In last week’s article I covered the three amendments that you will be asked to vote on the 2014 November ballot with a breakdown of the impact of each amendment. I felt further details on Amendment C were needed to help you understand the details of this amendment.
Below are some clarifications on the benefits of ballot Amendment C as explained by proponents of the bill during the House Ways & Means committee meeting and Senate research:
• Representative Riley presented in the House Ways & Means committee meeting from Feb. 6 that the contracts would contain stop-gap measures against the cost of rent being raised and passed on to the students.
• Chancellor Huckaby reiterated that the agreements will have caps which will prevent the private management companies from raising student rents, and that in the long run these agreements will benefit the financial status of the University System of Georgia.
Further, if an agreement is violated then the University System will have option to end the agreement.
Finally, he belabors the point that raising the price of student housing to the point where it is no longer affordable by students would be counterproductive.
• Representative Pak noted that this type of P3 project will reduce liability to the state by passing it on to private
• Chancellor Huckaby noted that when he became Chancellor the current method of financing resulted in the University System of Georgia accumulating approximately 3.6 billion dollars in debt, and these agreements are an attempt to pass on that risk to the private sector.
• This legislation extends the existing ad valorem tax exemption for use by the private sector.
• A number of states are successfully using this financing mechanism.
• Rating agencies are keen on this type of financing.
Below is the study committee report prepared by Senate Research:
Hank Huckaby spoke regarding this bill and stated the University System is $3.6 billion in debt. He stated this bill will involve the private sector thorough a competitive bidding process which allows the University system to move the debt to the balance sheets of private agencies. This will give them a better bond rating and allows them not to focus on debt, but to focus on educating students.
A question was raised by Sen. Carter if private agencies own the housing on the college/university campuses, can they rent to non-students or hold non-educational events on the property since it will be privately owned. The Chancellor answered that they would have contractual agreements with the private contractors and only students would be able to reside in the housing. The Chancellor stated there would be restrictions on non-students from renting or residing in dorms.
Sen. Cowsert expressed concern about room and board fees being raised so these companies could make a profit. Again, the chancellor assured him that that would not happen and this would be explicit in the contract. He stated this system is currently being used in Kentucky. If any of the private contractors break the contract, the university system would take over.
Senator Fran Millar