The University of Idaho on Thursday moved a major step closer to a new basketball and events arena decades in the making.
The State Board of Education voted unanimously to allow the university to begin the bidding and construction phase on the $46 million project. However, that decision was contingent upon approval of the State Board’s executive director in consultation with the new university president — a stipulation that will give that president input before moving into the job.
The board interviewed four presidential finalists Thursday to replace the outgoing Chuck Staben and indicated during the arena discussion that a hiring decision could be made in the next week.
Students will cover more than one-third of the arena construction cost through $18 million of student fees. Half of that amount is subject to State Board approval at next month’s meeting because it will double an existing arena fee to $30 per semester.
The student government worked with the university administration to address some student priorities — such as how student spaces on campus are managed — in exchange for the students’ support, ASUI President Nicole Skinner said.
“We think the new arena is a great project,” State Board President Linda Clark said in a press release. “We also think it is important that the new president has an opportunity to review the project and provide input.”
Staben expressed concern about any delays at Thursday’s meeting. However, since the bidding process is expected to take about 90 days, the contingency should be removed before the university is committed financially to the project.
The university hopes to break ground early this summer and open the venue for the 2021-22 men’s and women’s basketball seasons. Timing is a key part of the construction process because of the arena’s wooden features and the winter weather in Moscow.
The arena plans call for 4,000 seats and a capacity of 4,200, including other areas such as the alumni room. It will be built primarily with wood products and will replace the lawn on the north side of the Kibbie Dome.
The lead gift was $10 million from Idaho Central Credit Union, which gets naming rights for 35 years.
“The ICCU arena is much more than a basketball arena,” Staben said in a press release. “This unique facility represents an essential addition to our residential campus, offering a gathering place for students, athletes, faculty, staff, alumni and friends for generations to come. We are more energized than ever about this project. Our sincere thanks go to our students, Idaho Central Credit Union and the many donors and partners whose support will make the arena a reality.”
During Thursday’s meeting, U of I revealed that the true cost of the arena could be more than $60 million because of financing costs. Even though the university has identified $43 million in revenue for the arena, much of that money — like the student fees — will trickle in over many years. The university’s preference is to borrow $29 million from internal investment funds at an initial cost of roughly $800,000 per year in lost interest, according to the presentation to the board. The cost would be covered by a recent $1 million savings through refinancing debt, said Brian Foisy, U of I vice president for finance and administration.
Alternatively, the university could borrow the money from outside. Either way, U of I projects financing costs in the neighborhood of $15 million. If those costs are incurred through outside borrowing, the same $1 million refinance savings would be used to cover the interest, Foisy said.
The university has $16 million in cash of the $43 million earmarked for the arena, according to State Board documents.
“There is no way to escape the need for bridge financing,” Foisy said.
Staben also was asked about early projections of a $30 million cost (presented to the board in February 2017) and a 6,000-seat arena. He said those numbers became unrealistic quickly as the university began working on specific plans.