities throughout the state, and the potential for staff to create a document summarizing its thoughts on the JBC Staff proposal.

04:08 PM

Discussion ensued regarding the time frame for taking action on the proposals set forth by JBC Staff. Mr. Becker addressed a JBC Staff proposal to sell the Grand Junction Regional Center campus, noting some positions taken by the Regional Center Task Force assembled to study issues associated with the campus. Mr. Becker responded to questions regarding the timeline for this task force to issue a final report. Discussion followed regarding the potential for pursuing the creation of an authority to manage DHS assets, and the merits of other components of the JBC Staff proposal.

04:17 PM

Mr. Kemm presented issue four from the capital briefing document. This issue, in part, contemplates accessing lottery moneys to help fund higher education controlled maintenance. Discussion ensued regarding the ongoing need of the programs that currently receive lottery moneys, and the need to amend the State Constitution to access lottery moneys for higher education capital construction.

04:26 PM

The committee adjourned.