Arizona Board of Regents-February 2005 Special Meeting Minutes

A meeting of the Arizona Board of Regents was held February 17, 2005, in the Small Conference Room of the ABOR Office, 2020 N. Central, Suite 230, Phoenix, Arizona. President Stuart called the meeting to order at 1:41 p.m. Some of the people participated by telephone.

PRESENT:	Regent Fred Boice (By telephone) Regent Ernest Calderón Regent Lorraine Frank (By telephone) Regent Jack Jewett (By telephone) Regent Wes McCalley (By telephone) Regent Christina Palacios (By telephone) Regent Gary Stuart
ABSENT:	Governor Janet Napolitano Regent Robert Bulla Regent Benjamin Graff Regent Chris Herstam Superintendent Tom Horne

Also present were: Dr. George Davis (by telephone) and Mr. Greg Fahey, University of Arizona; Dr. Christine Wilkinson (by telephone), Arizona State University; Executive Director Joel Sideman, Board Counsel Paulina Vazquez-Morris, Secretary to the Board Judy Garza, Ms. Kathy Bedard, and Mr. Ted Gates, Central Office; Mr. Jaime Molera, Consultant; Mr. David Harris, Senior Project Manager for the Phoenix Biomedical Campus, and Ms. Darcy Renfro (by telephone), Governor’s Office.

All lists, reports, summaries, background materials, and other documents referred to in these minutes can be found in the February 17, 2005, Documents File.

President Stuart explained the Board was being asked to authorize the University of Arizona to enter into a lease agreement with the City of Phoenix for three historic buildings and related land located at the former Phoenix Union High School site in downtown Phoenix at 7th and Van Buren Streets; to authorize the University of Arizona to sublease those facilities to DESCO Southwest; and then lease them back from DESCO Southwest when required renovation work has been completed.

President Stuart said Regent Herstam had recused himself from the meeting because he might have a conflict of interest with a client. There was a need to meet in a special meeting to authorize these documents so the project can begin and will finish in time to meet the necessary deadlines for everyone involved.

The Board approved an Intergovernmental Agreement (IGA) with the City of Phoenix at its January 2004 meeting to allow the universities to renovate existing historic buildings and construct new facilities at the Phoenix Biomedical Campus of the Arizona University System in downtown Phoenix. Under this IGA, the City of Phoenix offered to lease three historic buildings on the Campus to the universities for $1.00 per year per building for a term of 30 years. The City has also offered the University of Arizona an opportunity to participate in its New Market Tax Credit Program, which could reduce construction costs by 25% by offering Federal Income Tax Credits to any proposed developer.

In June 2004, proposals were solicited from private developers to lease the building from the University of Arizona, renovate them, and lease them back to the university for 30 years for use for expansion of the College of Medicine in downtown Phoenix. After review by an independent financial consultant, DESCO Southwest was selected from five proposing developers based in large part on their experience with a similar project in St. Louis, Missouri, and their experience with New Market Tax Credits.

It is anticipated that the renovations will commence by March 1, 2005, on the 90,000 sq. ft. facility which will include highly mediated classrooms, administrative offices, faculty offices, student study carrels and library, and a small auditorium. The facility will accommodate 48 medical students, with the first class of 24 students starting in July 2006 and a second class of 24 students starting in July 2007.

Upon motion of President Stuart, seconded by Regent Boice, the Board authorized the University of Arizona, through its president or his designated representative, to enter into a 30-year lease with the City of Phoenix for three historic buildings and related land located at 7th and Van Buren Streets at a rate of $1.00 per year per building; authorized the university to sublease these facilities to DESCO Southwest for an identical $1.00 per year per building for a 30-year term; authorized the university to lease the facilities back from DESCO Southwest when required renovations are completed for a term of 30 years for an initial rate not to exceed $16.25 per sq. ft., with an annual inflation increase of 1.5 % or the CPI, whichever is greater. The appropriate legal documents are subject to review by university and Board Counsel.

Regent Calderón asked if the property would revert back to the City of Phoenix after the 30 years and was told yes if the university did not exercise its option.

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