UH finances are getting murkier and more perilous

Ben Jay, University of Hawaii athletic director, thinks UH sports can be great with just $8 million more.

Last week, Jay announced plans for a new fund drive that would increase the annual budget by $8 million.

The hope is to move UH into the NCAA’s top 50 universities.

"We need to be financially secure with an image, rank and reputation that will make UH athletics nationally recognized," Jay said, "matching the academic excellence that the university has already achieved."

Good, but before fans start waving their checkbooks like pompoms, some notice should be paid to the UH in general and West Oahu in particular.

UH’s own financial projections for the newest campus show that by fiscal year 2019-20, West Oahu will have an operational deficit of $30 million.

Much of it is caused by an $18 million loan the UH took out in May 2012. The money was loaned to UH from a Hawaii limited partnership associated with CanAm Enterprises. UH is paying $270,000 a year in interest for five years and then it must pay back the loan.

According to the loan agreement, which was signed by former UH President M.R.C. Greenwood, state Attorney General David Louie and state Budget Director Kalbert Young, the $18 million is to build the UH-West Oahu administration building.

Paying for this Kapolei campus is the state government’s version of the Perils of Pauline, as financing is a continuing set of cliff-hangers.

In March of this year, Gov. Neil Abercrombie had to send a special request to the Legislature to fund the first $270,000 interest payment for the loan.

In a letter to state Sen. Maile Shimabukuro, Gene Awakuni, former UH-West Oahu chancellor, said the project "required some creative means of obtaining financing."

In his letter, Awakuni listed several ways to pay off the loan: First is to simply sell revenue bonds; second would be to sell the as-yet-unbuilt administration building "and use the funds to pay off the loan with a lease-back provision"; and the third would be to sell some of the non-campus land owned by West Oahu in the area.

Here comes the second cliff-hanger.

In November 2012, UH regents happily announced a $32 million sale of some of the West Oahu land to the Catholic Church to build a church and private school.

The sale still hasn’t happened. All the regents have is a letter of intent.

In a letter to state Rep. Isaac Choy, the House Higher Education Committee chairman, UH-West Oahu Vice Chancellor for Administration Donna Kiyosaki said the "agreement was never fully negotiated and with the appointment of our new chancellor, we are looking at changing the location of the potential church/school site."

So no big problem, real estate deals go south all the time. The problem is that UH’s financial projections already list payments from the Catholic Church of $3 million in this fiscal year and $9 million in the year after.

Without those payments, the West Oahu campus will be even further in debt, because the $30 million project debt includes the church money.

Choy, who is an accountant, just shakes his head.

"How can we continually pay for all this stuff?" he asks.

"Right now I have no confidence that UH can solve these problems on their own. We need to sit down and talk about what is sustainable and what is not," Choy said in an interview.

A look at the UH balance sheet indicates that ticket prices may not be the only cost that is going to rise.

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Richard Borreca writes on politics on Sundays, Tuesdays and Fridays. Reach him at rborreca@staradvertiser.com.