Fresno State defers chunk of Save Mart Center debt. Could students feel the pain?

Yahoo

2 days ago

The Fresno State Association made a reduced annual debt payment on the Save Mart Center, effectively pushing down the road some of the pain in owing more than $30 million on an aging arena in need of refurbishment and upgrades.
The Association was facing a principal and interest payment of more than $10.2 million in 2024-25, but the university said it deferred more than $4 million to maximize cash flow and establish a consistent payment schedule over the next four years. In doing so, it increased pressure on other units within the non-profit auxiliary organization that capture student revenue, such as the dining hall, to cover capital lease obligations and operating losses.
With the deferral, payments will increase by $1 million a year over the next three fiscal years and by $1.1 million in 2028-29. The revised payments on arena debt are now $4.8 million in 2025-26, $5 million in 2026-27, $4 million in 2027-28 and $4.1 million in 2028-29; interest accounts for between 18.1% and 24.2% of those payments, not including the deferral amount.
The debt still is scheduled to be paid off Nov. 1, 2031.
The Save Mart Center capital lease payments are a general obligation of all Fresno State Association revenues, which include student housing, the residence dining hall, campus bookstore and the student union.
'Auxiliary operations cover both the facility's debt service and ongoing expenses, assuming full liability for the debt,' said Bob Brown, interim vice president of administration and chief financial officer. 'As a result, the university's operating budget remains unaffected.'
Fresno State students, already hit with a tuition increase across the California State University system and an increase in a mandatory instructionally-related activities fee approved last month, are likely to feel the pinch.
Revenue generated by student housing rent, as an example, was budgeted at $7.6 million in 2024-25, up from $6.5 million the previous year, according to the Fresno State Association budget. In actual dollars, rent revenue was reported at $6.5 million in 2022-23 and $6.3 million in 2021-22. With the increase, stemming in part from turning some double rooms into triple occupancy units, rent revenue is expected to generate a net surplus of $1.5 million in 2024-25, according to the budget.
The university dining hall has had a net surplus of as much as $1.6 million in recent years, and its surplus was budgeted at $1.3 million in 2024-25.
Any net surplus from units within the Association is directed by board policy to reserve accounts that are used to fund long-term capital lease obligations, as well as things like facility improvements and deferred maintenance.
The decision to defer payments was made by former vice president of administration and chief financial officer Deborah Adishian-Astone prior to her departure at the end of 2024, according to the university. Adishian-Astone, who served as chair of the Fresno State Association, retired from the university.
The Association is due to make principal and interest payments of about $3 million in 2029-30 and 2030-31 and $6.4 million in 2031-32.
After making its payment this fiscal year it still owes $30.3 million on an arena that was opened in 2003 at a cost of $103 million, and since has been a drain on Fresno State basketball and volleyball teams that practice and play there.
The Bulldogs' athletics department receives no cut of revenue from suite leases, signage, parking or concessions sales, which go to pay off the capital lease and to cover operating losses. Athletics also is charged for its use of the building, paying for floor changeovers to put the basketball floor down or take it up for another event, as well as on game days security, housekeeping and liability insurance.