Minutes of the
NIU Board of Trustees
Finance, Facilities and Operations Commitee

November 15, 2000

Our Committee will be asked to approve several capital action items. These items related to the following projects: the convocation center, Altgeld Hall, Wirtz Auditorium and the West Heating Plant. The committee also will receive several periodic annual reports, including a report on the active capital projects over $100,000, a summary report of transactions in excess of $100,000, Fiscal Year 2002 budget request update and a quarterly report on investments.

Chair Sanchez recognized University Advisory Committee members Jim Lockard and Rich Becker and asked if either had any comments. Dr. Lockard said he was gratified to hear that the three Trustees whose terms were about to expire wished to be reappointed to the Board.

Thank you, Chair Sanchez said. It is that kind of attitude, frankly, that makes it easy for us to want to return. Before I pass the meeting over to Dr. Williams, on behalf of the Board, I want to extend our congratulations to Dr. Williams on his promotion and his new title. Frankly, I think you have always had the responsibilities, the Chair said, but now you also have the privilege of the title. Congratulations, the Board is very happy for you. Trustee Boey agreed with Chair Sanchez. It has always been there, he said, it was just a matter of formalizing the proper title to go with it. Our obvious congratulations to you, Eddie.

In response to the very kind words that were spoken by our Chair and underscored by Trustee Boey, Dr. Williams said, I thank you. I feel very humbled by the opportunity to serve. Part of what makes this such an exciting job and a lot of fun really boils down to the people I work with, my very highly qualified staff. They do the job. Another very exciting part of the job is having the opportunity to work with a board of trustees such as we have here at Northern. Through the years, all of you have shown your commitment to this university and your desire to see NIU progress. It is a pleasure to be here and to again have our Finance Committee review very key and important projects for the future of our university.

We have been working on this project for about two years, Mr. Scheckelhoff said, working very closely with Dr. Williams, Pat Bell, Cary Groth and, more recently, John Gordon, the director of the convocation center. This is an opportunity to kind of bring the Board up to date on what has taken place over the past year.

Mr. Scheckelhoff stated that the convocation center is located on about 52 acres in the new West Campus development, west of Huskie Stadium, the Stevenson Towers and the soccer fields, and it is accessible off Lincoln Highway. The construction of the convocation center incorporates extending some of the pedestrian ways and roadways from the East Campus. The site itself is comprised of the major building, which is comprised of two major elements, the arena wing and the office and auxiliary gymnasium wing. It will have a formal boulevard entrance flanked on both sides by parking from Lincoln Highway to roadways on either side of retention ponds. There is parking in the south area for approximately 1,500 cars and an auxiliary overflow lot to the north which would double the parking area. There are connecting roadway systems from the East Campus both north and south of the main building. The main entrance connects with a pedestrian walkway that goes through the convocation center lobby and can be extended as a pedestrian walkway onto the West Campus. The major automobile drop-off area is at the southwest corner.

The building is close to the equivalent height of a six-story building. It has an entrance on the south facing Lincoln Highway as well as the entrance from the campus and is flanked by the office wing to the east. The total area of the building is about 215,000 square feet of which the arena is the major component, a multilevel area with the lower level becoming the main facility for athletics. The upper level is seating and through retractable seating can become adapted to many uses. The wing element is primarily the office wing, which is the offices for athletics administration and administration of the convocation center. The western portion is the upper level of a second gymnasium as well as a mechanical plant. The lower level, which is one level below grade, is the auxiliary gymnasium, which is a multi-use facility that can be used for practices, banquets, trade shows, etc. and has retractable seating for 800. Between the two gymnasium areas are the locker rooms for the home and the visitors' teams and other backup facilities for athletics and training. The locker rooms have a functional purpose as dressing rooms if there is concert venue.

There is a large multipurpose room that can be used for meetings, trade shows and press events. There is an area of approximately 55,000 square feet available when the seats are all retracted in the main arena, plus the addition of the auxiliary gym, which is about 25,000 square feet. In answer to a question from Trustee Boey, Mr. Scheckelhoff said the convocation center will contain approximately three times more space than Evans Field House offers. It holds approximately 9,000 people for basketball. Seating can vary from a maximum of in excess of 10,000 people for a concert venue. The seating is about 75 or 80 percent retractable seating, which allows this facility to be used for other purposes. Above the highest level of seating is a multifunction box area comprised of a major function room for perhaps 50 to 75 people and four smaller rooms for perhaps 20 people. That is facing to the south and centered on the court. With the seats retracted, the facility can be used for an exposition or trade shows, but its primary athletic function is for track. There is a six-lane, 200 meter track arrangement on the grade level bowl. The middle section is open with the basketball floor removed for practicing field events. In the track mode, the lower bowl consists of six lanes of 200 meters and can be used for a field event or practice. The upper level seats are fixed. The retractable seats in a partially retracted position give seating for a few hundred people on the sides. The upper level multifunction suite box area is above that to the north. Approximately a thousand seats can be added at the floor level. The stage can be arranged in a variety of ways, Mr. Scheckelhoff pointed out, either a center stage that could be used for convocations or a larger stage can be set on the south side and used for a concert or perhaps a convocation as well. Convocation center director John Gordon feels that the end stage arrangement is probably the best arrangement for a concert, and he intends to fill the center with some good venues.

A budget of $35.8 million was approved for the project. We have developed a facility that meets that budget, Mr. Scheckelhoff said. We have also looked at potential options and upgrades based on future funding. The arena itself is considered inviolate at this point, he said, but some of those upgrades deal with finishes in some areas, such as parking lot surfacing, exterior lighting at the overflow lot, some enhancements to the auxiliary gym and possibly some phasing of the office wing. One of the enhancements involves energy efficiency. Primarily through the mechanical system, we initially designed a budget system for this facility and then explored ways to try to make it more energy efficient for the long-term use of the university. One of the methods that has been explored is called performance contracting. Mr. Scheckelhoff described performance contracting as a State of Illinois program set up for public universities that allows them to enter into long-term contracts for the purpose of improving the energy usage of the building. It was originally adopted for rehabs where it was relatively easy to calculate what the energy usage was and then add amenities to it to get better energy usage. About a year and a half to two years ago, the State of Illinois actually decided that it can be used for new construction as well. What we have done, Mr. Scheckelhoff said, is designed a basic system and an enhanced system. The difference in the cost of those two systems can actually be funded by a performance contractor based on the savings and usage over a given period of time. The annual calculated savings and energy cost is divided into the additional cost for the system to determine a payback period, and the savings amortizes the cost of the upgrade.

Construction documents have been completed. The civil site drawings, site grading and site utilities drawings have been completed, and grading began about three weeks ago. Construction contracts will be awarded over the next three to four months, Mr. Scheckelhoff reported, and substantial completion is scheduled for the spring of 2002.

Back in 1966, when I came here, Chair Sanchez said, I was a little disappointed in the Field House. So it is more than 30 years, Eddie, that we have been dreaming this dream. The idea that we are within 18 months of substantial completion, I think is very exciting. Trustee Boey asked the size of the smallest event that can be held in this facility. Mr. Scheckelhoff answered that the multipurpose room or the auxiliary gym can be used for an event with approximately 500 to 1,000 in attendance. Also, the main arena could be subdivided with curtains for trade show areas. The lower bowl could accommodate seating of perhaps 2,500, or something could be done on the upper level of the bowl, which would seat up to 7,000. One of the major goals, he said, was to make this thing as adaptable and flexible as practical, and I think we have been able to achieve that.

I would like to introduce Mr. John Gordon, Dr. Williams said, who has been hired as director of the NIU convocation center. He comes with a great deal of experience in working with these kinds of facilities, and we thought it very important to have his expertise on board as we tried to pinpoint and refine the design elements of the facility. That has made a big difference. John has come up with several different ideas and recommendations that have modified our thinking and modified the drawings to the betterment of the whole project.

Dr. Williams asked the Committee to endorse the design as presented. I underscore the statements of Mr. Scheckelhoff on how we have approached this from a budget perspective. We do have some upgrades and contingencies in this design. But the bottom line is that the overall objectives and priorities in terms of being a multipurpose facility are addressed within the budget that has been established. In answer to a query from Trustee Vella, Dr. Williams said that Mr. Gordon is in the process of booking business for the convocation center and was almost ready to announce the first client contracted to use the facility. Mr. Gordon is making sure that the facility is filled, because that is part of our financing plan. I have talked extensively with Dr. Williams, John Gordon and Bob Albanese, Student Trustee Barr said, and I really think it covers all of our needs from the students' perspective.

Chair Sanchez asked for a motion to endorse the convocation center project design. Trustee Boey so moved, seconded by Trustee Vella. Trustee Skoien said that he would like to excuse himself from these votes. Just to make it clear, he said, I actually work for the Prime Group. This project is being done by Prime Group Realty Trust. They are affiliated, but I do not work for that company. To make sure there is no bad appearance, I will excuse myself from each vote related to the convocation center. The vote was as follows:

    Trustee Boey         Yes                 Trustee Vella        Yes
    Trustee Skoien      Abstain          Chair Sanchez     Yes
    Trustee Siegel       Yes

The motion was approved.

Agenda Item 6.a.(2) – Convocation Center HVAC – Performance Contract
As already has been explained to the Board, Dr. Williams said, we have considered all possible ways by which we can make the facility more efficient and cost effective. In our analysis, we came up with the concept of a performance contract which allows us to upgrade the heating/air-conditioning system to a very energy efficient state-of-the-art system and have the differential in the cost of that upgrade covered through a performance contract, which can be paid over a ten- year period from energy savings with no risk to the university. The contractor that enters into the agreement for the performance contract actually guarantees the energy savings, Dr. Williams explained, and thereby, the institution is really not exposed to a problem if those energy savings are not realized. Given that, we calculate this method will save about $1.4 million, which is the differential cost of the enhanced system, and we get that $1.4 million upgrade at no cost to the institution. This committee is familiar with the performance contracting that we have pursued in DuSable Hall. A lighting project, which included 19 buildings under a performance contract, was also approved, and we have had fairly good success with it. It is a great opportunity for us to improve the building without affecting the budget, he said. Committee concurrence was requested. Trustee Boey asked Dr. Williams if he would explain how the contractor benefits from a performance contract. Dr. Williams stated that the contractor amortizes that differential cost over a ten-year period. In their base contract amount, they include the cost of the upgrade plus the administrative cost and profit. They advance the funds for the upgrade so that all subcontractors are paid. Then, they receive their funds over the ten-year contract period.

Chair Sanchez asked for a motion to approve the convocation center HVAC performance contract. Trustee Vella so moved, seconded by Trustee Boey. The vote was as follows:

    Trustee Boey         Yes                 Trustee Vella        Yes
    Trustee Skoien      Abstain          Chair Sanchez     Yes
    Trustee Siegel       Yes

The motion was approved.

Agenda Item 6.b. – Turner Construction Management Contract Renewal
As you know, Dr. Williams said, this Committee and the Board have moved to amend the budget for this project by $5 million in response to unforeseen construction items and problems that have occurred in trying to totally renovate Altgeld Hall, a building that is almost a hundred years old. That request is also supported by the CDB. At this point, however, the university, would like to request that the contract for consultant services provided by Turner Construction Company for the Altgeld renovation be extended for another year. Turner has provided invaluable service, ideas and evaluations on a multitude of change orders. In the scope of this $20 million project, for us to come up with the need for an additional $5 million means that we had a number of change orders, Dr. Williams said. Many were technical in nature, many were structural, and we needed to have a consultant available who could help us evaluate all of these different change orders and provide additional options to us. As we move forward from this point, we feel that Turner's continued participation is very desirable, he said, and we ask your support. Dr. Williams introduced Mr. Rick Zerring and Mr. Ron Rusnik from Turner Construction Company who have been working on the Altgeld project. These two gentlemen have worked with us for the last year and a half on this project. I also want to commend Ms. Patti Perkins, who is the project manager, he added, for her extra efforts in this regard. In answer to a question from Trustee Vella, Dr. Williams stated that this contract extension should cover services to the end of the construction period. Mr. DiCircio of Turner Construction said he had been informed that the project might be concluded before that time. If so, he said it would not be necessary to use all those funds and the savings would be returned to the university. We did not want to prematurely set the number for what we needed to finish the project, Dr. Williams said, so we requested that the contractor, the architect, our consultants, the entire team, try, to the best possible extent, to verify that everything was included. To the best of our knowledge and ability, the $5 million additional request should cover all contingencies. About a month ago, Chair Sanchez said, Senator Miguel del Valle visited NIU and a state representative joined him. The first thing you see when you go to Lowden Hall is Altgeld Hall right across the street. Senator del Valle referred to it as the signature building. It is the signature building for NIU, and in Springfield, that is how they view that edifice. Some people say, "For that money, why didn't we build a new one?" The whole point is being missed, the Chair said. We could have done that, obviously, but then where is your signature building, where is that piece that will always be viewed as a historical piece of NIU for the next generation and the generations to come? Too often that is lost. It is a significant investment, but I am confident now under the supervision of Turner that this remaining project will be completed, and, eventually, the students, the staff, the faculty and everybody will benefit, including the visitors once it is completed. Chair Sanchez asked for a motion for the renewal of the construction management contract. Trustee Skoien so moved, seconded by Trustee Boey. The motion was approved.

Agenda Item 6.c. – Wirtz Auditorium Rehabilitation
Sometime ago, Dr. Williams said, the university received a gift of approximately $100,000 to renovate the auditorium in Wirtz Hall. This amount was matched by the College of Business for a total of $200,000. We then reallocated some construction funds to make a full budget of $232,900. After we went forward with our bids, there were some enhancements to the project as well. The total costs came up to $290,900. Even with the fact that the College of Business, during this period, received the Barsema gift of $20 million and a new facility, he said, the dean has maintained his pledge of $100,000 in support of the auditorium saying that even though the College of Business may not use it, it would be used by other elements of the university and other academic departments. With that commitment, the university requested that the budget be increased to $290,900. The additional funding will come from repair and replacement reserves in the General Revenue Fund. Committee concurrence was requested. Chair Sanchez asked for a motion to endorse the Wirtz Auditorium rehabilitation project. Trustee Vella so moved, seconded by Trustee Skoien. The motion was approved.

Agenda Item 6.d. – West Heating Plant Boiler Upgrade Project
The university has two heating plants on campus, one east behind Altgeld Hall, and the west heating plant just east of Grant Towers. Pursuant to our regular maintenance schedules, Dr. Williams said, there are a number of things that we need to do to upgrade the West Heating Plant to make sure that it is ready for any contingency coming during the winter months. Through this Board's support we were able to put in the necessary linkages to the west heating plant for it to serve as a total fallback system in case there is a problem with the east plant, so that the campus would never be without a backup heating system in the middle of winter. We need to take these steps in order to assure the efficiency of the west heating plant, Dr. Williams said. The budget is set at $800,000. The university asked for Committee concurrence. Chair Sanchez asked for a motion to approve the West Heating Plant boiler upgrade project. Trustee Boey so moved, seconded by Trustee Vella. The motion was approved.

Agenda Item 7.b. – Quarterly Summary Report of Transactions
Board policy gives the President approval authority for all transactions under $250,000. Board Regulations require that projects between $100,000 and $250,000 be periodically reported to the Board. The listing of those transactions was provided in this item. There were 16 such transactions covering all sources of funds, states funds as well as bond revenue and local funds.

Agenda Item 7.c. – Update of Fiscal Year 2002 Budget Requests
This Committee reviewed the Fiscal Year 2002 budget items at the June meeting. These were approved by the Board. The university then submitted its budget request to the Board of Higher Education. In September the university conferred with the Board of Higher Education, Dr. Williams said, and in early October we had what is called the Big Picture Meeting where members of the staff of the Board of Higher Education, including the director, came to campus to discuss options regarding the 2002 budget, asking President Peters to outline campus priorities, recommendations as far as statewide issues relating to such matters as salary and capital projects and reviewing many of the specific capital needs of the institution. We are still in negotiations with the Board of Higher Education. In early December, the IBHE staff will release their recommendations to the Board of Higher Education. The Board of Higher Education will vote on the budget recommendations for the 2002 budget at its December meeting. There are various issues surrounding the budget. Certainly, Dr. Williams said, the priorities are set and, as this Committee has articulated on several occasions, and President Peters has underscored, salaries for our quality faculty and staff has the highest priority. We have reviewed and submitted some key program areas. Provost Waldeland has been in touch with the IBHE staff to underscore those recommendations, and we have also worked with them on capital budget requests. We will learn the results when the budget is presented to the Board of Higher Education in December.

Agenda Item 7.d. - Quarterly Report on Investments
Pursuant to Board Regulations, the quarterly report on investments shows that our quarterly return was at about 5.7 percent, Dr. Williams reported, which is a very competitive return on our investments. He recognized Ms. Tamara Farley and Ms. Kathe Shinham, who are responsible for the investments. Chair Sanchez asked how the 5.7 percent compares with one year ago. Ms. Shinham said that the university is actually up from last year. The annual rate for last fiscal year was 5.48 percent. So we are up, and it reflects the yield curve, which has higher rates for short-term investments, she said, though we expect the short-term rate will be dropping probably the second quarter of next calendar year. Ms. Shinham confirmed that there are significant restrictions on what the university can and cannot invest in. We really try to watch where we can lock into some higher rates, she said. In the last week or so, we did some 6.7 percent yields. I think Ms. Farley does a very nice job of working with our advisor to identify the best investments and when we have the funds to lock into those.

Chair Sanchez asked if anyone among the visitors or guests wanted to comment or contribute. I know at some point we are going to deal with the subject of public comment at the Board level. It has always been our policy that the majority of that kind of activity, if at all, takes place at the committee level.

The Chair then asked for a motion to adjourn. Trustee Vella so moved, seconded by Trustee Boey. The meeting was adjourned at 10:02 a.m.
 
Respectfully submitted,

Sharon M. Mimms
Recording Secretary