Less than halfway to its $166 million fundraising goal, the University of Minnesota may take on debt to break ground on its Athletes Village.
The Board of Regents will vote Friday whether to take on long-term debt to fund the nearly $89.5 million still needed to fund the project. Donors have currently pledged $76.5 million, but administrators expect the school will eventually raise the remaining funds in full.
“There’s a 95 percent chance that we will finalize the vote this week on the Athlete’s Village,” Regent Thomas Devine said. “The fundraising hasn’t stopped — it’ll continue — but what we are doing is debt financing in between so we can start the project.”
Despite delays in the project’s timeline to allow for additional fundraising, Devine said regents are confident in the progress of the multi-building hub that will serve as a flagship for Gopher Athletics and provide new practice facilities.
Richard Pfutzenreuter, chief financial officer at the University, said work could begin on the 320,000-square-foot building with the $76.5 million already pledged.
Before it takes out any additional loans, the University will use the already pledged funds. Pfutzenreuter said the rest of the project would be financed with long-term loans over a 25- to 30-year timeline.
He said the school believes it can fundraise additional donations before the long-term loans are issued, which could ultimately decrease the amount of debt the University would accrue.
“It’s a great time to issue debt because interest rates are very low,” Pfutzenreuter said.
The University employed a similar strategy when it financed TCF Bank Stadium, Devine said.
The ability to show donors the construction’s progress is a useful tool for raising additional donations, Devine said.
Taking on debt for University construction is common practice, Pfutzenreuter said. Administrators routinely shape a project’s timeline based on fundraising progress.
Generally, administrators require a project to be 80 percent funded before breaking ground — a figure that loosely tests a project’s readiness, he said. Leaders also require that a project’s finances be in order before approval, he said.
“That’s a guideline,” he said. “But that guideline is subject to the president [or the board] having a different feeling about it.”
The Athletes Village faced scrutiny over its initial planned site, which would have relocated the school’s outdoor track, home to many female athletes.
In January, plans for the Athletes Village prompted a federal investigation into whether the school had violated Title IX — a law that protects against gender-based discrimination — by failing to provide female athletes with the same equipment, supplies, scholarships and facilities as men.
The University later agreed to build a new track facility at a still-undecided East Bank location.
Devine said regents are aggressively pursuing the Title IX issues that have plagued the project since its beginning.
He said that when completed, the Athletes Village would be more than just a new building on campus. It would help attract new athletes, encourage a better balance of academics and athletics and ensure the University serves all of its student-athletes equally.
“It is putting all of these ducks in a row so that we have a terrific outcome,” he said.