What is the real impact of the Mark Dambly led Construction Waste?
We have previously discussed several of the bewilderingly-priced Penn State Capital Projects….
And the hits just keep on coming, with the most recent debacle being the renovations of Sproul and Geary dormitories at University Park.
Now, aside from the obvious questions – which we have discussed at length when looking at previous Dambly projects:
1) Why do Capital Projects championed by PSU Board Chair Mark Dambly have such outrageous costs?
2) Who benefits from the millions upon millions of wasted Penn State funds?
Questions for which we can all draw reasonable conclusions – given the resumes of the men in charge.
Lets examine this month’s Capital Project Debacle – with an eye on the true impact of this waste:
This month, at the PSU Board of Trustees meeting of February 21-22, 2019, the following expenditure is expected to be “rubber-stamped” :
[ You can find the link here:
Final Plan Approval and Authorization to Expend Funds, East Halls Renovation – Phase 2a, University Park East Halls Renovation
“The regular bed count in the two buildings will be reduced by 9 for a new total of 573. Most beds will remain in double rooms. Building updates include additions to improve social spaces, the replacement of aging and inefficient building systems, renovation of the building envelope, improvements to the building’s appearance, and ADA accessibility improvements. Both halls will be connected to the campus chilled water system for air conditioning.”
Will the Board of Trustees adopt the following resolutions:
RESOLVED, That the final plans for the East Halls Renovation – Phase 2a at University Park, as designed by Clayco of St. Louis, Missouri, are approved.
FURTHER BE IT RESOLVED, That authorization to expend funds to accomplish the project is approved in the amount of $60,800,000.
This month’s “request” is for $60.8 Million, to renovate 2 East Halls dormitories (which provide a total of approximately 290 “two-students-to-a-room” dormitory units).
The price for the renovations (which DOES NOT include funds already spent in the design phase) breaks down to $210,000 per room.
Again, those are RENOVATION costs – not the costs for construction of a new building.
Just to provide a bit of perspective, Penn State recently PURCHASED a complete dormitory building (including the land it was situated on) for a price of $157,000 per room.
That purchase was of an entire existing building – but NOT a construction project governed by Dambly and the PSU Capital Projects group.
But let’s focus today on understanding the IMPACT of this (fraudulent) waste:
It is often easy to lose sight of the real impact of such expenditures – when we look only at a single number – like the $60,800,000.
Let’s put some context to this (fraudulent) waste:
First, we must acknowledge that some Capital Expenditures (especially those to maintain current facilities in good order) are absolutely necessary…. and are money well spent (assuming the costs are not fraudulently or wastefully inflated).
The two dormitories that are involved in this renovation – Sproul and Geary Halls – are certainly good candidates for updating, and are likely to be scheduled for significant necessary maintenance.
How much of that $60.8 Million is required Maintenance and Upkeep?
How much would be necessary to place those buildings in “good and updated” condition?
– Replacing worn carpeting and flooring.
– Painting and repairing cosmetic issues.
– Maintenance to Roof, Heating Systems, Plumbing etc.
– Repointing of Brick or other Façade Maintenance.
– Updating Dorm Room furnishings
Penn State doesn’t provide such a breakdown for these projects.
Stunningly, in a repeated act of fiduciary negligence, such information is rarely (if ever) even requested by the 38 members of the full Board of Trustees.
But we know, for buildings of this size and usage, assuming that they have been relatively poorly maintained over the years, costs of $6-7 Million per building for extensive maintenance may be justifiable. Lets assume that the maintenance and upkeep of East Hall dormitories have been relatively ignored over the years.
That totals to approximately $14 million (combined) for the two buildings.
Let’s round up to $15 million in maintenance costs.
The remaining $45.8 Million?
Those dollars, of they are to be spent, would have to be justified as Discretionary Expenditures.
Figures like “$45.8 Million” are sometimes difficult to conceptualize – so lets look at those costs in a more practical format.
“How much more are Penn State students
going to have to be charged, in order to pay for Dambly’s latest project?”
Let’s do the math:
If we exclude the $15 Million required to bring the buildings up-to-date, and look only at the discretionary expenditures, the costs per dorm room – as shown in the spreadsheet above – amount to $159,000 per room.
Those funds will be borrowed by Penn State (adding to the University’s record levels of debt).
Even if we assume interest rates on that debt will remain historically low into the foreseeable future, in order to pay off that debt – which will come from student fees:
Each student housed in those dormitories
will be incurring an additional
cost of $5,089 per YEAR, for the next 25 years…..
just to pay off the additional debt.
That is assuming that no further capital expenses will be required on those properties until the year 2043.
That – multiplied time after time – is the REAL COST of all of these dubious Dambly debacles.
That is the burden we pass on to future generations of students – and their families – each time we look the other way.
That is the damage we inflict each time we fail to perform responsible acts of governance for Penn State.