ST. PETERSBURG — Days after they turned down an offer from city officials for help in financing a $20 million student center and dormitory, University of South Florida St. Petersburg officials say the project is still on and should start construction by March.
The facility will be 81,000 square feet and include nearly 200 beds, a food court, and meeting and game rooms. It will help increase the on-campus living percentage to about 10 percent of the 6,000 full-time students.
It is being paid for with an increase in student fees.
USF officials are pushing for the project because of the high demand for dorms. Campus housing is so scarce that about 30 students are housed at the Hilton. City officials support the project because they believe development of the campus helps downtown.
"The stronger they are, the stronger we are," said council member Jim Kennedy.
On Monday, the City Council was set to approve a city bond issue of $67 million to pay for a host of water and wastewater projects. Like many cities and counties in Florida, St. Petersburg is issuing bonds that are part of the $787 billion federal stimulus approved in February 2009. The bonds allow local governments to borrow money for projects. Unlike other municipal bonds, they aren't tax exempt. But their enticement is sizable tax rebates from the IRS.
The city offered USF St. Petersburg about $3 million of its $6 million rebate from the bond issue, which would have been allocated over 30 years. USF St. Petersburg could use that pledge to help finance the project.
City officials said they had discussed this deal with university officials for months. But on Friday, Fell Stubbs, the executive director of the USF financing corporation, told them that it would be cheaper if the university issued its own bonds.
It turns out that the ones the city was issuing have some strings attached. Even though they come with a lucrative rebate, they also require that those hired to work on the project are paid wages that don't fall below local wage levels set by the U.S. Labor Department.
That can vary from project to project, but Mike Connors, the city's administrator of public works, said he calculates the requirement typically will increase cost by 2 to 3 percent.
"They thanked the city for the support, but said they would float their own debt," said Anne Fritz, the city's finance director. "Labor costs are an important part in making a decision in how to finance a project. It was in their interest to go with another bond issue."
The higher wages are tied to the Davis-Bacon Act, which was passed in 1931 by Congress to assure workers a fair wage while working on projects financed with federal money.
Stubbs said the higher labor costs played a role in the decision to decline the city's help. The university is planning to issue bonds with a smaller tax rebate that don't have the requirement for the higher wages. The university will issue an $18 million bond issue in mid December that will pay for the project, Stubbs said.
The building is expected to be complete by the 2012 fall semester, said Kent Kelso, vice chancellor of student affairs at USF St. Petersburg.
Michael Van Sickler can be reached at (727) 893-8037 or [email protected]