board of trustees finance committee - meeting agenda€¦ · staff cindy visot called the roll with...

Board of Trustees Finance Committee

Tuesday, February 12, 2019

1:15 – 3:15pm Tampa Campus - Marshall Student Center Room# 3707

Trustees: Brian Lamb, Chair; John Ramil, Vice Chair; Michael Carrere, Les Muma, Charlie Tokarz

Foundation Board Liaison: Alan Bomstein

A G E N D A

I. Call to Order and Comments Chair Brian Lamb

II. Public Comments Subject to USF Procedure Chair Lamb

III. New Business – Action Items a. Approval of October 29, 2018 Meeting Notes Chair Lamb

b. Approve Revisions to USF BOT Debt Management University Treasurer Fell Stubbs

Policy

c. Assumption of Subleasehold Interest and Acquisition Sr. Vice President David Lechner of Building Improvements – University Diagnostic Institute (UDI)

d. Tampa Student Housing Rental Rates Asst. Vice President Ana Hernandez

e. Expenditure Authorization Request Vice President/CFO Nick Trivunovich

IV. New Business – Information Items

a. USF 2018 Audited Financial Statements University Controller Jennifer Condon

b. Research Park Mixed Use Lab and Office Building Paul Sanberg/Allison Madden/ Fell Stubbs c. USFSM Student Housing Project Karen Holbrook/Eddie Beauchamp

Board of Trustees Finance Committee - Meeting Agenda

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d. USFSP Student Housing Update Jacob Diaz, USFSP Dean of Students

& Director of Housing and Residence Life

e. DSO Mid-Year Forecasts University Treasurer Fell Stubbs/DSO CEOs & CFOs

1. USF Health Professions Conferencing Corp. Carole Post/Greg Vannette 2. University Medical Services Assoc., Inc. & Rich Sobieray/Alisha Ozmeral USF Medical Services Support Corp. 3. Sun Dome, Inc. Michael Kelly/Brandon Hall 4. USF Foundation, Inc. Joel Momberg/Rob Fischman 5. USF Institute of Applied Engineering Robert Bishop/Eric Forsyth 6. USF Alumni Association, Inc. Bill McCausland/Melissa Schaeffer 7. USF Research Foundation, Inc. Paul Sanberg/Patricia Gamble 8. USF Financing Corp. & USF Property Corp. Fell Stubbs

f. Creation of SEED Florida LLC Paul Sanberg/Valerie McDevitt

V. Adjournment Chair Lamb

Board of Trustees Finance Committee - Meeting Agenda

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USF Board of Trustees Finance Committee

NOTES Monday, October 29, 2018

USFSM Selby Auditorium

I. Call to Order and Comments

The meeting of the Finance Committee was called to order by Chair Brian Lamb at 1:53pm. Chief of Staff Cindy Visot called the roll with the following committee members present: Brian Lamb, Mike Carrere, Les Muma, Charlie Tokarz, and Judy Genshaft. A quorum was established. The following Trustees were also present: Stephanie Goforth, Oscar Horton, Deanna Michael, and Byron Shinn.

II. Public Comments Subject to USF Procedure

No requests for public comments were received. III. New Business – Action Items

a. Approval of August 27, 2018 Meeting Notes

Upon request and receiving no changes to the draft meeting notes, Chair Lamb requested a motion for approval, it was seconded and the August 27th meeting notes were unanimously approved as submitted by all committee members present.

b. DSO Thresholds

Hilary Black, Sr. Associate General Counsel, presented an action item to approve an amendment to the USF System Regulation 13.002 Direct Support Organizations and Health Services Support Organization for approval of expenditures. Florida Statute §1004.28 and the proposed Florida Board of Governors Regulation 9.011 requires the USF Board of Trustees (BOT) to set thresholds for approval of purchases, acquisitions, projects, and issuance of debt by DSOs. The proposed amendment to USF System Regulation 13.002 requires the USF BOT Finance Committee Chair to approve any of the above expenditures equal to or greater than $1M and the USF BOT Finance Committee to approve any of the above expenditures equal to or greater than $2M. The proposed amendment would make the DSO required expenditure approvals comparable to the University’s expenditure approvals (USF System Policy 0-100). Chair Lamb reported that the spending policy is working well at the university level and he does not expect much volume from the DSOs (should not be a significant workload). Most large transactions for the DSOs already come to the BOT pursuant to the BOT Real Property Policy and the BOT Debt Management Policy.

Board of Trustees Finance Committee - New Business - Action Items

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A motion was made to recommend to the BOT for approval the proposed amendment to USF System Regulation 13.002 Direct Support Organizations and Health Services Support Organization. The motion was seconded and approved by all committee members present. Chair Lamb stated that it is good governance to get consistency with the University and the DSOs.

IV. New Business – Information Items

a. Tampa Housing Report

Ana Hernandez, Assistant Vice President, Housing & Residential Education, gave an update on USF Tampa Student Housing. Ms. Hernandez reminded the Committee that in May 2016, the BOT approved the USF Tampa Student Housing Rental Request for three years (FYE 2017-2019). As a result of the predictable funding model, Housing & Residential Education has been able to invest $36.77M in facilities infrastructure and upgrades while meeting or exceeding debt service coverage ratio targets. This reinvestment has extended the useful life of buildings and systems 15-20 years and improved residential experience and satisfaction. The final three buildings of the USF Village project opened in Fall 2018, bringing the total on-campus bed count to 6,329 student beds (added 1,098 new beds in USF Village and demolished 549 beds in remaining Andros buildings). Ms. Hernandez listed the FYE 2018 facility reinvestment projects, which included both front of the house (what students see) and back of the house (infrastructure) projects. Ms. Hernandez also presented before and after photos of some of the completed projects (Holly exteriors, Castor bathrooms and RLC office, and furnishings upgrades for Maple). In addition, Ms. Hernandez presented sample facility reinvestment projects for FYE 2019 and FYE 2020. These projects were part of the long-term deferred maintenance plan presented to the Finance Committee in May. Ms. Hernandez explained the value of living on campus, which includes safety; convenience (close to classes and resources); variety of housing options; Living Learning communities and access to faculty outside the classroom (USF Tampa currently has 14 LLCs and 6 faculty in residence); academic success (graduation and retention); connection to campus life; and flexibility (change rooms or roommates, length of contract, cancellation options). USF Housing is solely funded by rents collected. USF Housing functions as an auxiliary enterprise. The main cost pressures on USF Housing are matching university salary & benefits increases, cost for services (cable, landscaping), utilities and materials, and facilities reinvestment to critical infrastructure, which are causing expenses to increase. Revenues are under pressure due to loss of 550 Andros beds, the revenue adjustment in Greek Village Master leases to allow for adequate turn between semesters, and reduced administrative services fee revenue from P3 (lower occupancy). Ms. Hernandez provided a comparison of SUS housing rates by type for 2018-19. Only UF and FSU are proposing rate increases for 2019-20. Also provided was a 2018-19 market comparison with the off-campus community for apartments. USF on-campus apartments have a 97% occupancy rate. Ms. Hernandez also provided a 2019-20 rate comparison for the USF Village and USF Housing. USF Village will be implementing a 2.4% weighted average increase based on demand. USF Village has 92% occupancy; USF Housing has 94%


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occupancy. Chair Lamb asked how P3 rates are set. Ms. Hernandez explained that the P3 has a five-member advisory board consisting of 2 USF members (Ms. Hernandez and Mr. Stubbs) and 3 P3 members. Rates are driven by the P3 meeting financial obligations for its investors. USF transfers all collected rents/revenue to the P3; then the P3 pays an administrative services fee to USF Housing per occupied bed. There was then discussion on the term of the P3, which is 46 years. According to Ms. Hernandez, this is standard for a P3 agreement, most are between 36 -70 years. These buildings are required to have a useful life of 65 years; when the P3 turns the building over to USF after 46 years, it will still have 25% useful life. Ms. Hernandez also provided financial projections for USF Housing for FYE 2020 with no increase in rents and with a 1% average increase in rents. A 1% increase will allow for additional facility reinvestment. President Genshaft was concerned about a rate increase and its impact on cost of attendance. There was discussion on cost of attendance (and its effect on performance based funding) as well as on deferred maintenance. Chair Lamb stated that we need to continue to invest, recruit and meet debt service. The Trustees will have to make a decision on rates in January. Ms. Hernandez will meet with any of the Trustees who would like more information on this issue before then.

b. Draft 2018 USF Financial Statements

Jennifer Condon, University Controller, provided highlights of the FY 2018 financial statements. The statements are draft as the audit is ongoing. Ms. Condon presented a historical view of operating results. With the exception of FY 16/17, operating results for the USF System have been largely breakeven. FY 16/17 had an operating surplus of $26.9M primarily due to WUSF FCC auction proceeds. Ms. Condon also presented the year-to-year change in cash and investments showing continuing improvement in these areas. This clearly demonstrates that USF is in a strong financial position. Ms. Condon explained variances between 2017 and 2018 in excess of $10M and 10% as well as variances in excess of $20M. While there were many variances that exceeded the thresholds, she highlighted the following:

o Contracts & Grants revenue increased $36M (federal and non-governmental awards) – this is our largest revenue source.

o State Appropriations increased $34M, resulting from Performance Based Funding and Emerging Preeminence.

o Compensation & Employee Benefits increased $46M due to expansion, filled vacancies, and increases in retirement and pension costs. 60-70 net new faculty were hired and the student/faculty ratio has improved on all campuses.

o Cash & Investments increased $60M due to FCC auction proceeds, C&G overhead and investment returns, not E&G.

o Net Capital Assets increased $105M – Phase 1 USF Village ($56M), CIP for MCOM & Heart Institute ($30M), land.

o Total Net Position decreased $295M due to change in accounting for OPEB liability. This is a non-cash item.

o Pension Liability increased $30M due to lower than anticipated investment performance and change in allocation.

o Other Post-Employment Benefits (OPEB) Liability increased $301M due to the GASB 75 move to total liability.


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Ms. Condon concluded by stressing that the change in cash/investments naturally adjusts for the GASB accounting impact and the cash/investments added to the balance sheet indicate that USF continues to prudently manage its finances.

c. Annual DSO Investment Reports

The Board of Trustees, in the August 17, 2017 Finance Committee meeting, requested annual investment reports on significant DSO investment portfolios. 1. USF Foundation

Brian Keenan, Chair of the USF Foundation Investment Committee and USF Foundation Treasurer, and Ken Souza, Investment Director, USF Foundation, presented the annual Foundation investment report. This report includes the Endowment Portfolio and the Operating Portfolio. The USF Foundation recently closed FY 2018 with approximately $615M in total assets under management, of which $480M are restricted endowment assets. The Endowment Pool posted a return of 11.9% for the fiscal year, which exceeded its policy benchmark by 2.8%. This portfolio performance was due to strong performance from domestic and international equities. USF’s endowment returns are the best in the SUS. NACUBO is the primary benchmarking tool. USF endowment continues to outperform peers in all time periods (1, 3, 5, and 10 year) primarily due to its strategic asset allocation; overweight equity position relative to peers; and no allocation to hedge funds. USF endowment is the third largest among selected institutions established since 1950. This is due to strong returns and good fundraising. FY 2018 returns exceeded policy benchmarks. Active management provided a significant boost to portfolio returns and investment expenses were reduced 14 basis points. Asset allocation is set for long-term growth through multiple market cycles. Wilshire forecasts indicate that the USF endowment should be able to maintain long-term intergenerational equity while maintaining its spending rate (4% dividend, 1.95% administrative fee). Recent Investment Committee initiatives include implementing manager change in small cap value and a new quantitative strategy in international equity. The Investment Committee looks at managers and asset allocation quarterly. The Operating Pool is about $102M with some overlap as a portion is invested in the endowment. The investment objective for the Operating Pool is preservation of capital. Foundation management conducts an actuarial review of the operating funds’ cash flow activity in order to forecast the pool’s liquidity needs; this becomes the basis of the asset allocation strategy. Asset allocation is set based on risk/return forecasts for each asset class, under guidance from Wilshire. The Operating Pool posted a return of 2.5% for the fiscal year, which was over its policy benchmark by 1.0%.

2. University Medical Services Assoc., Inc. (UMSA)

Rich Sobieray gave the investment report for FY2018 which includes UMSA and MSSC. Investment committee membership overlays with the University Investment Committee. Portfolio objectives include liquidity and mirroring University investment allocations


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(although UMSA is currently a bit behind), policies, investment managers and utilization of the same investment consultant, Cambridge Associates. Over the past few years, the DSO has taken cash out of the portfolio to invest in the business; now the DSO is in a growth phase and building investments back to the $50M level. This is consistent with the approved strategy for the DSO.

3. USF Research Foundation, Inc.

Nick Trivunovich, Chair of the Research Foundation’s Administrative Finance Committee, gave a brief report for the Research Foundation. The total investment portfolio is $34.5M and consists of three investment accounts:

- Long Term Investments (+ 10 Years); USF Foundation Endowment Pool; $25.1M

- Intermediate Term Investments (5 - 7 Years); SunTrust; $6.5M - Short Term Investments; Vanguard; $3M.

73% of the portfolio is invested long-term with the USF Foundation. The remaining 27% is in intermediate and short-term investments (maintained for strategic purposes such as the potential building of a new facility in the research park in the near future). The intermediate investments (for working capital and reinvestment into the research park) are performing at or slightly below benchmarks. The Research Foundation had total investment income of just over $3M in FY 2018. The weighted return on the portfolio was 10.2% which exceeded benchmark by 2.0%.

d. Construction Update

Calvin Williams, Vice President for Administrative Services, gave a brief update on the following construction projects over $2M:

• USF Health Morsani College of Medicine and Heart Institute – project is moving along quickly; construction continues; structural top out scheduled for November 2018; completion 14 months out; still waiting for $14.2M PECO from State

• USF Grocery (P3) – in construction; store opening moved to December 2018 • USF New Entry/Laurel Drive Extension – in construction; continuation of road

between the Village and Publix with tie in to 46th street; new parking lot (300 spaces) • USF Honors College – philanthropy driven; will be located north of Muma College

of Business; in design phase; all other SUS preeminent universities have a stand-alone Honors College

• USF Football Center – consists of indoor practice facility and football operations building; philanthropy driven; football operations building is first priority

• USFSP Student Housing & Dining Project – in procurement phase; the Beck Group has been selected for design/build; one building consisting of 120,000 sf student housing (375 beds) and 12,000 sf dining facility; Chair Lamb thanked Trustee Goforth for advancing this project and also thanked former Trustee Debbie Sembler who led the selection committee

• USFSM Academic STEM Facility – CIP Priority 7; no dollars yet for this project; to date, $54K has been spent for renderings


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Chair Lamb noted that with all of the current construction going on, this is a transformational time in USF’s history and it won’t stop anytime soon.

e. Supplier Diversity Program Update

Terrie Daniel, Assistant Vice President of Supplier Diversity, gave an annual update of the Supplier Diversity Program. This was the first year of the Program. The BOT approved the strategic plan in December 2017. All 26 short-term goals in the strategic plan have been successfully implemented, including development and launch of “Lunch & Learn” series; purchasing card (pcard) training (it is important to impact this level of spending); and hiring and training of staff to support the operations of the program. To date, the Office of Supplier Diversity (OSD) has created a roadmap for systematic program development; has significantly increased awareness internally and externally about our supplier diversity initiatives; has created and is still driving a system-wide program buy in and support; and is implementing analytics tool Jaggaer to track and identify key areas of spend. OSD recently had its 2nd Annual Supplier Diversity Day (which was a phenomenal success) and awarded the 1st USF Supplier Diversity Champion Awards to recognize those across the USF System who have run with these initiatives. Ms. Daniel then discussed performance metrics which include total spend with diverse owned suppliers and provided the Trustees with a copy of the “2018 Growing Together Annual Program Update.” In 2016/17, USF’s spend with diverse-owned suppliers was $18M. That spend increase $10M in the first year of the program (2017/18 spend was $27M). The current percent of total spend with diverse suppliers is 7.8%. The USF System goal is 13-20% upon full program implementation. President Genshaft thanked Ms. Daniel for all her work. Chair Lamb stated that we have a best in class model here at USF with Ms. Daniel’s leadership and that we are in a good place and headed in the right direction. He asked Ms. Daniel not to let up and to continue to be visible on all campuses.

V. Adjournment Trustee Shinn emphasized the need for housing and labs on the Sarasota-Manatee campus. Chair Lamb reiterated that Sarasota-Manatee is a strategic priority. Trustee Muma noted that Sarasota-Manatee is a great community to provide support to the University. Trustee Tokarz stated that at a recent town hall meeting (in Sarasota) it was noted by attendees that USF will be the only research university in the area.

Having no further business, Chair Lamb adjourned the Finance Committee meeting at 3:50pm.


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Agenda Item: III b

USF Board of Trustees March 5, 2019

Issue: Revise USF BOT 06-003 Board of Trustees Debt Management Policy ______________________________________________________________________ Proposed action: Approve Amendment to USF Board of Trustees Debt Management Policy USF BOT 06-003 ______________________________________________________________________ Executive Summary: The USF Board of Trustees Debt Management Policy 06-003 is being revised to conform certain sections of the Policy to the Board of Governors Debt Management Guidelines, including selection of underwriters and advisors, continuing SEC disclosures and reporting subsequent events. Additionally, revisions were made to clarify debt management responsibilities and financing structures. Financial Impact: N/A ______________________________________________________________________ Strategic Goal(s) Item Supports: Goal 4: Sound Financial Management to establish a strong and sustainable economic base in support of USF’s continued academic advancement Committee Review Date: Finance Committee – February 12, 2019 Supporting Documentation Online (please circle): Yes No

• Proposed amended draft of USF BOT 06-003 Debt Management Policy (redline format) • Proposed amended draft of USF BOT 06-003 Debt Management Policy (clean format)

USF System or Institution specific: USF System Prepared by: Fell L. Stubbs, University Treasurer, (813) 974-3298


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UNIVERSITY OF SOUTH FLORIDA

DEBT MANAGEMENT POLICY

Policy & Procedures Manual

Effective Date Amended Date Policy Number


12/07/06 – Approved by USF Board of Trustees

3/9/17

USF BOT 06-003


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TABLE OF CONTENTS

Page Number I. INTRODUCTION 1 II. STATEMENT OF POLICY 1 III. ENTITIES COVERED BY THIS POLICY 2 IV. FINANCING OBJECTIVES 2

V. RESPONSIBILITIES 3 VI. DEBT MANAGEMENT STRATEGIES 3 VII. DEBT MANAGEMENT PRACTICES 6 VIII. ARBITRAGE AND INVESTMENT OF BOND PROCEEDS 8 IX. DISCLOSURE 8


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I. INTRODUCTION (Purpose and Intent)

Mission of the University The University of South Florida (the “University”) is a multi-campus national research university that supports the development of the metropolitan Tampa Bay Region, the United States and the world. Building upon unique strengths inherent in Florida’s population, location, and natural resources, the university is dedicated to excellence in:

Teaching and lifelong learning in a student-centered environment Research to advance knowledge and promote social, cultural, economic,

educational, health, and technological development Service based on academic excellence and the ethic of community responsibility Community engagement to build university-community partnerships and

collaborations. Purpose of the Policy To fulfill its mission, the University will need to make strategic capital investments in its facilities that could affect the University’s credit. Funding sources, including State funds (appropriations and debt), University debt, internal reserves and philanthropy will be continuously utilized by management to achieve the University’s strategic objectives. Debt, particularly tax-exempt debt, provides a low cost source of capital to fund investments and is viewed as a long-term component of liabilities. The purpose of this document is to establish a policy for the University of South Florida to be used to evaluate the appropriate mix of funding sources, the capital funding structure and the appropriate use of leverage (the “Policy”).

II. STATEMENT OF POLICY It is the policy of the University of South Florida that debt financing conform to the authority granted by Florida and Federal laws and regulations, its Board of Trustees and the Board of Governors’ Debt Management Guidelines for Capital Outlay Projects initially approved on April 27, 2006, and subsequently revised, and that the management of debt be conducted in such a manner as to promote the interests of the University.


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This Policy will be implemented, reviewed and monitored by the University Chief Financial Officer, the Office of the University Treasurer (“Treasurer”) and the CFO of the DSO or CU.

III. ENTITIES COVERED BY THIS POLICY The Policy applies to all units within the University, to direct support organizations (“DSO”), to component units (“CU”) and to units for which the University is financially and legally accountable. DSOs are separate not-for-profit corporations organized and operated exclusively to assist the University achieve its mission. CUs are organizations operated exclusively to assist the University achieve its mission. In accordance with Florida Statutes and Rules and University Regulations and Policies, these organizations receive, hold, invest and administer property and make expenditures to or for the benefit of the University. All University, DSO and CU debt financings, to the extent such debt financings are allowed by applicable law, require approval by the DSO and CU Boards, the University Board of Trustees and the Florida Board of Governors, and such projects shall be managed by the University Chief Financial Officer or designated chief financial officer (“CFO”) of the DSO and CU.

IV. FINANCING OBJECTIVES The financing objectives below, combined with the judgment of the University, and DSO and CU as appropriate, provide a framework for decisions regarding the use and management of debt. The objectives are subject to review and change over time.

A. Identify eligible capital projects for debt financing. Restricting debt to projects that are critical to the mission of the University will ensure that debt capacity is optimally utilized. Projects that relate to the strategic objectives of the University and projects which are self-funding with associated revenues will receive priority consideration.

B. Maintain favorable access to capital. Management will manage the timing and

overall level of debt to ensure low-cost and timely access to the capital markets.

C. Limit risk within the debt portfolio. Management will balance the goal of achieving the lowest cost of capital with the goal of limiting exposure to interest rate risk and other financing and credit risks.

D. Manage credit to maintain the highest possible credit rating. Maintaining the

highest possible credit rating will facilitate the issuance of debt at favorable cost. Outstanding debt will be limited to a level that will maintain acceptable credit ratings from the credit rating agencies. While maintaining or attaining a specific credit rating is not an objective of this Policy, the University Chief Financial Officer and University Treasurer System Finance


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Council (the “Finance Council”) will monitor the University’s credit ratings and assess factors that might affect those ratings.

V. RESPONSIBILITIES Pursuant to the delegated authority of the University President, the responsibility for implementing the Policy and its procedures lies with the University Chief Financial Officer. The University Chief Financial Officer may delegate debt management duties to other officers. The Treasurer will provide direction for managing outstanding University debt and the respective CFO of the DSO or CU will be responsible for managing the outstanding debt of the relevant organization. Debt management guidance, review and recommendations will be provided by the University Chief Financial Officer and TreasurerFinance Council.

VI. DEBT MANAGEMENT STRATEGIES To achieve its financing objectives above, the University will adopt the following debt management strategies and procedures. These strategies will be reviewed and modified by the University over time.

A. Funding Strategies 1. Only capital projects that relate to the mission of the University

will be considered for debt financing. 2. Projects which are self-funding or can create budgetary savings

will receive priority consideration. 3. The Chief Financial OfficerFinance Council will prioritize all

projects put forward for funding. 4. Projects supported by a security pledge that meet debt service

obligations and provide for operations will be considered. 53. State funding, Ccash reserves, philanthropy and all other sources

of legally available funds are expected to finance a portion of the cost for the University’s or, as appropriate, the DSO’s and CU’s investment in facilities.

64. Debt is to be used sparingly and strategically. 75. The University, in the context of this Policy, will consider

alternative financing other funding arrangements when appropriate and advantageous to the University.

B. Debt Capacity Assessment

1. This Policy requires the assessment of University debt capacity using key financial ratios. These ratios should be consistent with those used in the capital markets and will constitute benchmarks for debt capacity. The ratios will be evaluated over the past several years and will be compared to appropriate industry medians at specific rating levels.


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The following ratios, supplemented from time to time with other measures, will be calculated on a University-wide basis and reported annually and on a pro forma basis when new debt is issued, and will be revised to reflect any changes in the capital markets and accounting standards:

Actual Debt Service Coverage (x)

Measures the actual margin of protection for annual debt service payments from annual operations.

The Sum of:

operating surplus (deficit) plus depreciation expense plus interest expense

Divided by total principal and interest expense.

Actual Debt Service to Operations (%) Measures the ability to pay debt service associated with all outstanding debt and the impact on the overall budget.

Actual annual debt service Divided by total operating expenses.

Operating Margin (%)

Measures the operating surplus on each dollar of operating revenue.

Operating surplus (deficit) Divided by total operating revenue.

Expendable Financial Resources to Direct Debt (x)

Measures coverage of direct debt by financial resources that are ultimately expendable.

The Sum of:

unrestricted net assets plus restricted expendable net assets plus foundation unrestricted / temporarily restricted net

assets less foundation net investment in plant

Divided by outstanding direct debt.

Expendable Financial Resources to Operations (x) Measures coverage of operating expense by financial resources that are ultimately expendable.

The Sum of:


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unrestricted net assets plus restricted expendable net assets

plus foundation unrestricted / temporarily restricted net assets

less foundation net investment in plant Divided by total operating expense.

2. Target ratios or Policy limits may be established as part of this

Policy. These targets or limits will vary depending on risk tolerance and strategic objectives.

C. Debt Instruments

1. Tax-Exempt Debt. Tax-exempt debt is beneficial and efforts will be made to maximize the amount of tax-exempt debt outstanding under the Policy.

2. Taxable Debt. The University debt portfolio will be managed to minimize the amount of taxable debt outstanding. Taxable debt will be used to fund projects ineligible for tax-exempt financing.

D. Financing Structures

1. Funding risk is reduced by maintaining diverse sources for project financing in addition to debt, including gifts and donations, equity contributions and public-private partnerships.

2. Funding risk is also reduced by maintaining diverse sources of pledged revenues or security for the debt.

3. Consideration will be given to the credit quality of the proposed transaction and likely credit ratings, access to public or private capital markets, competitive or negotiated sales, credit enhancement, bond covenants, debt service reserves, whether funded by bond proceeds or cash balances, compliance and reporting requirements.

E. Interest Rate Swaps

1. Interest rate swaps will be used by the University in a manner consistent with the Derivatives Policy to reduce interest rate risk and to manage variable rate exposure.

2. Interest rate swaps will be evaluated in a framework incorporating a cost/benefit analysis of any derivative instrument, market and interest rate conditions, and counterparty exposure.

3. Under no circumstances will a derivative transaction be utilized that is not fully understood or that imposes inappropriate risk on the University.

4. Only counterparties with ratings of “AA-” or better at the time of the transaction will be used.

5. If, following the transaction, the counterparty is downgraded, the relationship will be subject to immediate review.

6. All swap contracts will include provisions for collateralization


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upon certain events to secure the interests of the University and particularly that the contract will terminate at the University’s option if the counterparty’s rating falls below a “BBB-“.

7. Exposure to counterparties will be diversified.

E. Variable Interest Rate Exposure 1. Due to the typically low interest rate cost of variable rate debt

relative to fixed rate debt, it may beis beneficial for the University to maintain a portion of outstanding debt in a variable rate mode.

2. Variable rate debt, however, introduces a number of significant risks: the potential volatility of debt service requirements, a risk that associated credit arrangements that expire prior to the maturity of the underlying debt may be difficult or costly to renew, financing arrangements that may include rating triggers or covenants that could accelerate debt repayment and collateral pledge requirements. Thus, the amount of variable rate debt not swapped to fixed rates will be limited as a portion of the total amount of outstanding University debt. Fixed rate debt will be the primary source of capital infrastructure financing.

3. The amount of variable rate debt will vary depending on liquidity constraints, capital market conditions and the level of interest rates.

F. Off-Balance Sheet Financing

1. Off-balance sheet financing may will be considered by the University when it is desirable to work with a third party for risk sharing

and for leasing. 2. The effect of such financing will be considered on the cost of

capital, credit ratings and debt capacity, making the assumption that the financing is included on the balance sheet.

3. Off-balance sheet financing will conform to the Florida Board of Governors’ Public-Private Partnership Guidelines, effective as of September 3, 2015.

VII. DEBT MANAGEMENT PRACTICES

A. Debt Administration 1. The University Chief Financial Officer, who may delegate duties to

other officers, will be responsible for structuring new University transactions, managing project funds and developing repayment schedules from units. The CFO of the DSO or CU will have similar responsibilities for the DSO or CU.

2. The University’s outstanding debt will be managed by the Treasurer. The DSO’s and CU’s outstanding debt will be managed by the CFO of the DSO and CU.


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3. The University TreasurerSystem Finance Council will review debt management practices and new transactions reported by the University and the DSOs and CUs at least on a quarterly basis with and will provide guidance and recommendations to the University Chief Financial Officer.

4. In circumstances where the University issues debt for capital projects benefiting multiple units, the Treasurer will pool the debt and allocate funds and financing costs for the various projects to the units on a consistent basis.

5. The Finance CouncilUniversity Chief Financial Officer, as needed, will review proposals for new financed projects and rank them according to the foregoing University objectives and strategy.

6. The University Chief Financial OfficerFinance Council will review, at least annually, the University’s debt capacity, repayment sources and other capital market, budget and financing considerations.

7. The University Board of Trustees and the DSO and CU Boards, if applicable, must approve capital projects before issuing the debtfunding.

B. Structure

1. To obtain the lowest possible financing costs, debt should be structured with the strongest possible authorized security.

2. Debt maturity structures will not exceed the useful life of the facilities financed.

3. Debt service should not exceed the expected revenues used to repay the debt at any time.

4. Call features should be structured to provide maximum flexibility relative to cost.

C. Methods of Sale

1. Negotiated or competitive debt transactions will be considered on a case-by-case basis.

2. Private placements will be considered for debt transactions where the size is too small or the structure is too complicated for public debt issuance.

D. Purchase of Insurance or Other Credit Enhancement

1. Insurance and other credit enhancement opportunities will be evaluated and utilized if they are considered cost effective and when they do not require material debt and operating restrictions.

E. Selection of Underwriters and Advisors

1. A competitive selectionrequest-for-proposal process will be utilized from time to time to select senior and co-managing underwriters. This request process will serve to select a group of lead underwriters for debt issuance for a specified period. The


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process will also be utilized to pre-qualify a roster of other firms for participation on the underwriting team. A competitive or negotiated process will be utilized for any single issue.

2. Financial and legal advisors to the University and DSO’s and CU’s for debt issuance and management requirements will be selected from a request- for-proposal process from time to time to serve for a specified period. Advisors may be selected for any single issue utilizing a competitive or negotiated process.

F. Refunding Targets

1. Outstanding debt will be monitored for refunding opportunities. 2. As a guideline, refunding debt that produces a 5% or greater net

present value will be considered. 3. Refunding outstanding debt will also be considered if the

University benefits from eliminated restrictive covenants, payment obligations, reserve and/or security requirements or other obligations, or from consolidation into larger, more cost- effective transactions.

G. Communications and other activities with rating agencies relating to credit ratings on University and DSO debt and activities relating to disclosure under Rule 15c2- 12 of the Securities and Exchange Commission shall be conducted jointly between the University and/or DSO and the Florida Board of Governor’s Office and State Division of Bond Finance under the management and coordination of the Florida Board of Governor’s Office and State Division of Bond Finance. The University or DSO must notify the Florida Board of Governor’s Office and State Division of Bond Finance in advance of any contact with a rating agency, such that the Florida Board of Governor’s Office and State Division of Bond Finance will have an adequate opportunity to prepare and participate. In addition, the University or DSO must promptly notify the Florida Board of Governor’s Office and State Division of Bond Finance when a rating agency requests to schedule surveillance calls, site visits, or other activities, or whenever any request for information is received, such that the Florida Board of Governor’s Office, and State Division of Bond Finance will have an adequate opportunity to prepare and participate. The Florida Board of Governor’s Office and State Division of Bond Finance must be notified on the same day that a rating agency publishes their final rating action, should the final rating action not be provided directly to the Florida Board of Governor’s Office and State Division of Bond Finance. The Florida Board of Governor’s Office and State Division of Bond Finance will coordinate with the University and/or DSO on the appropriate level of engagement by the Florida Board of Governor’s Office and State Division of Bond Finance for any given call, draft report, site visit, etc., as determined by the Florida Board of Governor’s Office and State Division of Bond Finance. The Florida Board of Governor’s Office and State Division of Bond Finance must be copied on any communications between the University and/or the DSO and any rating agency. The University and DSO must provide all information relating to credit ratings or disclosure to the Florida Board of Governor’s Office and State Division of Bond Finance and respond timely to requests from the Florida Board of Governor’s Office and State


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Division of Bond Finance for any information necessary to facilitate activities relating to credit ratings or appropriate disclosure.

H. Reporting to the Board of Trustees 1. The Treasurer will present an annual report to the Board of

Trustees on debt issued and outstanding, the estimated University debt capacity and the credit ratings. The CFO of the DSO or CU will submit information as requested by the Treasurer for this annual report.

I. Reporting Subsequent Events and Amendments to the Board of Governors 1. The Treasurer will timely notify the Board of Governors and the

Division of Bond Finance of any proposed changes in the terms or conditions of debt issued by the University or DSO. No material changes shall be made without specific Board authorization, which may include items such as, but not limited to: Extending maturities Changes in bond covenants Changes in pledged revenues Debt acceleration Cross default Changes to remedies provided to investors Variable rate refundings Other actions that may reduce debt service coverage or

credit ratings Termination or modification of swap agreements Use of derivatives

VIII. ARBITRAGE AND INVESTMENT OF BOND PROCEEDS Compliance with arbitrage requirements on invested tax-exempt bond funds will be maintained. Proceeds that are to be used to finance construction expenditures are excepted from the filing requirements, provided that proceeds are spent in accordance with requirements established by the IRS.

IX. DISCLOSURE Initial and ongoing disclosure requirements will be met in accordance with Rule 15c2-12 of the Securities and Exchange Commission (SEC) Rules, or Florida Statutes or Rules, as applicable, and best practices including applicable policies, procedures and guidelines. Financial reports, statistical data and descriptions of any material events will be submitted as required under outstanding bond indentures.


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Policy & Procedures Manual

Effective Date Amended Date Policy Number


12/07/06 – Approved by USF Board of Trustees

3/9/17

USF BOT 06-003


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TABLE OF CONTENTS

Page Number I. INTRODUCTION 1 II. STATEMENT OF POLICY 1 III. ENTITIES COVERED BY THIS POLICY 2 IV. FINANCING OBJECTIVES 2

V. RESPONSIBILITIES 3 VI. DEBT MANAGEMENT STRATEGIES 3 VII. DEBT MANAGEMENT PRACTICES 6 VIII. ARBITRAGE AND INVESTMENT OF BOND PROCEEDS 8 IX. DISCLOSURE 8


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1



I. INTRODUCTION (Purpose and Intent)

Mission of the University The University of South Florida (the “University”) is a multi-campus national research university that supports the development of the metropolitan Tampa Bay Region, the United States and the world. Building upon unique strengths inherent in Florida’s population, location, and natural resources, the university is dedicated to excellence in:

Teaching and lifelong learning in a student-centered environment Research to advance knowledge and promote social, cultural, economic,

educational, health, and technological development Service based on academic excellence and the ethic of community responsibility Community engagement to build university-community partnerships and

collaborations. Purpose of the Policy To fulfill its mission, the University will need to make strategic capital investments in its facilities that could affect the University’s credit. Funding sources, including State funds (appropriations and debt), University debt, internal reserves and philanthropy will be utilized by management to achieve the University’s strategic objectives. Debt, particularly tax-exempt debt, provides a low cost source of capital to fund investments and is viewed as a long-term component of liabilities. The purpose of this document is to establish a policy for the University of South Florida to be used to evaluate the appropriate mix of funding sources, the capital funding structure and the appropriate use of leverage (the “Policy”).

II. STATEMENT OF POLICY It is the policy of the University of South Florida that debt financing conform to the authority granted by Florida and Federal laws and regulations, its Board of Trustees and the Board of Governors’ Debt Management Guidelines for Capital Outlay Projects initially approved on April 27, 2006, and subsequently revised, and that the management of debt be conducted in such a manner as to promote the interests of the University.


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This Policy will be implemented, reviewed and monitored by the University Chief Financial Officer, the University Treasurer (“Treasurer”) and the CFO of the DSO or CU.

III. ENTITIES COVERED BY THIS POLICY The Policy applies to all units within the University, to direct support organizations (“DSO”), to component units (“CU”) and to units for which the University is financially and legally accountable. DSOs are separate not-for-profit corporations organized and operated exclusively to assist the University achieve its mission. CUs are organizations operated exclusively to assist the University achieve its mission. In accordance with Florida Statutes and Rules and University Regulations and Policies, these organizations receive, hold, invest and administer property and make expenditures to or for the benefit of the University. All University, DSO and CU debt financings, to the extent such debt financings are allowed by applicable law, require approval by the DSO and CU Boards, the University Board of Trustees and the Florida Board of Governors, and such projects shall be managed by the University Chief Financial Officer or designated chief financial officer (“CFO”) of the DSO and CU.

IV. FINANCING OBJECTIVES The financing objectives below, combined with the judgment of the University, and DSO and CU as appropriate, provide a framework for decisions regarding the use and management of debt. The objectives are subject to review and change over time.

A. Identify eligible capital projects for debt financing. Restricting debt to projects that are critical to the mission of the University will ensure that debt capacity is optimally utilized. Projects that relate to the strategic objectives of the University and projects which are self-funding with associated revenues will receive priority consideration.

B. Maintain favorable access to capital. Management will manage the timing and

overall level of debt to ensure low-cost and timely access to the capital markets.

C. Limit risk within the debt portfolio. Management will balance the goal of achieving the lowest cost of capital with the goal of limiting exposure to interest rate risk and other financing and credit risks.

D. Manage credit to maintain the highest possible credit rating. Maintaining the highest possible credit rating will facilitate the issuance of debt at favorable cost. Outstanding debt will be limited to a level that will maintain acceptable credit ratings from the credit rating agencies. While maintaining or attaining a specific credit rating is not an objective of this Policy, the University Chief Financial Officer


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and University Treasurer will monitor the University’s credit ratings and assess factors that might affect those ratings.

V. RESPONSIBILITIES Pursuant to the delegated authority of the University President, the responsibility for implementing the Policy and its procedures lies with the University Chief Financial Officer. The University Chief Financial Officer may delegate debt management duties to other officers. The Treasurer will provide direction for managing outstanding University debt and the respective CFO of the DSO or CU will be responsible for managing the outstanding debt of the relevant organization. Debt management guidance, review and recommendations will be provided by the University Chief Financial Officer and Treasurer.

VI. DEBT MANAGEMENT STRATEGIES To achieve its financing objectives above, the University will adopt the following debt management strategies and procedures. These strategies will be reviewed and modified by the University over time.

A. Funding Strategies 1. Only capital projects that relate to the mission of the University

will be considered for debt financing. 2. Projects which are self-funding or can create budgetary savings

will receive priority consideration. 3. The Chief Financial Officer will prioritize all projects put

forward for funding. 4. Projects supported by a security pledge that meet debt service

obligations and provide for operations will be considered. 5. Cash reserves, philanthropy and all other sources of legally

available funds are expected to finance a portion of the cost for the University’s or, as appropriate, the DSO’s and CU’s investment in facilities.

6. Debt is to be used sparingly and strategically. 7. The University, in the context of this Policy, will consider

alternative financing arrangements when appropriate and advantageous to the University.

B. Debt Capacity Assessment

1. This Policy requires the assessment of University debt capacity using key financial ratios. These ratios should be consistent with those used in the capital markets and will constitute benchmarks for debt capacity. The ratios will be evaluated over the past several years and will be compared to appropriate industry medians at specific rating levels.


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The following ratios, supplemented from time to time with other measures, will be calculated on a University-wide basis and reported annually and on a pro forma basis when new debt is issued, and will be revised to reflect any changes in the capital markets and accounting standards:

Actual Debt Service Coverage (x)

Measures the actual margin of protection for annual debt service payments from annual operations.

The Sum of:

operating surplus (deficit) plus depreciation expense plus interest expense

Divided by total principal and interest expense.

Actual Debt Service to Operations (%) Measures the ability to pay debt service associated with all outstanding debt and the impact on the overall budget.

Actual annual debt service Divided by total operating expenses.

Operating Margin (%)

Measures the operating surplus on each dollar of operating revenue.

Operating surplus (deficit) Divided by total operating revenue.

Expendable Financial Resources to Direct Debt (x)

Measures coverage of direct debt by financial resources that are ultimately expendable.

The Sum of:

unrestricted net assets plus restricted expendable net assets plus foundation unrestricted / temporarily restricted net

assets less foundation net investment in plant

Divided by outstanding direct debt.

Expendable Financial Resources to Operations (x) Measures coverage of operating expense by financial resources that are ultimately expendable.


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The Sum of: unrestricted net assets plus restricted expendable net assets

plus foundation unrestricted / temporarily restricted net assets

less foundation net investment in plant Divided by total operating expense.

2. Target ratios or Policy limits may be established as part of this

Policy. These targets or limits will vary depending on risk tolerance and strategic objectives.

C. Debt Instruments

1. Tax-Exempt Debt. Tax-exempt debt is beneficial and efforts will be made to maximize the amount of tax-exempt debt outstanding under the Policy.

2. Taxable Debt. The University debt portfolio will be managed to minimize the amount of taxable debt outstanding. Taxable debt will be used to fund projects ineligible for tax-exempt financing.

D. Financing Structures

1. Funding risk is reduced by maintaining diverse sources for project financing in addition to debt, including gifts and donations, equity contributions and public-private partnerships.

2. Funding risk is also reduced by maintaining diverse sources of pledged revenues or security for the debt.

3. Consideration will be given to the credit quality of the proposed transaction and likely credit ratings, access to public or private capital markets, competitive or negotiated sales, credit enhancement, bond covenants, debt service reserves, whether funded by bond proceeds or cash balances, compliance and reporting requirements.

E. Interest Rate Swaps

1. Interest rate swaps will be used by the University in a manner consistent with the Derivatives Policy to reduce interest rate risk and to manage variable rate exposure.

2. Interest rate swaps will be evaluated in a framework incorporating a cost/benefit analysis of any derivative instrument, market and interest rate conditions, and counterparty exposure.

3. Under no circumstances will a derivative transaction be utilized that is not fully understood or that imposes inappropriate risk on the University.

4. Only counterparties with ratings of “AA-” or better at the time of the transaction will be used.

5. If, following the transaction, the counterparty is downgraded, the relationship will be subject to immediate review.


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6. All swap contracts will include provisions for collateralization upon certain events to secure the interests of the University and particularly that the contract will terminate at the University’s option if the counterparty’s rating falls below a “BBB-“.

7. Exposure to counterparties will be diversified.

E. Variable Interest Rate Exposure 1. Due to the typically low interest rate cost of variable rate debt

relative to fixed rate debt, it may be beneficial for the University to maintain a portion of outstanding debt in a variable rate mode.

2. Variable rate debt, however, introduces a number of significant risks: the potential volatility of debt service requirements, a risk that associated credit arrangements that expire prior to the maturity of the underlying debt may be difficult or costly to renew, financing arrangements that may include rating triggers or covenants that could accelerate debt repayment and collateral pledge requirements. Thus, the amount of variable rate debt not swapped to fixed rates will be limited as a portion of the total amount of outstanding University debt. Fixed rate debt will be the primary source of capital infrastructure financing.

3. The amount of variable rate debt will vary depending on liquidity constraints, capital market conditions and the level of interest rates.

F. Off-Balance Sheet Financing

1. Off-balance sheet financing may be considered by the University when it is desirable to work with a third party for risk sharing

and for leasing. 2. The effect of such financing will be considered on the cost of

capital, credit ratings and debt capacity, making the assumption that the financing is included on the balance sheet.

3. Off-balance sheet financing will conform to the Florida Board of Governors’ Public-Private Partnership Guidelines, effective as of September 3, 2015.

VII. DEBT MANAGEMENT PRACTICES

A. Debt Administration 1. The University Chief Financial Officer, who may delegate duties to other officers, will be responsible for structuring new University transactions, managing project funds and developing repayment schedules from units. The CFO of the DSO or CUwill have similar responsibilities for the DSO or CU.

2. The University’s outstanding debt will be managed by the Treasurer. The DSO’s and CU’s outstanding debt will be managed by the CFO of the DSO and CU.


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3. The Treasurer will review debt management practices and new transactions reported by the University and the DSOs and CUs at least on a quarterly basis with and will provide guidance and recommendations to the University Chief Financial Officer.

4. In circumstances where the University issues debt for capital projects benefiting multiple units, the Treasurer will pool the debt and allocate funds and financing costs for the various projects to the units on a consistent basis.

5. The University Chief Financial Officer will review proposals for new financed projects and rank them according to the foregoing University objectives and strategy.

6. The University Chief Financial Officer will review, at least annually, the University’s debt capacity, repayment sources and other capital market, budget and financing considerations.

7. The University Board of Trustees and the DSO and CU Boards, if applicable, must approve capital projects before issuing the debt.

B. Structure

1. To obtain the lowest possible financing costs, debt should be structured with the strongest possible authorized security.

2. Debt maturity structures will not exceed the useful life of the facilities financed.

3. Debt service should not exceed the expected revenues used to repay the debt at any time.

4. Call features should be structured to provide maximum flexibility relative to cost.

C. Methods of Sale

1. Negotiated or competitive debt transactions will be considered on a case-by-case basis.

2. Private placements will be considered for debt transactions where the size is too small or the structure is too complicated for public debt issuance.

D. Purchase of Insurance or Other Credit Enhancement

1. Insurance and other credit enhancement opportunities will be evaluated and utilized if they are considered cost effective and when they do not require material debt and operating restrictions.

E. Selection of Underwriters and Advisors

1. A competitive selection process will be utilized to select senior and co-managing underwriters. This process will serve to select a group of lead underwriters for debt issuance for a specified period. The process will also be utilized to pre-qualify a roster of other firms for participation on the underwriting team. A competitive or negotiated process will be utilized for any single issue.

2. Financial and legal advisors to the University and DSO’s and CU’s for debt issuance and management requirements will be


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selected from a request-for-proposal process from time to time to serve for a specified period. Advisors may be selected for any single issue utilizing a competitive or negotiated process.

F. Refunding Targets

1. Outstanding debt will be monitored for refunding opportunities. 2. As a guideline, refunding debt that produces a 5% or greater net

present value will be considered. 3. Refunding outstanding debt will also be considered if the

University benefits from eliminated restrictive covenants, payment obligations, reserve and/or security requirements or other obligations, or from consolidation into larger, more cost- effective transactions.

G. Communications and other activities with rating agencies relating to credit ratings on University and DSO debt and activities relating to disclosure under Rule 15c2- 12 of the Securities and Exchange Commission shall be conducted jointly between the University and/or DSO and the Florida Board of Governor’s Office and State Division of Bond Finance under the management and coordination of the Florida Board of Governor’s Office and State Division of Bond Finance. The University or DSO must notify the Florida Board of Governor’s Office and State Division of Bond Finance in advance of any contact with a rating agency, such that the Florida Board of Governor’s Office and State Division of Bond Finance will have an adequate opportunity to prepare and participate. In addition, the University or DSO must promptly notify the Florida Board of Governor’s Office and State Division of Bond Finance when a rating agency requests to schedule surveillance calls, site visits, or other activities, or whenever any request for information is received, such that the Florida Board of Governor’s Office, and State Division of Bond Finance will have an adequate opportunity to prepare and participate. The Florida Board of Governor’s Office and State Division of Bond Finance must be notified on the same day that a rating agency publishes their final rating action, should the final rating action not be provided directly to the Florida Board of Governor’s Office and State Division of Bond Finance. The Florida Board of Governor’s Office and State Division of Bond Finance will coordinate with the University and/or DSO on the appropriate level of engagement by the Florida Board of Governor’s Office and State Division of Bond Finance for any given call, draft report, site visit, etc., as determined by the Florida Board of Governor’s Office and State Division of Bond Finance. The Florida Board of Governor’s Office and State Division of Bond Finance must be copied on any communications between the University and/or the DSO and any rating agency. The University and DSO must provide all information relating to credit ratings or disclosure to the Florida Board of Governor’s Office and State Division of Bond Finance and respond timely to requests from the Florida Board of Governor’s Office and State Division of Bond Finance for any information necessary to facilitate activities relating to credit ratings or appropriate disclosure.

H. Reporting to the Board of Trustees 1. The Treasurer will present an annual report to the Board of


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Trustees on debt issued and outstanding, the estimated University debt capacity and the credit ratings. The CFO of the DSO or CU will submit information as requested by the Treasurer for this annual report.

I. Reporting Subsequent Events and Amendments to the Board of Governors 1. The Treasurer will timely notify the Board of Governors and the

Division of Bond Finance of any proposed changes in the terms or conditions of debt issued by the University or DSO. No material changes shall be made without specific Board authorization, which may include items such as, but not limited to: Extending maturities Changes in bond covenants Changes in pledged revenues Debt acceleration Cross default Changes to remedies provided to investors Variable rate refundings Other actions that may reduce debt service coverage or

credit ratings Termination or modification of swap agreements Use of derivatives

VIII. ARBITRAGE AND INVESTMENT OF BOND PROCEEDS Compliance with arbitrage requirements on invested tax-exempt bond funds will be maintained. Proceeds that are to be used to finance construction expenditures are excepted from the filing requirements, provided that proceeds are spent in accordance with requirements established by the IRS.

IX. DISCLOSURE Initial and ongoing disclosure requirements will be met in accordance with Rule 15c2-12 of the Securities and Exchange Commission (SEC), Florida Statutes or Rules, as applicable, and best practices including applicable policies, procedures and guidelines. Financial reports, statistical data and descriptions of any material events will be submitted as required under outstanding bond indentures.


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Agenda Item: III c


Issue: Assumption of Subleasehold Interest and Acquisition of Improvements from University Diagnostic Institute (“UDI”) ______________________________________________________________________ Proposed action: Approve the assumption of UDI’s subleasehold interest and the acquisition of UDI’s building improvements by the USF Financing Corporation and authorize the execution of documents attendant to the assumption, acquisition and related financing. ______________________________________________________________________ Executive Summary: University Diagnostic Institute (UDI) is a full service imaging facility located on the USF Tampa campus. UDI currently occupies the property by way of a 99 year sublease on the land that was granted in 1984. UDI wishes to assign their interest in the sublease and sell their building improvements to the USF Financing Corporation, but wants to continue to operate within the facility in the short term by way of a five year space lease of the facility, paying market rates to the USF Financing Corporation for that use. The UDI subleased property is in the research area of the campus, and this transaction will provide USF the intangibly valuable flexibility in redeploying this space in the future for research or any other priority uses. The acquisition will be financed by the USF Financing Corporation utilizing a conventional mortgage obtained on a competitive basis. Appraisals were obtained supporting the purchase price. The acquisition will not be consummated until environmental and other due diligence processes are completed. Financial Impact: $3,600,000 Strategic Goal(s) Item Supports: Goal 4: Sound financial management to establish a strong and sustainable economic base in support of USF’s continued academic advancement Committee Review Date: Finance Committee - February 12, 2019 Supporting Documentation Online (please circle): Yes No USF System or Institution specific: System Prepared by: David Lechner, Senior Vice President for Business and Financial Strategy (813) 974-3297


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Assumption of UDI SubleaseholdInterest and Acquisition of UDI’s

Building Improvements

Presentation to Board of Trustees Finance CommitteeFebruary 12, 2019


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Objective

Gain control of a strategic parcelof real estate

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History of University Diagnostic Institute

• Diagnostic Institute serves USF Health, Moffitt,Veterans, Florida Hospital, Shriners providing imaging services

• Founded by USF Researchers• Initial lease was in 1984 for 99 years

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North


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Transaction Particulars

• USF Financing Corporation (USFFC) will:• assume the subleasehold interest• acquire the building improvements

• Purchase price of $3,600,000• Five year leaseback at $376,000 per year, triple net• Financing by USFFC with conventional mortgage • Payments dedicated to pay down the debt• Subject to normal diligence – environmental, title

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Comparisons of Appraisals

$3,800,000 Seller’s Appraiser

$3,600,000 Agreed-Upon Purchase Price

$3,000,000 USF’s Appraiser

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Requested Action

Approve the assumption of the subleasehold interest,the acquisition of the building improvements,

and grant authority to execute related documentsto facilitate the transaction.

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Agenda Item: III d


Issue: 2019-2020 USF Tampa Student Housing Rate Proposal ________________________________________________________________ Proposed action: Approve 2019-2020 USF Tampa Student Housing Rates ________________________________________________________________ Executive Summary: In May 2016, the USF Board of Trustees approved the USF Tampa Student Housing Rental Request for three years (FYE 2017 – FYE 2019). As a result of the predictable funding model, Housing & Residential Education has been able to invest $36.77M in facilities infrastructure and upgrades while meeting or exceeding debt service coverage ratio targets. Reinvestment has extended the life of buildings and systems by 15-20 years. We are seeking approval for a 1% housing increase for 2019-2020 to continue our path to success. Financial Impact: Housing operation is an Auxiliary funded by student rental revenues and Housing & Residential Education capital reserves. A 1% rate increase would generate approximately $348,015 in revenue at a 95% occupancy rate. ________________________________________________________________ Strategic Goal(s) Item Supports: Goal 4: Sound financial Management to establish strong and sustainable economic base in support of USF’s continued academic advancement. Committee Review Date: February 12, 2019 Supporting Documentation Online (please circle): No USF System or Institution specific: USF - Tampa Prepared by: Ana Hernandez, Assistant Vice President, Housing & Residential Education

Yes


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Tampa Housing Update

1

P r e s e n t a t i o n t o B o a r d o f T r u s t e e sF e b r u a r y 1 2 , 2 0 1 9


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Objectives:

Review our progressStrategically move forward

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Together we have created aHigh performing,Financially stable,

Self-sustainingHousing system.

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Track Record of ProgressTotal bed count of 6,329 at Fall 2018 Semester:• 1,098 new beds opened in Village project• Demolished 549 beds in remaining Andros buildings

Met or exceeded all debt service coverage ratios

Resulting system strength used to bolster the St. Pete housing bond issue

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Greatly DecreasedDeferred Maintenance BacklogExecuted deferred maintenance (DM) plans shared with board (last in May, 2018):• Fiscal 2017 - $ 14 million of projects completed• Fiscal 2018 - $ 15 million of projects completed• Fiscal 2019 - $ 7 million of projects initiated, planned, completed

Internally financed strategic investment provided USF several advantages:• Avoided borrowing costs to fund DM• In last three years, eliminated over $80 million of DM ($30 from projects plus $50

from demolition)• Extended the life of facility assets by 15-20 years.

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Intangible Value Provided byOn-Campus Housing

• Greater safety• Proven factor in graduation and retention rates• Added convenience• Offers a variety of options• Access to living and learning communities• Connection to campus life• Greater flexibility (change rooms, roommates, length of contract)

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Fiscal 2020 Request

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Current Request:

One year, 1% Average Increase

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Cost drivers:• Salaries and benefits• Utilities, repairs• Cable, landscaping, amenities• Reduced fees from P3

While these costs are increasing much more than 1%,because of our student sensitivity, we have elected

to be less aggressive in our DM programand absorb portions of the cost.

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Other observations• Small increase keeps faith with board guidance of modest increases

versus no increases followed by large increases.• USF rates lower than P3 rates• Still comparable to other metro SUS institutions• Allows us to meet debt service ratios at 1.4x

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Requested Action

Approve 1% increasein housing rates for fiscal 2020.

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12


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Tampa Housing Update

13

P r e s e n t a t i o n t o B o a r d o f T r u s t e e sF e b r u a r y 1 2 , 2 0 1 9S u p p l e m e n t a l M a t e r i a l s


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2018-2019 SUS Rate Comparison

University City Cost of Living Rent Index

University of Florida Gainesville 29.02

Florida State University Tallahassee 26.47University of South Florida Tampa 39.56

University of Central Florida Orlando 38.79

Florida International University Miami 57.81

Preeminent Universities Traditional Double Suite Double Apartment Single Proposed Increase for 2019-2020

University of Florida $5,296-$5,630 $6,120-$7,458 $6,348-$6,858 4.40%

Florida State University $5,990-$7,480 $7,310 1%

University of South Florida $5,908 $7,480 $8,756 TBD

University of South Florida (P3 Village) $7,432 $7,956-$8,756 2.4%

SUS Institutions Traditional Double Suite Double Apartment Single Proposed Increase for 2019-2020

University of Central Florida $4,940-$5,670 $5,970-$8,880 0%

Florida International University $5,300 $6,500-$8,600 0%

Florida Gulf Coast University $5,896 0%

University of North Florida $4,500 $5,660-$6,300 0%

University of West Florida $6,000 $6,130-$6,600 0%

Florida A&M $5,472-$6,812 Not reported

Florida Atlantic University $6,100-$7,300 $8,400-$10,360 Not reported

Florida Polytechnic University $5,940 $8,064 Not reported

New College of Florida $5,890 - $6,496 $8,596 4%

26% of beds 40% of beds 25% of beds

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2018-2019 Market ComparisonOff-Campus Community Miles to Marshall

Student Center (mi)Lease Amount(12 months)

The Flats at 4200 0.4 $9,120 The Venue at North Campus 0.6 $8,748 ON50 (4BD/3BR) 0.7 $7,620 40 Fifty Lofts 0.7 $8,040 Avalon Heights 0.7 $8,508 Monticello 0.9 $7,320 The Ivy 1.2 $7,080 Malibu USF 1.2 $7,860 University LinQ 1.7 $7,080 42 North 1.8 $7,620 Reflections Apartments 2.5 $7,188 The Province 3.0 $8,148 Campus Lodge 3.4 $6,720 Boardwalk at Morris Bridge 4.3 $7,680

USF On-Campus Apartments

$8,756

Academic Year Lease

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2019-2020 Rate Comparison

Village Room Type Bed Count

2018-2019

Annual Rate

% Increase $ Increase 2019-2020Annual Rate

P3 Traditional Double 906 $7,432 0% $0 $7,432

P3 Traditional Single 27 $9,400 5% $470 $9,870

P3 Traditional Super Single 119 $9,550 8.4% $800 $10,350

P3 End Suite Double w/private bath 40 $7,956 5% $398 $8,354

P3 Suite Double w/private bath 742 $8,756 3.6% $319 $9,075

P3 Suite Single w/private bath 28 $10,600 5% $530 $11,130

P3 Suite Super Single 56 $10,700 7.5% $800 $11,500

Totals 1,918 2.4%

USF Room Type Bed Count 2018-2019 Annual Rate

% Increase

$ Increase

2019-2020 Annual Rate(+1% Model)

Traditional Double 624 $5,908 1.4% $82 $5,990

Traditional Single 10 $7,960 0% $0 $7,960

Suite Double 1520 $7,480 0.3% $20 $7,500

Apartment Double 190 $7,900 0.9% $70 $7,970

Apartment Single 4br 1468 $8,756 1.6% $144 $8,900

Apartment Single 2br 48 $9,600 2.1% $200 $9,800

Totals 3860 1.0%

2019-2020 P3 Village Rates

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Financial ProjectionsFYE 2018 (Actual) FYE 2019

(Projection)FYE 2020

(No increase)FYE 2020

(+1% Model)Total Operating Revenues 40,390,309 38,304,014 38,614,636 38,962,651

Total Operating Expenses 22,293,811 22,865,076 23,221,804 23,569,819

Net Income 18,096,498 15,438,937 15,392,832 15,392,832

Debt Service Payment 10,982,818 11,027,812 10,994,880 10,994,880

Debt Service Coverage Ratio 1.65 1.40 1.40 1.40

Rate Increase 8.0% 6.5% 0% 1.0%

Occupancy Projection 103% 93% 95% 95%

FYE 2018 (Actual) FYE 2019 (Budget) FYE 2020(No increase)

FYE 2020 (+1% Model)

Facilities Projects – Non-capital4,853,292 4,359,709 4,135,044 4,483,058

Facilities Projects - Capital 10,811,445 4,293,377 2,220,235 2,220,235

Total Reinvestment 15,664,737 8,653,086 6,355,279 6,703,29417


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Agenda Item: III e

USF Board of Trustees Finance Committee February 12, 2019

Issue: Expenditure Authorization Request ________________________________________________________________ Proposed action:

1) Approval of the following expenditures over $2,000,000:

o Insightec Equipment Purchase & Service Agreement $2,799,000

________________________________________________________________ Executive Summary: The USF System Policy for Delegations of General Authority and Signatory Authority requires the approval of the Finance Committee Chair for the procurement of goods and services above $1 million and the approval of the Finance Committee for the procurement of goods and services above $2 million. Approval is being requested for the items listed above. Financial Impact: Authorization is being requested for $2,799,000 in transactions. _______________________________________________________________ Strategic Goal(s) Item Supports: Goal 4: Sound Financial Management Committee Review Date: February 12, 2019 Supporting Documentation Online (please circle): Yes No USF System or Institution specific: USF System Prepared by: Nick Trivunovich, Vice President/CFO (813) 974-3297


58

USF System Approval of Expenditures Exceeding One Million Dollars

Project/Initiative Name: Insightec MR Guided Focused Ultrasound Total Project/Initiative Cost: $2,799,000 Description: (description and rationale for the project/initiative) • MR guided focused ultrasound (MRgFUS) is a novel technique for precisely targeting

therapeutic intervention within deep brain structures noninvasively – without skin incision, craniotomy or radiation.

• This technique is FDA-approved for thermal ablation of the ventral intermediate (VIM) nucleus of the thalamus in patients with treatment refractory essential tremor (ET), and additional indications are being actively investigated in clinical trials.

• Current, traditional surgical interventions for essential tremors include radiofrequency ablation (RFA) and deep brain stimulation (DBS) surgeries both of which require a skin incision and craniotomy; alternatively, stereotactic radiosurgery (SRS) utilizes ionizing radiation which may damage surrounding brain tissue, has a 6-month delay between the application of the treatment and clincal benefit, and is associated with comparatively lower efficacy.

• In contrast, MRgFUS has immediate effects which can be used to tailor the therapy during the procedure, is associated with a favorable safety profile and comparable efficacy at 1-year post-procedure when compared with traditional surgical techniques and is performed on an outpatient basis through an intact scalp and skull. As such, it is an attractive option for elderly patients who a currently ineligible for the currently available surgical procedures and is more cost-effective because this non-invasive technique avoids hospital stays, shows lower complications and fewer ancillary costs.

• To date, there are only 14 operational MRgFUS in place throughout the US and Canada. USF Health would be the second site in Florida but the first at an academic medical center in the southeast.

• This is a five year agreement. Pricing is an initial system payment of $1,149,000, a per-procedure payment of up to $850,000, and a total service fee of $800,000 (5 years at $160,000 per year) for a total of $2,799,000 over the life of the contract.

Objective: (strategic priority or needs the project/initiative addresses; include strategic goal this project/initiative supports) The two (2) objectives of MRgFUS will be:


59

1. Treat patients with essential tremor and other neurodegenerative conditions; and 2. Advance scientific discoveries through funded research for additional indications

such as thalamotomy and pallidotomy for patients with Parkinson’s Disease, capsulotomy for obsessive compulsive disorder (OCD) and depression, centro-lateral thalamotomy for neuropathic pain and various targets for eplilepsy to name a few.

This purchase supports Goal #2 by furthering high impact research and innovation to change lives and improve health. In addition , there are economic benefits to be gained by this purchase which supports Goal #4. Funding Source(s): The $2,799,000 for the purchase of the MRgFUS is funded through 3 parts: 1. Preeminence Funding: Initial Capital Investment - $1,149,000 2. Patient service and clinical trial and federal research revenue:

a. The balance of $850,000 paid through a per click charge b. $160,000 per year maintenance contract over 5 years = $800,000 to support the

service agreement. Are the funds supporting the project budgeted or non-budgeted? Partially Budgeted – to the extent that Preeminence funds have been set aside for strategic investment, this will fund the initial capital investment However, remaining funding was not originally contemplated in the Practice Plan or Research Budgets for 2018/2019, but will be in subsequent years. Prior Approval Process: Approved by the Senior VP Council, including for preeminence funding. List Related Projects/Initiatives: (if any) USF System or Institution specific: USF Health Prepared by: Richard Sobieray Date Requested: February 1, 2019 USF System Policy 0-100 requires approval of this expenditure by the USF Board of Trustees Finance Committee Chair. Approval must be granted in writing and may be granted by electronic communication.


60

Agenda Item: IV a


Issue: USF 2018 Audited Financial Statements ________________________________________________________________ Proposed action: Informational ________________________________________________________________ Executive Summary: The USF 2018 Financial Statements and associated audit report were released by the State of Florida Auditor General on January 24th, 2019. Financial Impact: N/A ________________________________________________________________ Strategic Goal(s) Item Supports: Goal 4: Sound Financial Management Supporting Documentation Online (please circle): Yes University of South Florida Financial Audit for the Fiscal Year Ended June 30, 2018 USF System or Institution specific: USF System Prepared by: Jennifer Condon, (813)974-7696

Board of Trustees Finance Committee - New Business - Information Items

61

https://www.usf.edu/business-finance/controller/documents/usf2018financialaudit.pdf

Agenda Item: IV b


Issue: USF Research Park Mixed Use Lab and Office Building ________________________________________________________________ Proposed action: Informational ________________________________________________________________ Executive Summary: The USF Research Park has experienced better than market occupancy rates in its buildings due to the connection to talented faculty and students along with access to research facilities. The Research Foundation is looking to strengthen the life sciences and technology ecosystem by reinvesting the strength of its balance sheet and strong cash flows in the Research Park. Financial Impact: The project will be self-sustaining once fully leased. There are sufficient revenues generated from the Research Park available to support the project through the lease up period. ________________________________________________________________ Strategic Goal(s) Item Supports: Goal 2: High-impact research and innovation,

Goal 3: partnerships and collaborations, and Goal 4: sound financial management

Committee Review Date: February 12, 2019 Supporting Documentation Online (please circle): Yes No USF System or Institution specific: Research Park @ USF Tampa Prepared by: Allison Madden, Corporate Secretary & Director of Operations, USF Research Foundation 813-974-5095


62

USF RESEARCH PARK

1

M I X E D U S E L A B A N D O F F I C E B U I L D I N G

P a u l S a n b e r gP r e s i d e n t U S F R e s e a r c h F o u n d a t i o n

F e l l S t u b b sU S F S y s t e m T r e a s u r e r

A l l i s o n M a d d e nC o r p o r a t e S e c r e t a r y & D i r e c t o r o f O p e r a t i o n sU S F R e s e a r c h F o u n d a t i o n


63

2

• Center for Research and Innovation• Collaborate, innovate, develop, transfer and commercialize technology• Strengthen ecosystem with space for startups and established companies• Reinvest in Research Park

• Why?• Exceeds 90% occupancy – Average 97%+• Exceeds occupancy in the local market• Leased temporary expansion space

• Urgency • No available lab or office space• Research infrastructure outdated and no new buildings in the last 10 years (impacts F&A calculations)

Need for Research Park Expansion

USF Research Foundation, Inc.


64

3

• 120,000 SF office and lab space

• Fowler frontage• Defines the physical approach to the

University and Research Park from I-275

• Flexibility for long-term marketability and economic viability

• Expansion is anticipated in the Research Park DRI* and Master Plan

• Project Cost: $37 million

Planned Expansion

Site

*DRI = Development of Regional Impact



65

4

Demand Study• Consultant recommendations• Requested proposals from three highly acclaimed firms• September 2018 – Proposals received• December 2018 – HR&A Advisors

• Study led by Bob Geolas• Research Triangle Park• North Carolina State Centennial Campus and Centennial Biomedical Campus• Clemson University International Center for Automotive Research



66

Demand Study Key Findings

5“With strong assurances that there is demand for lab and office space at the Research Park, USF is in an enviable position from which it can curate a mixture of tenants to support its institutional and economic development goals.”



67

Research Park Occupancy Statistics

6

Occupancy Statistics 3650/UTB 3702/UTA 3720/ IDR 3802/BPB Total

Rentable Square Feet 41,247 52,222 140,000 96,524 329,993FY2018-2019 100% 100% 100% 98% 99%FY2017-2018 100% 100% 100% 95% 99%FY2016-2017 100% 100% 100% 85% 96%FY2015-2016 100% 100% 100% 72% 92%FY2014-2015 100% 100% 100% 93% 98%FY2013-2014 100% 100% 100% 91% 97%FY2012-2013 100% 100% 100% 91% 97%FY2011-2012 100% 100% 99% 87% 96%FY2010-2011 100% 100% 88% 87% 77%FY2009-2010 100% 100% 75% 84% 77%FY2008-2009 100% 100% 60% 71% 73%

6



68

Considerations for the BOT

7

• Demand: Strong indicators for demand currently unmet in the Tampa market• 1.2M SF unmet demand for life science and tech space• 253K SF space needed for new faculty hires by 2022• 35K SF unmet private sector demand from corporate partnerships

• Risk• Project cost exceeds expected rental rates• Competition from other market tech parks• Delayed lease up of project space

• Financial Plan and Mitigation• Use of $15M in cash to lower leverage and project risk• Use of USF Research Foundation to master lease project and provide credit support • USF Financing Corporation issues RFP for 20-year fixed rate taxable private placement debt• USF Financing Corporation develops financing structure and agreements



69

Project Pro Forma

88

Core and shell delivery anticipated for January 2021, FY22 is anticipated at 21% occupancy, 42% in FY23, 63% in FY24, 83% in FY25, and 100% in FY26. Lease up is anticipated at 25,000 SF per year


Research Park Project Revenue Needed to

Support Project

Project Revenue Available to PledgeProperty FY22 Pro Forma FY22 Pro Forma (UTA & UTB available 12/2019)

FY18 Actual (first full year) w/Revenue Support BPB UTA UTBOperating Revenue 8,833,389 650,000 1,710,576 2,360,576 2,091,679 1,075,363 915,386 Operating Expenses 3,889,417 321,625 321,625 930,872 200,925 177,173 Net Income 4,943,972 328,375 2,038,951 1,160,807 874,438 738,213 Debt Service 2,276,889 1,568,424 1,568,424 Debt Service Coverage Ratio 2.17 x 0.21 x 1.30 x Total Available 2,773,457


70

Project Milestones

9

Disclose to Research Foundation Board October 31, 2018Disclose to Financing Corporation Board November 15, 2018Obtain Demand Study December 21, 2018Release of Design/Build RFP November 20, 2018Response Due Date December 18, 2018Proposer Shortlist Interviews January 24, 2019Release of Brokerage RFP Week of February 4, 2019Disclose to Board of Trustees Finance Committee February 12, 2019Request Approval by Board of Trustees (TBD)Request Approval by Board of Governors (TBD)

9



71

10

Key Next Steps• Issue broker RFP – initiate preleasing of Project

• Financing Corporation to structure appropriate financing and issue RFP for long-term direct bank financing

• Prepare materials for BOT and BOG/DBF approval

• Project to meet ALL 20 BOT and BOG approval requirements• Commitment to NO Exceptions



72

Agenda Item: IV c

USF Board of Trustees Finance Committee Meeting

February 12, 2019 Issue: USF Sarasota-Manatee Student Housing Project ________________________________________________________________ Proposed action: Informational ________________________________________________________________ Executive Summary: The University of South Florida Sarasota-Manatee Campus is committed to enhancing the student experience on campus. One of the areas USF Sarasota-Manatee is evaluating is the role student housing could play in student success and enriching campus life. On August 3, 2018, USF Sarasota-Manatee entered into an agreement with Brailsford and Dunlavey to complete a student housing demand study. Faculty, staff, and students have been working with this nationally recognized, independent consulting firm to evaluate the demand for on-campus housing at USFSM in the near future.

B&D has completed its study from a comprehensive survey of the USFSM students. This presentation is a report of the demand study findings together with next steps and milestone requirements for the Project. Financial Impact: ________________________________________________________________ Strategic Goal(s) Item Supports: Goal 4: Sound financial management to establish a strong and sustainable economic base in support of continued academic advancement Workgroup Review Date: Supporting Documentation Online (please circle): Yes No USF System or Institution specific: USFSM Prepared by: Eddie Beauchamp, Regional Vice Chancellor for Business and Finance (941-359-4279)


73

USF Sarasota-Manatee Student Housing Project:Housing Demand Study UpdateFebruary 12, 2019

1


74

Goal: To transform the USFSM Campus by adding Residential Facilities

• Housing is critical to support enrollment growth / diversity objectives / academic goals and performance metrics

• Residential facilities support recruitment/retention of high caliber students

• Research shows that students living in a residence excel in persistence and academic performance and foster a sense of community on campus for all students

This Project has the support of the USFSM student body and demand today for 100 beds.

Of students agree that housing is important in

building community and culture at USFSM

88%

2


75

Strategic Alignment:

• This project has the support of the USF System and underscores our commitment to Student Success

• It demonstrates sound financial management/use of resources

• It will leverage the USF System resources and capabilities to the benefit of the Sarasota-Manatee Campus

3


76

Demand Study Timeline• The Request for Proposals was issued for a

residential housing demand study on April 23, 2018 • Proposals were received on May 29th

• On August 3rd, the contract for consulting services was awarded to Brailsford and Dunlavey

• On December 18th B&D presented their initial findings to the Regional Chancellor

4


77

USFSM Fall 2018 Enrollment and Survey Participation

FALL 2018

USFSM Projected Enrollment Incorporating 2018 Actuals 1,985

**In-Person Students (69% of Undergraduates / Graduates) 1,370

completed current student responses with a +/- 4%

margin of error593

0%

2%

4%

6%

8%

100

500

900

1,30

01,

700

2,10

02,

500

2,90

03,

300

3,70

04,

100

4,50

04,

900

5,30

0

Prec

isio

n w

ith a

95%

co

nfid

ence

leve

l

ResponsesSurvey received 37% participation from

USFSM students

**Total In-Person Students in 2018 provided by USFSM Department of Institutional Research and Effectiveness

5


78

Target Market Students

Local and non-local

permanent residence

In-person(Not Online)

Undergraduate & graduate

Currently rent at minimum of $600/month

Full-time and part-time

Without children

Excludes students living with parents

or non-student spouse

“Local” Subpopulation: Permanent residence within Sarasota and Manatee Counties

“Non-Local” Subpopulation: Permanent residence outside Sarasota

and Manatee Counties

6


79

Residential Project Concept

Current 2018 Demand: 100 Beds

+ New College of Florida: 75 Beds

+ USFSM Students living

with Parents (30+ miles): 10 - 40 Beds

Total Project: 185 - 215 Beds

7


80

Next Steps/MilestonesWe Need To:1. Develop a Feasible, USFFC funded and Approvable Project.

a) Project cost supported by affordable student rentsb) First year debt service coverage at 1.3xc) Housing System lends debt capacity and “A1/A+” ratings

2. Develop a schedule to meet all of the BOT/BOG Project Approval Requirements – No Exceptions!

3. Determine the location of residential project, and infrastructure required.

4. Update and obtain approval for modified Campus Master Plan.5. Outline the need and cost for Student Support Services.

8


81

Next Steps/Milestones (Cont.)

Develop a Long-term Lease Agreement with New College of Florida for 75 beds

9


82

Next Steps/Milestones (Cont.)

Majority of students (71%) paying $900+ in rent indicate that they

prefer a single-occupancy bedroom, but

only half chose an apartment

• Evaluate student demand for unit types and acceptable rental rates to define cost and scope for a financially feasible project.

• Issue an RFP for design/build construction management services.

10


83

Agenda Item: IV d


Issue: USF St. Petersburg Student Housing Report ________________________________________________________________ Proposed action: Informational ________________________________________________________________ Executive Summary: On December 1, 2016, the USF Board of Trustees approved a three-year housing rental rate increase plan (fiscal years 2017-2020) to achieve a preferred 1.4x debt service coverage ratio by fiscal year 2019-2020. The Board’s approval of the rental rate increase requires USFSP staff to return annually to the Board Finance Committee to report on the performance of the housing system at USFSP to ensure that the assumptions underlying the increase remain valid. This report is presented as an information item but the Board Finance Committee retains the authority to refer the increase to the full Board for reconsideration if it disagrees with the report. Financial Impact: The USFSP housing system is set to achieve a preferred 1.4x debt service coverage ratio by fiscal year 2019-2020. The approved increase in housing rates for fall 2019 will have an overall impact of 2.5% across all room configurations. ________________________________________________________________ Strategic Goal(s) Item Supports: Student Success and Culture Infrastructure to Meet Current and Future Needs

Sustainable Funding BOT Committee Review Date: February 12, 2019 Supporting Documentation Online (please circle): Yes No USF System or Institution specific: USF St. Petersburg Prepared by: Jacob Diaz Regional Asst. Vice Chancellor & Dean of Students Student Affairs


84

USF St. PetersburgStudent Housing Report

Board of TrusteesFinance CommitteeFebruary 12, 2019


85

Overview• In December 2016, the USF Board of Trustees approved a three-year USFSP Student

Housing rental rate structure (FYE 2018 – FYE 2020)

USFSP Housing Fall 2017 (FYE 2018) Fall 2018 (FYE 2019) Fall 2019 (FYE 2020)

Room Type Bed CountSemester

Rate Increase Bed CountSemester

Rate Increase Bed CountSemester

Rate IncreaseRHO Triple 52 $ 2,922 0.0% 52 $ 2,922 0.0% 0 $ 2,922 0.0%RHO Double/Studio 8 $ 4,049 7.0% 8 $ 4,332 7.0% 48 $ 4,505 4.0%RHO Single 311 $ 4,197 7.0% 311 $ 4,491 7.0% 308 $ 4,671 4.0%USC Triple 148 $ 2,922 0.0% 148 $ 2,922 0.0% 0 $ 2,922 0.0%USC Double 88 $ 4,049 7.0% 88 $ 4,332 7.0% 196 $ 4,505 4.0%Affiliate Double 50 $ 4,984 0.0% 50 $ 4,984 0.0% 0 $ 4,984 0.0%P3 Housing (New) 550 $ 4,896 All Beds 657 4.3% 657 4.3% 1102 4.0%Debt Service Coverage Ratio (Forecast) 1.35x 1.39x 1.43x

• New residence hall was anticipated to open in fall 2019 eliminating triple occupancy room configurations


86

Overview• Purpose of rental rate increases:

USFSP Housing Inventory will meet the Rating Agencies preferred 1.4x Debt Service Coverage Ratio (DSCR) in 2019-2020

Preparation for occupancy change once new residence hall project is completed, University housing will return to 95% occupancy

Address increasing costs of staffing, utilities, and maintenance of facilities


87

Cost Pressures• Annual staff compensation cost increases• Lifecycle maintenance, repairs, and improvements• Increased utility and technology costs

Electric Cable Water Chilled Water


88

Update• Housing Enhancements

Additional staffing to meet service needs New shower base project continued in RHO Bike corral for both RHO and USC updated Painting in residence halls to update color schemes Updating lounge furniture in both RHO & USC (ongoing) RHO ice maker water line cap-off project (ongoing) Replaced blinds in student lounges for improved look and

durability Added water bottle fill stations in each lounge in RHO & USC Added LED lighting to RHO- sustainability upgrade (ongoing)


89

For Our StudentsBoard of Trustees Finance Committee - New Business - Information Items

90

Value of Living On CampusResearch indicates living on campus improves

STUDENT SUCCESS• Safety• Convenience (close to classes and resources)• Variety of housing options• Residential Curriculum• Our four Living Learning communities and access to faculty

outside the classroom New communities coming Fall 2019

• Academic success (persistence and timely graduation)• Connection to campus life• Hall Staff• Flexibility (change rooms or roommates, length of contract,

cancellation options)


91

CurrentRates

CamdenPier

DistrictFusion 1560 Hermitage Beacon 430 USFSP

Single

Semester Rate per Bed

$9,395 $5,370 $9,365 $6,475 $4,671

Local Market Comparison• Lack of affordable student housing near campus• Downtown housing prices too expensive for students, and some

will not rent to students• Each of the following rental rates are based on comparable one-

bedroom apartments• Camden Pier District: $1,879/month• Fusion 1560: $1,074/month• Hermitage: $1,873/month• Beacon 430: $1,295/month


92

USF SystemFYE 2018 (Actual)

FYE 2019 (Forecast)

FYE 2020 (Forecast)

Debt Service Coverage Ratio 1.43 1.42 1.47

Financial Projections(based upon approved rates)

• New residence hall deferred for one year, to open fall 2020

• Reduction in revenue and expenses for FYE 2019 resulting from elimination of affiliate housing (reduced overall occupancy)

USF St. PetersburgFYE 2018 (Actual)

FYE 2019 (Forecast)

FYE 2020 (Forecast)

Revenue 7,436,402$ 7,102,918$ 7,280,491$ Expenses 3,703,821 3,246,632 3,411,565 Net Income 3,732,581 3,856,286 3,868,926 Debt Service 2,813,192 2,785,231 2,716,409 Debt Service Coverage Ratio 1.33 1.38 1.42Fall Occupancy Rate 126% 111% 113%


93

Room Type Bed CountApproved

Rate IncreaseSingle 307 $ 4,671 4.0%Double 80 $ 4,505 4.0%Triple 227 $ 2,922 0.0%All Beds 614 2.5%

Fall 2019 (FYE 2020)USFSP Housing

Rental Rates

• Impact of rate increase previously expected to be 4.0% overall (with elimination of triple occupancy rooms)

• Deferral of new residence hall results in a 2.5% average rate increase overall for fall 2019 (triple occupancy rooms remain with rate unchanged)


94

Agenda Item: IV e

USF Board of Trustees Finance Committee Meeting

February 12, 2019 Issue: DSO Mid-Year Forecasts for FY 2019 ________________________________________________________________ Proposed action: Informational ________________________________________________________________ Executive Summary: The Direct Support Organizations of the University (DSOs) have prepared their Mid-Year Forecasts for FY 2019. These reports include a comparison of the Forecast to the FY 2019 Financial Plans approved by the BOT Finance Committee at its May 22, 2018 Meeting, as well as actual results for FY 2018, FY 2017 and FY 2016. The DSOs are:

1. USF Health Professions Conferencing Corporation 2. University Medical Services Association, Inc. &

USF Medical Services Support Corporation 3. Sun Dome, Inc. 4. USF Foundation, Inc. 5. USF Institute of Applied Engineering 6. USF Alumni Association, Inc. 7. USF Research Foundation, Inc. 8. USF Financing Corporation & USF Property Corporation

Financial Impact: The Direct Support Organizations of the University of South Florida (DSO) are organized and operated exclusively to assist the University achieve excellence by providing supplemental resources from private gifts and bequests and valuable education support services. These organizations are authorized by Florida Statute 1004.28 to receive, hold and administer property and make expenditures for the University. ________________________________________________________________ Strategic Goal(s) Item Supports: Goal 4: Sound Financial Management Committee Review Date: February 12, 2019 Supporting Documentation Online (please circle): Yes No DSO Mid-Year Forecasts FY 2019 USF System or Institution specific: USF System Prepared by: Fell L. Stubbs, University Treasurer, (813) 974-3298


95

DIRECT SUPPORT ORGANIZATIONS

MID-YEAR FORECASTS

FISCAL YEAR 2019

February 12, 2019


96

DSO Mid-Year Forecasts for FY 2019

INDEX

USF Health Professions Conferencing Corporation .................................................. 2-5

University Medical Services Association, Inc. & USF Medical Services Support Corporation ................................................... 6-9

Sun Dome, Inc. ........................................................................................................... 10-13

USF Foundation, Inc. ................................................................................................. 14-17

USF Institute of Applied Engineering. ....................................................................... 18-21

USF Alumni Association, Inc. ................................................................................... 22-25

USF Research Foundation, Inc. .................................................................................. 26-29

USF Financing Corporation and USF Property Corporation ..................................... 30-33

[Page 1 of 33]


97

List Significant Forecasted Variances (Favorable and Unfavorable) - Both Income Statement and Cash Flows

As noted in the first bullet 'Direct Program Expense' is projected to exceed the FY19 Financial Plan by $2.5M from an increase in the number of grants received in partnership with, and passed through to, medical education companies (MEC) that use USF Health’s accreditations for their programming.

'Direct Program Expense' is expected to decrease $250K as a result of decreased pass-through programmatic costs incurred as a percentage of 'CAMLS - Industry, Societies, Healthcare' revenue. Pass-through programmatic costs include catering, tissue, instruments and other supplies.

Describe Management's Actions to Close Significant Unfavorable Gaps Before FYE

Cash flow is forecasted to exceed FY19 targets due to a stronger beginning balance and controlling operating expenses while maintaining revenue volumes.

There are no unfavorable gaps to address at this time.

Revenue for 'CAMLS - Industry, Societies, Healthcare' is forecasted to exceed FY19 financial plan by $225K. The increase is attributed to increased activity, particularly new training programs for international physicians.

'Transfer from UMSA - Wages and Benefits' of $60K is support to offset CAMLS executive director's inter-professional education responsibilities to USF Health but charged to HPCC.

'Wages and Benefits' increased year over year as a result of the recruitment of a permanent CAMLS executive director as well as fulfillment of the plan to restore key staffing that had attritted over time in alignment with increased CAMLS academic and event activities.

Overall the forecast for 'Direct Program Expense' will increase $2.25M from financial plan as follows:

The net result of these variances is projected to exceed the FY19 Financial Plan 'Net Operating Profit' by 52% or $285K.

USF Health Professions Conferencing Corporation (HPCC)FY 2019 Mid-Year Forecast

MID-YEAR FORECAST

The 'Revenue for Continuing Professional Development is projected to exceed the FY19 Financial Plan by $2.6M due to an increase in the number of grants received in partnership with medical education companies (MEC) that use USF Health’s accreditations for their programming. Accordingly, 'Direct Program Expense' is also projected to exceed the FY19 Financial Plan. Additional detail of this expense line item provided below.

Revenue for 'CAMLS - USF Health Programming' is forecasted to decline from FY19 financial plan by $180K. The decrease is attributed to a year over year decrease in Graduate Medical Education (GME) contractual services and also to an update in the private parking contract arrangement for Undergraduate Medical Education (UME) student parking resulting in reduced fees to UME.

[Page 2 of 33]


98

(In thousands) FY 2019 FY 2019 FY 2018 FY 2017 FY 2016MID-YEAR FINANCIAL ACTUAL ACTUAL ACTUALFORECAST PLAN $ % RESULTS RESULTS RESULTS

REVENUES Continuing Professional Development $4,457 $1,857 $2,600 140 % $3,943 $2,289 $3,988

CAMLS - USF Health Programming 2,747 2,927 (180) (6)% 3,158 2,222 1,727

CAMLS - Industry, Societies, Healthcare 4,205 3,980 225 6 % 5,381 4,619 7,055

Other HPCC Divisions 405 405 0 0 % 523 810 1,420

In Kind Donations 40 40 0 0 % 22 41 7

Rents, Parking, Rebates, Interest 529 529 0 0 % 531 362 504

Gain on Sale of Fixed Assets 0 0 0 % 10 434 0

Transfer from USF-Plant Operations & Maint. 1,293 1,293 0 0 % 1,293 1,293 1,293

Transfer from USF-Educational wages/supplies 0 0 0 % 755 1,660

Transfer from USF - Forgiveness of debt 0 0 0 % 943 0

Transfer from UMSA - Forgiveness of debt 0 0 0 % 401 0

Transfer from UMSA - Wages and Benefits 60 0 60 % 0 0

Transfer from UMSA-Continuing Ed.-Faculty, Students 1,000 1,000 0 0 % 1,033 1,530 1,750

Total Revenues $14,736 $12,031 $2,705 22 % $15,893 $15,699 $19,404

EXPENSESWages and Benefits $4,057 $3,904 $153 4 % $3,378 $3,296 $4,499

Utilities, Leases, Maint., Supplies, Marketing 2,251 2,234 17 1 % 2,466 3,274 3,730

Direct Program Expense 5,680 3,430 2,250 66 % 5,744 4,589 7,127

Interest 567 567 0 0 % 681 726 757

In Kind Expense 40 40 0 0 % 22 41 7

Depreciation-Purchased & Donated Assets 1,307 1,307 (0) (0)% 1,720 1,972 2,252

Transfer to UMSA-Pre FY17 program residuals 0 0 0 % 0 366 0

Total Expenses $13,902 $11,482 $2,420 21 % $14,011 $14,264 $18,372

OPERATING PROFIT BEFORE NON-CASH CHANGES $834 $549 $285 52 % $1,882 $1,434 $1,033

Unrealized Investment Gains (Losses) 0 0 0 % 0 0 0

Total Non-Cash Changes $0 $0 $0 % $0 $0 $0

NET OPERATING PROFIT $834 $549 $285 52 % $1,882 $1,434 $1,033

Operating Profit Margin 6% 5% 1 % 12% 9% 5%


INCOME STATEMENT

Variance

[Page 3 of 33]


99

(In thousands) FY 2019 FY 2019 FY 2018 FY 2017 FY 2016MID-YEAR FINANCIAL ACTUAL ACTUAL ACTUAL

FORECAST PLAN $ % RESULTS RESULTS RESULTS

OPERATING ACTIVITIES

Net Operating Profit $834 $549 $285 52 % $1,882 $1,434 $1,033

Adjustments for Non-Cash Activities:

Depreciation 1,307 1,307 (0) (0)% 1,720 1,972 2,252

(Gain)/Loss on sale of fixed assets 0 0 0 % (10) (434) 0

Adjustments for Changes in

Operating Assets and Liabilities 0 0 0 % (553) (856) (2,007)

Total Cash From Operating Activities $2,141 $1,856 $285 15 % $3,039 $2,116 $1,278

INVESTING ACTIVITIES

Capital Expenditures $(200) $(200) $0 0 % $(345) $(441) $(74)

Net (Purchases) Sales of Investments 0 0 0 % 46 $385 8

Total Cash From Investing Activities $(200) $(200) $0 0 % $(299) $(56) $(66)

FINANCING ACTIVITIES

Proceeds of Long-Term Debt $0 $0 $0 % $0 $0 $0

Principal Payments (1,138) (1,138) 0 0 % (1,148) (1,524) (2,111)

Total Cash From Financing Activities $(1,138) $(1,138) $0 0 % $(1,148) $(1,524) $(2,111)

CHANGE IN CASH 803 518 285 55 % 1,592 536 (899)

Cash, Beginning of Year 2,308 1,810 498 28 % 716 180 1,079

Cash, End of Year $3,111 $2,328 $783 34 % $2,308 $716 $180

Total Cash & Investments-Checking $2,635 $1,928 $707 37 % $1,832 $316 $180

Total Cash & Investments-Designated Savings $476 $400 $76 19 % $476 $400 $0

Days Cash on Hand 90 84 7 8 % 69 21 4


Variance

STATEMENT OF CASH FLOWS

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100

(In thousands)FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021

ASSETSCash & Investments $180 $716 $2,309 $3,111 $3,629 $4,147Fixed Assets 20,163 19,959 18,548 17,425 16,625 16,025Other Assets 2,287 1,591 1,963 1,963 1,963 1,963Total Assets $22,630 $22,266 $22,820 $22,499 $22,217 $22,135

LIABILITIESPayables $3,234 $2,576 $2,997 $2,997 $2,797 $2,797Long-Term Debt 15,919 16,121 14,934 13,830 13,125 12,441Other Liabilities 3,990 2,647 2,086 0 0 0Total Liabilities $23,143 $21,344 $20,017 $16,827 $15,922 $15,238

NET ASSETS $(513) $922 $2,803 $5,672 $6,295 $6,897

Days Cash on Hand 4 21 69 90 125 140

REVENUESProgram revenues $18,900 $13,559 $15,352 $14,208 $12,000 $12,000Other Revenues 504 2,140 541 529 529 529Total Revenues $19,404 $15,699 $15,893 $14,736 $12,529 $12,529

EXPENSESSalaries & Benefits $4,499 $3,296 $3,378 $4,057 $4,096 $4,112Program services 13,116 10,242 9,952 9,278 7,000 7,000Other Expenses - interest 757 726 681 567 528 486Total Expenses $18,372 $14,264 $14,011 $13,902 $11,624 $11,598

Changes $1,033 $1,434 $1,882 $834 $905 $931Total Non-Cash Changes $0 $0 $0 $0 $0 $0NET OPERATING PROFIT $1,033 $1,434 $1,882 $834 $905 $931

Operating Profit Margin 5% 9% 12% 6% 7% 7%


3-YEAR FORECAST

ACTUAL FORECAST

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1 The ancillaries continue not to provide a financial benefit to the practice plan (loss of $2M - $3M annually). Although significant improvements in volume have been made, challenges remain with respect to fixed costs and reimbursement. The choices to solve this gap are a) get out of business or 2) partner with another entity.

2 There are price and volume challenges within the practice plan (approximately $5M). The price challenge revolves around billing and collecting and managed care contracting. The volume challenge revolves around some clinical faculty not achieving their work effort targets. Several steps have been initiated to address this gap.

3 The practice plan continues to provide approximately $10M of annual support, excluding Dean's Tax, of the academic missions of the Morsani College of Medicine. Much of this is tied to faculty academic pursuits without other funding sources to support. Taking the next step along our work effort and compensation plan journey is required to further close this gap.

4 Solidifying the relationship with TGH is critical to the future success of the practice plan. The challenges demonstrated above could be mitigated with a real partnership between USF and TGH around an academic medical center brand in this community.

UMSA/MSSC CombinedFY 2019 Mid-Year Forecast

MID-YEAR FORECAST

Although the financial picture of the practice plan has significantly improved, challenges still exist in four (4) primary areas:

Total revenues exceed plan by $17.2M or 5%. Although we continue to see growth in our patient care activities (up $7M), the primary drivers for revenue growth are UPL/LIP and the decision to use university dollars to support the academic activities of the faculty that have been traditionally supported by the practice plan (up $10M).

Expenses are exceeding plan by $11.4M or 4%. This growth in expenses is primarily related to faculty growth and engagement of a consultant to help the with USF/TGH integration discussions.

Due to impacts of the revenue and expense changes and their impact on the operating margin, the practice plan leadership has decided contribute $5M in FY2019 and $2M in FY2020 toward the completion of the medical school downtown. This contribution doesn't impact the practice plan achieving its targets.

The change in cash position is driven primarily by the operating margin of the practice plan. The capital spend will also be under the plan.

Achieving year-end targets are dependent on the following assumptions: 1) Departments achieve their margin targets; 2) ASC continues to improve its bottom line; 3) Billing and collections continue to improve; and 4) Finalization of outstanding support from TGH.

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REVENUES Net Patient Service $190,230 $185,751 $4,479 2 % $172,391 $166,362 $151,505

Grants, Contracts & Awards 75,110 72,217 2,893 4 % 72,454 68,336 62,551

UPL 26,290 22,560 3,730 17 % 22,606 7,329 6,798

Other Revenue 40,438 34,758 5,680 16 % 35,776 39,458 34,278

Total Revenues $332,068 $315,286 $16,782 5 % $303,227 $281,485 $255,132

EXPENSESFaculty Support $114,183 $112,415 $1,768 2 % $112,135 $102,578 $94,895

Housestaff Support 11,618 11,128 490 4 % 11,922 11,723 11,406

Other Staff Support 72,838 70,903 1,935 3 % 65,467 67,992 63,988

Depreciation/Amortization 4,714 5,400 (686) (13)% 4,824 5,397 5,171

Other Expenses 54,456 50,129 4,327 9 % 49,185 49,672 43,930

Transfer to USF - Faculty Support 57,514 54,135 3,379 6 % 54,291 46,495 45,141

Transfer to HPCC - Program Support 1,000 790 210 27 % 1,035 1,530 2,955

Total Expenses $316,321 $304,900 $11,421 4 % $298,859 $285,387 $267,485

OPERATING PROFIT BEFORE NON-OPERATING AND NON-CASH CHANGES $15,747 $10,386 $5,361 52 % $4,368 $(3,902) $(12,353)

Contribution to MCOM - Downtown (5,000) 0 (5,000) % 0 0 0

Unrealized Investment Gains (Losses) (954) 0 (954) % 725 1,428 144

Non-Cash Impact of Epic Conversion 1,576 1,300 276 21 % (931) (931) (2,168)

Total Non-Operating and Non-Cash Changes $(4,378) $1,300 $(5,678) (437)% $(206) $497 $(2,024)

NET OPERATING PROFIT $11,369 $11,686 $(317) (3)% $4,162 $(3,405) $(14,377)

Operating Profit Margin 5% 3% 2 % 1% -1% -5%

Variance


INCOME STATEMENT

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Net Operating Profit $11,369 $11,686 $(317) (3)% $4,162 $(3,405) $(14,377)


Depreciation/Amortization 4,714 5,400 (686) (13)% 4,824 5,369 5,171

Non Cash Impact of EPIC (1,576) (1,300) (276) (21)% 931 931 2,168

Unrealized Gains 954 0 954 % (725) (1,428) (144)

Operating Assets and Liabilities 466 466 0 0 % (289) (7,071) (4,806)

Total Cash From Operating Activities $15,926 $16,252 $(326) (2)% $8,903 $(5,604) $(11,988)


Capital Expenditures $(3,225) $(4,750) $1,525 32 % $(2,563) $(1,873) $(3,652)

Net (Purchases) Sales of Investments (3,000) 0 (3,000) % (9,828) 13,382 13,580

Total Cash From Investing Activities $(6,225) $(4,750) $(1,475) (31)% $(12,391) $11,509 $9,928


Proceeds of Long-Term Debt $0 $0 $1,525 % $0 $0 $0

Transfer to USF FC - Leases on MOBs (2,262) (2,262) (3,000) (133)% (2,310) (2,368) (2,005)


CHANGE IN CASH 7,439 9,240 $1,525 (17)% (5,798) 3,537 (4,065)

Cash, Beginning of Year 6,661 7,085 (3,000) (42)% 12,459 8,922 12,987

Cash, End of Year $14,100 $16,325 $(2,225) (14)% $6,661 $12,459 $8,922

Total Cash & Investments $42,087 $41,312 $775 2 % $28,119 $23,448 $31,912

Days Cash on Hand 49 50 (1) (2)% 35 31 44

Variance



[Page 8 of 33]


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ASSETSCash & Investments $31,912 $23,448 $28,119 $42,087 $46,213 $53,487Fixed Assets 60,397 58,326 56,065 54,576 53,086 51,505Other Assets 53,681 56,768 65,929 61,617 64,698 67,933Total Assets $145,990 $138,542 $150,113 $158,280 $163,997 $172,925

LIABILITIESPayables $6,435 $6,257 $8,449 $6,617 $6,608 $6,729Long-Term Debt 54,979 53,528 51,176 48,914 46,652 44,390Other Liabilities 14,104 13,931 18,699 19,592 15,279 13,599Total Liabilities $75,518 $73,716 $78,324 $75,123 $68,539 $64,718

NET ASSETS $70,472 $64,826 $71,788 $83,157 $95,458 $108,206

Days Cash on Hand 44 31 35 49 53 59

REVENUESNet Patient Service $151,505 $166,362 $172,391 $190,230 $199,742 $211,726Grants, Contracts & Awards 62,551 68,336 72,454 75,110 74,383 76,615UPL 6,798 7,329 22,606 26,290 26,290 26,290Other Revenues 34,278 39,458 35,776 40,438 37,319 35,983Total Revenues $255,132 $281,485 $303,227 $332,068 $337,734 $350,614

EXPENSESFaculty Support $94,895 $102,578 $112,135 $114,183 $118,036 $122,938Housestaff Support 11,406 11,723 11,922 11,618 11,462 11,806Other Staff Support 63,988 67,992 65,467 72,838 74,448 78,171Depreciation/Amortization 5,171 5,397 4,824 4,714 5,490 5,581Other Expenses 43,930 49,672 49,185 54,456 53,289 52,590Transfer to USF - Faculty Support 45,141 46,495 54,291 57,514 59,208 65,530Transfer to HPCC - Program Support 2,955 1,530 1,035 1,000 500 250Total Expenses $267,485 $285,387 $298,859 $316,321 $322,433 $336,866

Changes $(12,353) $(3,902) $4,368 $15,747 $15,301 $13,748Total Non-Operating and Non-Cash Change $(2,024) $497 $(206) $(4,378) $(3,000) $(1,000)NET OPERATING PROFIT $(14,377) $(3,405) $4,162 $11,369 $12,301 $12,748

Operating Profit Margin -5% -1% 1% 5% 5% 4%


3-YEAR FORECAST

ACTUAL FORECAST

[Page 9 of 33]


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Sun Dome, Inc.FY 2019 Mid-Year Forecast

MID-YEAR FORECAST

The overall decrease in event-related revenue of $98K is attributable to the recent cancellation of the Kat Williams comedy event, contributing to $53K of the negative variance.

With approximately 53 events (sporting, concerts, graduations, comedy shows and miscellaneous events) left to close the fiscal year, management is optimistic that the revenue gap will be made up over the course of the fiscal year, through better expense management and the ancillary revenue streams.

[Page 10 of 33]


106


REVENUES Direct Event Income $603 $701 $(98) (14)% $264 $830 $905

Ancillary Revenue 1,120 1,092 28 3 % 1,121 952 1,590

Miscellaneous 309 287 22 8 % 110 172 317

Total Revenues $2,032 $2,080 $(48) (2)% $1,495 $1,954 $2,812

EXPENSESSalaries & Benefits $896 $794 $102 13 % $817 $824 $843

General & Administrative 451 464 (13) (3)% 551 248 455

Marketing & Sales 26 26 0 0 % 22 8 30

Equipment & Supplies 287 338 (51) (15)% 53 228 412

Utilities 34 36 (2) (6)% 31 72 50

Insurance 125 152 (27) (18)% 152 70 70

Depreciation/Amortization 0 38 (38) (100)% 0 43 139

Transition Expenses 0 0 0 % 0 72 90

Incentive Fees 150 228 (78) (34)% 0 57 140

Total Expenses $1,969 $2,076 $(107) (5)% $1,626 $1,622 $2,229

OPERATING PROFIT BEFORE NON-CASH CHANGES $63 $4 $59 1,475 % $(131) $332 $583


Change in Fair Value of Swaps 0 0 0 % 0 0 0


NET OPERATING PROFIT $63 $4 $59 1,475 % $(131) $332 $583

Operating Profit Margin 3% 0% 3 % -9% 17% 21%

Variance


INCOME STATEMENT

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Net Operating Profit $63 $4 $59 1,475 % $(131) $332 $583

Adjustments for Non-Cash Activities 191 272 (81) (30)% 416 67 407

Total Cash From Operating Activities $254 $276 $(22) (8)% $285 $399 $990


Capital Expenditures $0 $0 $0 % $0 $0 $0

Net (Purchases) Sales of Investments 0 0 0 % 0 0 0

Total Cash From Investing Activities $0 $0 $0 % $0 $0 $0


Principal Payments 0 0 0 % 0 (73) (71)

Transfer to USF - Debt Service (413) (449) 36 8 % (544) (505) (524)

Total Cash From Financing Activities $(413) $(449) $36 8 % $(544) $(578) $(595)

CHANGE IN CASH (159) (173) 14 8 % (259) (179) 395

Cash, Beginning of Year 882 882 0 0 % 1,141 1,320 925

Cash, End of Year $723 $709 $14 2 % $882 $1,141 $1,320

Total Cash & Investments $723 $709 $14 2 % $882 $1,141 $1,320

Days Cash on Hand 134 127 7 6 % 198 264 231

Variance



[Page 12 of 33]


108


ASSETSCash & Investments $1,320 $1,141 $882 $723 $706 $1,121Fixed Assets 721 678 638 633 629 625Other Assets 407 67 124 124 124 124Total Assets $2,448 $1,886 $1,644 $1,480 $1,459 $1,870

LIABILITIESAccounts Payables & Accrued Liabilities $1,172 $1,123 $1,122 $976 $970 $1,217Long-Term Debt 616 0 0 0 0 0Other Liabilities 0 0 143 177 189 227Total Liabilities $1,788 $1,123 $1,265 $1,153 $1,159 $1,444

NET ASSETS $660 $763 $379 $327 $300 $426

Days Cash on Hand 231 264 198 134 132 184

REVENUESDirect Event Income $905 $830 $264 $603 $706 $716Ancillary Revenue 1,590 952 1,121 1,120 1,152 1,630Miscellaneous 317 172 110 309 90 90Total Revenues $2,812 $1,954 $1,495 $2,032 $1,948 $2,436

EXPENSESSalaries & Benefits $843 $824 $817 $896 $941 $988General & Administrative 455 248 551 451 755 969Depreciation/Amortization 139 43 0 0 0 0Other Expenses 792 507 258 622 258 264Total Expenses $2,229 $1,622 $1,626 $1,969 $1,954 $2,221

Changes $583 $332 $(131) $63 $(6) $215Total Non-Cash Changes $0 $0 $0 $0 $0 $0NET OPERATING PROFIT $583 $332 $(131) $63 $(6) $215

Operating Profit Margin 21% 17% -9% 3% 0% 9%


3-YEAR FORECAST

ACTUAL FORECAST

[Page 13 of 33]


109


Investment losses incurred through December 31st combined with investment return projections for the third and fourth quarters are reflected in the mid-year forecast; thereby driving the decrease in net operating profit. All other forecasted results do not vary significantly from the financial plan.


Reliance on Foundation sources by the USF System have led to fluctuations in the utilization of Foundation funds. Foundation sources represent a small percentage of the System's overall budget, however, this source is critical for many University programs while providing a funding catalyst for others to achieve the University's goals and aspirations.

USF Foundation, Inc.FY 2019 Mid-Year Forecast

MID-YEAR FORECAST

[Page 14 of 33]


110

(In thousands) FY 2019 FY 2019 FY 2018 FY 2017 FY 2016MID-YEAR FINANCIAL ACTUAL ACTUAL ACTUAL


REVENUES Gift & Donations $51,100 $51,100 $0 0 % $56,330 $38,867 $38,541

Investment Income (Loss) (12,825) 45,263 (58,088) (128)% 52,617 63,943 (3,626)

University Support 12,427 12,427 0 0 % 12,680 13,305 13,108

Other Revenues 970 970 0 0 % 1,250 2,743 394

Total Revenues $51,672 $109,760 $(58,088) (53)% $122,877 $118,858 $48,417

EXPENSESProgram Services

Salaries & Benefits $24,668 $24,665 $3 0 % $21,850 $20,786 $23,834

Scholarship & Fellowship 7,715 7,713 2 0 % 9,723 8,330 8,009

Service & Independent contractors 5,170 5,169 1 0 % 4,187 4,284 4,227

Supplies 1,191 1,193 (2) (0)% 980 1,341 1,948

Other Transfers & Expenses 10,362 10,159 203 2 % 10,933 11,897 8,736

Total Program Service Expense 49,106 48,899 207 0 % 47,673 46,638 46,754

Fundraising & Operating Expenses

Salaries & Benefits $14,581 $14,402 $179 1 % $14,501 $13,979 $13,329

Service & Independent contractors 779 778 1 0 % 1,037 910 811

Other Transfers & Expenses 1,902 1,900 2 0 % 1,828 2,409 2,555

Total Fundraising & Operating Expenses 17,262 17,080 182 1 % 17,366 17,298 16,695

Total Expenses $66,368 $65,979 $389 1 % $65,039 $63,936 $63,449

OPERATING PROFIT BEFORE NON-CASH CHANGES $(14,696) $43,781 $(58,477) (134)% $57,838 $54,922 $(15,032)


NET OPERATING PROFIT $(14,696) $43,781 $(58,477) (134)% $57,838 $54,922 $(15,032)

Operating Profit Margin -28% 40% (68)% 47% 46% -31%

Variance


INCOME STATEMENT

[Page 15 of 33]


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Net Operating Profit $(14,696) $43,781 $(58,477) (134)% $57,838 $54,922 $(15,032)


Investment (gains) losses 12,825 (45,263) 58,088 128 % (52,617) (63,943) 3,626

Change in assets & liabilities (4,126) (6,171) 2,045 33 % (5,134) 2,042 6,982

Total Cash From Operating Activities $(5,997) $(7,653) $1,656 22 % $87 $(6,979) $(4,424)


Capital Expenditures $(590) $(650) $60 9 % $(458) $(2,936) $(194)

Net (Purchases) Sales of Investments 11,953 13,932 (1,979) (14)% 7,067 13,605 9,953

Interest dividends reinvested (4,265) (4,989) 724 15 % (6,112) (4,465) (3,927)

Total Cash From Investing Activities $7,098 $8,293 $(1,195) (14)% $497 $6,204 $5,832


Principal Paid on Debt $(371) $(371) $0 0 % $(362) $(352) $(343)

Total Cash From Financing Activities $(371) $(371) $0 0 % $(362) $(352) $(343)

CHANGE IN CASH 730 269 461 171 % 222 (1,127) 1,065

Cash, Beginning of Year 1,025 1,191 (166) (14)% 803 1,931 866

Cash, End of Year $1,755 $1,460 $295 20 % $1,025 $804 $1,931

Total Cash & Investments $82,047 $83,319 $(1,272) (2)% $83,867 $80,084 $79,925

Days Cash on Hand 452 461 (10) (2)% 472 458 460

Variance



[Page 16 of 33]


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LIABILITIESPayables $1,735 $1,444 $937 $2,832 $2,687 $2,395Long-Term Debt 5,780 5,447 5,086 5,086 4,333 3,942Other Liabilities 34,295 32,001 37,506 38,256 41,374 42,202Total Liabilities $41,810 $38,892 $43,529 $46,174 $48,394 $48,539

NET ASSETS $540,205 $595,127 $652,966 $638,270 $665,035 $699,242

Days Cash on Hand 460 458 471 452 445 442

REVENUESGifts & fundraising revenue $38,541 $38,867 $56,330 $51,100 $51,611 $52,643University support 13,108 13,305 12,680 12,427 12,428 12,677Other Revenues (3,232) 66,686 53,867 (11,855) 31,379 39,420Total Revenues $48,417 $118,858 $122,877 $51,672 $95,418 $104,740

EXPENSESSalaries & benefits $37,163 $34,765 $36,351 $39,249 $40,034 $40,835Scholarships & fellowships 8,009 8,330 9,723 7,715 7,792 7,948Other Expenses 18,277 20,841 18,965 19,404 20,827 21,750Total Expenses $63,449 $63,936 $65,039 $66,368 $68,653 $70,533

Changes $(15,032) $54,922 $57,838 $(14,696) $26,765 $34,207Total Non-Cash Changes $0 $0 $0 $0 $0 $0NET OPERATING PROFIT $(15,032) $54,922 $57,838 $(14,696) $26,765 $34,207

Operating Profit Margin -31% 46% 47% -28% 28% 33%


3-YEAR FORECAST

ACTUAL FORECAST

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RD Management is providing 4000sq ft of space for Institute at no cost for first year

USF Institute of Applied EngineeringFY 2019 Mid-Year Forecast

MID-YEAR FORECAST

Although FY started in July, did not receive funding until Oct, delaying execution of formation activites and associated expenses

Hiring of personnel has taken longer than originally planned, resulting in lower salary costs in first year

USSOCOM has identified $1M award to Institute; waiting to receive Request for Proposal (RFP), expect award by end of FY

USSOCOM released Request For Information for local, long-term academic partner; Institute responded, expect RFP by end of FY

Institute has identifed plan and timeline to transition select SOFWERX efforts to Institute contracts

Institute in discussions with Hillsbourough County to provide funding to Institute matching University investment and commitment

Audit and accounting system costs higher than originally estimated, but affordable and in line with other DSO costs

No contract revenues to date

On track to hire initial cadre of personnel by April (jobs posted, part-time financial support in process with HR

Banking service & insurance procured. On track to procure accounting system and audit by March (request for quotes released)

Institute procuring manufacturing equipment for secure facility; in process of obtaining quotes

USSOCOM has donated additional manufacturing equipment to Institute; still determining FMV and depreciation

[Page 18 of 33]


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(In thousands) FY 2019 FY 2019 FY 2018 FY 2017 FY 2016

MID-YEAR FINANCIAL ACTUAL ACTUAL ACTUAL


REVENUES Contracts & Grants - Federal 83 750 (667) (89)% $0 $0 $0

University Support 491 491 0 0 % 0 0 0

College of Engr Support 298 0 298 % 0 0 0

Contributions - Gifts In-Kind: 0 0 0 % 0 0 0

Donated Materials, Supplies & Equip. 0 0 0 % 0 0 0

Donated Furnished Rent Free Space 73 0 73 % 0 0 0

Total Revenues $945 $1,241 $(296) (24)% $0 $0 $0

EXPENSESSalaries & Benefits $110 $347 $(237) (68)% $0 $0 $0

College of Engr Support Expense 298 298 % 0 0 0

Gifts In-Kind Expense 24 24 % 0 0 0

Travel, Materials, Supplies, Software & Equip. 63 74 (11) (15)% 0 0 0

Banking, Insurance, Audit, Tax Services 60 32 28 88 % 0 0 0

Facilities, Utilities, Telecomm., Security 56 218 (162) (74)% 0 0 0

Direct Program Costs 63 563 (500) (89)% 0 0 0

Transfer to USF-Indirect Return to Univ. 1 7 (6) (86)% 0 0 0

Total Expenses $675 $1,241 $(566) (46)% $0 $0 $0

OPERATING PROFIT BEFORE NON-CASH CHANGES $270 $0 $270 % $0 $0 $0



NET OPERATING PROFIT $270 $0 $270 % $0 $0 $0

Operating Profit Margin 29% 0% 29 % #DIV/0! #DIV/0! #DIV/0!


INCOME STATEMENT

Variance

[Page 19 of 33]


115



Net Operating Profit $270 $0 $270 % $0 $0 $0


Increase in Prepaid Assets (23) 0 (23) % 0 0 0

Increase in Contribution Receivable (48) 0 (48) % 0 0 0


Operating Assets and Liabilities 0 0 0 % 0 0 0

Total Cash From Operating Activities $199 $0 $199 % $0 $0 $0


Capital Expenditures $(199) $0 $(199) % $0 $0 $0

Net (Purchases) Sales of Investments 0 0 0 % 0 0 0

0 0 0 % 0 0 0

0 0 0 % 0 0 0

Total Cash From Investing Activities $(199) $0 $(199) % $0 $0 $0



Principal Payments 0 0 0 % 0 0 0

Interest Payments 0 0 0 % 0 0 0

0 0 0 % 0 0 0

Total Cash From Financing Activities $0 $0 $0 % $0 $0 $0

CHANGE IN CASH 0 0 0 % 0 0 0Cash, Beginning of Year 0 0 0 % 0 0 0Cash, End of Year $0 $0 $0 % $0 $0 $0



Variance

[Page 20 of 33]


116


ASSETSCash & Investments $0 $0 $0 $1 $1 $1Fixed Assets 0 0 0 199 $199 $199Other Assets 0 0 0 89 $89 $89Total Assets $0 $0 $0 $289 $289 $289

LIABILITIESPayables $0 $0 $0 $0 $0 $0Long-Term Debt 0 0 0 0 0 0Other Liabilities 0 0 0 0 0 0Total Liabilities $0 $0 $0 $0 $0 $0

NET ASSETS $0 $0 $0 $289 $289 $289

Days Cash on Hand #DIV/0! #DIV/0! #DIV/0! 1.0 0.1 0.1

REVENUESContracts & Grants $0 $0 $0 $83 $2,250 $4,500University Support 0 0 0 491 602 602Other Revenues 0 0 0 73 0 0Total Revenues $0 $0 $0 $647 $2,852 $5,102

EXPENSESSalaries & Benefits $0 $0 $0 $110 $998 $1,107Other Expenses 0 0 0 250 1,855 3,996Total Expenses $0 $0 $0 $360 $2,853 $5,103

Changes $0 $0 $0 $287 $(1) $(1)Total Non-Cash Changes $0 $0 $0 $0 $0 $0NET OPERATING PROFIT $0 $0 $0 $287 $(1) $(1)

Operating Profit Margin #DIV/0! #DIV/0! #DIV/0! 44% 0% 0%


3-YEAR FORECAST

ACTUAL FORECAST

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USF Alumni Association, IncFY 2019 Mid-Year Forecast

Decreases in operating revenue due to the restricting of the affinity contract with the USF Federal Credit Union is being managed through expense reduction.

The unfavorable gap due to the location of scholarships is a transfer of assets and does not have an impact on the operating profit of the Association.

MID-YEAR FORECAST

Decrease in sponsorship and royalty revenue is due to changes in the USF Credit Union affinity contract.

Due to the decrease in revenue mentioned above, the Association has made efforts to reduce operating expenses in the area of membership printing, solicitation expenses, staff travel, and printing of Association produced publications.

In the past, scholarship gifts raised by Alumni development were housed within the Association. Effective the beginning of the current fiscal year, the Foundation has begun housing all scholarships within their financial records in order to keep them integrated. The Association will continue to manage the scholarships, but the dollars will be reported in the Foundation's net assets. This $50k transfer is reflected in expenses.

[Page 22 of 33]


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REVENUES Membership $573 $544 $29 5 % $533 $630 $555

Transfer from University - Support 625 625 0 0 % 625 0 0

Transfer from Foundation - Support 75 0 75 % 0 625 631

Royalties 488 507 (19) (4)% 533 529 524

License Plate Revenue 386 432 (46) (11)% 383 388 392

Sponsorships 250 301 (51) (17)% 180 134 143

Investment Income (Loss) 260 259 1 0 % 238 218 198

Event and other Revenue 182 157 25 16 % 194 116 77

Gifts & Donations 193 195 (2) (1)% 179 198 224

Total Revenues $3,032 $3,020 $12 0 % $2,865 $2,838 $2,744

EXPENSESSalaries & Benefits $1,777 $1,726 $51 3 % $1,691 $1,514 $1,451

Membership and Membership Services $191 $217 $(26) (12)% 181 261 377

Printing & Duplicating $11 $23 $(12) (52)% 14 37 29

Event Services $278 $274 $4 1 % 246 237 203

Professional Services $95 $92 $3 3 % 98 96 87

Postage $53 $57 $(4) (7)% 53 59 48

Travel $57 $71 $(14) (20)% 57 50 60

Advertising & Marketing $26 $27 $(1) (4)% 24 34 27

Insurance $50 $50 $0 0 % 50 41 42

Community Relations 23 28 (5) (18)% 42 38 49

Credit Card Fees 26 21 5 24 % 25 23 22

Scholarships 74 74 0 0 % 76 83 53

Other expenses 24 22 2 9 % 33 30 46

Bad debt expense 0 0 0 % 16 3 5

Transfer to Foundation - Scholarships 50 0 50 % 0 0 0

Total Expenses $2,735 $2,682 $53 2 % $2,606 $2,506 $2,499

OPERATING PROFIT BEFORE NON-CASH CHANGES $297 $338 $(41) (12)% $259 $332 $245

Unrealized Investment Gains (Losses) 423 432 (9) (2)% 376 538 (399)

Total Non-Cash Changes $423 $432 $(9) (2)% $376 $538 $(399)

NET OPERATING PROFIT $720 $770 $(50) (6)% $635 $870 $(154)

Operating Profit Margin 10% 11% (1)% 9% 12% 9%

Variance


INCOME STATEMENT

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Net Operating Profit $720 $770 $(50) (6)% $635 $870 $(154)


Unrealized gain on investments (423) (432) 9 2 % (376) (538) 399


Operating Assets and Liabilities 140 140 0 0 % (99) (196) 139

Total Cash From Operating Activities $437 $478 $(41) (9)% $160 $136 $384


Net (Purchases) Sales of Investments (436) (477) 41 9 % (155) (148) (378)

Total Cash From Investing Activities $(436) $(477) $41 9 % $(155) $(148) $(378)



Principal Payments 0 0 0 % 0 0 0

Interest Payments 0 0 0 % 0 0 0

Total Cash From Financing Activities $0 $0 $0 % $0 $0 $0

CHANGE IN CASH 1 1 0 0 % 5 (12) 6

Cash, Beginning of Year 6 6 0 0 % 1 13 7

Cash, End of Year $7 $7 $0 0 % $6 $1 $13


Days Cash on Hand 184 188 (4) (2)% 188 178 182

Variance



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ASSETSCash & Investments $1,248 $1,224 $1,343 $1,382 $1,416 $1,457Restricted Cash & Investments 4,655 5,535 5,957 6,430 6,875 7,324Other Assets 359 365 313 360 360 360Total Assets $6,262 $7,124 $7,613 $8,172 $8,651 $9,141

LIABILITIESPayables $140 $189 $99 $150 $150 $150Long-Term Debt 0 0 0 0 0 0Other Liabilities 2,079 2,022 2,140 2,206 2,301 2,211Total Liabilities $2,219 $2,211 $2,239 $2,356 $2,451 $2,361

NET ASSETS $4,043 $4,913 $5,374 $5,816 $6,200 $6,780

Days Cash on Hand 182 178 188 184 175 174

REVENUESMembership $555 $631 $533 $573 $604 $684Transfer from University - Support 0 0 625 625 625 625Transfer from Foundation - Support 631 625 0 75 223 230Other Revenues 1,558 1,582 1,707 1,759 1,844 1,936Total Revenues $2,744 $2,838 $2,865 $3,032 $3,296 $3,475

EXPENSESSalaries & Benefits $1,451 $1,514 $1,691 $1,777 $1,945 $1,999Event Expenses 203 237 246 278 292 306Other Expenses 845 755 669 680 714 750Total Expenses $2,499 $2,506 $2,606 $2,735 $2,951 $3,055

Changes $245 $332 $259 $297 $345 $420Total Non-Cash Changes $(399) $538 $376 $423 $445 $449NET OPERATING PROFIT $(154) $870 $635 $720 $790 $869



3-YEAR FORECAST

ACTUAL FORECAST

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Mid Year Forecast projects Operating Revenue to track favorably to Financial Plan for fiscal year 2019, with no significant unfavorable variances anticipated at this time.

Mid Year Forecast projects Operating Expenses to track favorably to Financial Plan for fiscal year 2019, with exception of an unfavorable variance in expenses associated with UBC. A delay in timing for completing the renovations of the space to be subletted, resulted in an unfavorable forecasted variance in net rent expense.

Mid Year Forecast includes significant unfavorable variance in non-operating Investment Income which negatively impacts Income Statement. Variance is due to general market volatility. Non-cash transactions with no effect on Cash Flow. Mid Year Forecast assumes positive return for Quarters 3 and 4, resulting in a net forecasted loss of -2.2% for fiscal year 2019.


Continued Investment Governance for financial oversight of investment portfolio.

USF Research Foundation, Inc.FY 2019 Mid-Year Forecast

MID-YEAR FORECAST

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REVENUES Rental Revenue $8,490 $8,390 $100 1 % $8,379 $8,061 $9,382Intellectual Property Revenue 3,476 3,050 426 14 % 3,728 2,307 2,200NMR Use License Fee (from USF) 307 307 - 0 % 307 307 307

Transfer from USF - - - % - - -

Other Operating Revenues 268 266 2 1 % 244 185 190

Total Revenues $12,541 $12,014 $528 4 % $12,657 $10,860 $12,079

EXPENSESSalaries & Benefits (to USF) $1,384 $1,384 ($0) 0% $1,347 $1,212 $1,149

Program Expenses (Intellectual Prop/Other) 2,709 2,579 130 5 % 3,045 1,811 1,807

Operations - Research Park 3,132 3,116 16 1 % 3,075 2,895 3,154

Contractual Services & Other Operating 140 140 0 0 % 165 131 159

UBC Net Exp (University Business Center) 327 199 128 64 % 4 - -

Interest Expense 620 620 - 0 % 687 863 1,719

Depreciation & Amortization 2,730 2,736 (6) 0% 2,907 2,822 2,959

Total Expenses $11,043 $10,775 $268 2 % $11,230 $9,733 $10,947

OPERATING PROFIT BEFORENON-OPERATING REVENUE $1,499 $1,239 $260 21 % $1,427 $1,127 $1,132

Investment Income (Loss) (746) 1,895 (2,641) (139)% 3,117 3,465 (374)

Other Non-Operating Income (Loss) - - - % - (30) (989)

Total Non-Operating Revenue (Loss) $(746) $1,895 $(2,641) (139)% $3,117 $3,434 $(1,363)

NET INCOME $752 $3,133 $(2,381) (76)% $4,544 $4,562 $(231)

Operating Profit Margin 12% 10% 2 % 11% 10% 9%


INCOME STATEMENT

Variance

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Net Income $752 $3,133 $(2,381) (76)% $4,544 $4,562 $(231)


Add back Depreciation/Amortization Exp 2,730 2,736 (6) (0)% 2,907 2,822 2,959

Add back Other Non-Cash Expenses 13 75 (63) (83)% 25 158 126

Non Cash Investment (Gain) Loss 746 (1,895) 2,641 139 % (3,114) (3,447) 374

Less Other Non-Cash Revenue (30) (30) - 0 % (49) (79) 1,583

Add back Cash re: Other Inc Restatement - - - % 786 640 551


Operating Assets and Liabilities - - - % (783) 346 1,646

Total Cash From Operating Activities $4,212 $4,020 $192 5 % $4,316 $5,002 $7,008


Capital Expenditures $(1,852) ($1,852) $0 0 % ($591) ($698) ($516)

Net Purchase of Investments - - - % (1,000) (2,000) (3,600)

Transfer from Venture Investment Fund 25 150 (125) (83)% 50 150 -

Seed Capital Loan Funding (25) (150) 125 83 % (17) (150) (175)

Total Cash From Investing Activities $(1,852) $(1,852) $0 0 % $(1,558) $(2,698) $(4,291)


Redeem Investments for Debt Payoff $0 $0 $0 % $0 $9,254 $0

Pay Off Debt - - - % - (9,525) -

Principal Payments (1,720) (1,720) - 0 % (1,590) (1,565) (1,680)


CHANGE IN CASH 640 448 192 43 % 1,168 469 1,037

Cash, Beginning of Year 6,077 6,077 - 0 % 4,909 4,440 3,403

Cash, End of Year $6,717 $6,526 $192 3 % $6,077 $4,909 $4,440


Days Cash on Hand 395 298 96 32 % 325 253 468

Variance



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LIABILITIESPayables $1,871 $2,205 $2,284 $1,784 $1,838 $1,893Long-Term Debt 31,555 20,465 18,875 17,155 15,410 14,635Other Liabilities 8,334 7,880 7,646 7,876 8,112 8,355Total Liabilities $41,760 $30,550 $28,806 $26,815 $25,360 $24,883

NET ASSETS $52,022 $57,224 $62,554 $64,773 $68,012 $71,947

Days Cash on Hand 468 253 325 395 517 637

REVENUESRental Revenue $9,382 $8,061 $8,379 $8,490 $8,696 $8,741Intellectual Property Revenue 2,200 2,307 3,728 3,476 3,150 3,250Other Revenues 497 492 551 575 591 609Total Revenues $12,079 $10,860 $12,657 $12,541 $12,437 $12,600

EXPENSESSalaries & Benefits $1,149 $1,212 $1,347 $1,384 $1,425 $1,468Operations - Research Park 3,154 2,895 3,075 3,132 2,977 3,065Other Expenses 6,644 5,627 6,808 6,528 6,230 6,170Total Expenses $10,947 $9,733 $11,230 $11,043 $10,632 $10,703

Operating Profit Before Non-Operating $1,132 $1,127 $1,427 $1,499 $1,804 $1,897Total Non-Operating $(1,363) $3,434 $3,117 $(746) $1,904 $2,015NET OPERATING PROFIT $(231) $4,562 $4,544 $752 $3,708 $3,913


3-YEAR FORECAST

ACTUAL FORECAST


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Housing System forecasted revenues have decreased due to a lower occupancy level than forecasted driven by the addition of 1,295 beds in the Village in fall 2018.

UMSA forecasted revenues, which represent a pass-through equal to debt service payments, have decreased due to the recent refunding of the Series 2013 Certificates resulting in annual debt service savings of $100,000.

Housing System forecasted operating expenses have decreased $0.8 M from the Plan, due to a lower occupancy level than forecasted driven by the addition of 1,295 beds in the Village in fall 2018, along with lower than anticipated maintenance expense.

Forecasted interest expenses have decreased due to debt service savings resulting from the Series 2010B and Series 2013B refunding transactions over the past six months.

Forecasted general & administrative expenses have decreased due to lower than anticipated property insurance premiums.

On January 16, 2019, the Corporation issued $30M Series 2018 Certificates of Participation to fund the construction of the 375-bed USF St. Petersburg Housing and Dining Project. The final maturity date is 2048. The Certificates were issued at a tax-exempt all-in fixed interest rate of 3.99%. This is significantly less than the 5.00% interest rate included in the financing plan approved by the Board of Trustees in July 2018. The Project is expected to open in July 2020.

On January 16, 2019, the Corporation refunded the $15M outstanding Series 2010B Housing Build America Bonds with the issuance of the Series 2019 Refunding Certificates of Participation with a final maturity date of 2040. The Certificates were issued at a tax-exempt all-in fixed interest rate of 3.68%. This refunding resulted in annual debt service savings of $120,000. The present value savings of $1.8M equals 11.8% of the refunded debt and exceeds the 5% minimum refunding savings required by the Board of Governors.


Cash Flows from Investing Activities and Financing Activities vary from the Plan due to the following transactions. These transactions were not included in the Annual Plan as the timing and details of the transactions were not yet certain.

The Corporation's net operating profit is largely determined by the net operating profit of INTO USF, Inc. in which the Corporation maintains a 50% equity investment.

USF Financing Corporation & USF Property CorporationFY 2019 Mid-Year Forecast

MID-YEAR FORECAST

Total Revenues are forecasted at $54.9M, lower than the Financial Plan by $1.4M, or 3%.

Total Expenses are forecasted at $46.8M, lower than the Financial Plan by $1.3M, or 3%.

[Page 30 of 33]


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REVENUES Transfer from USF - Housing debt payment $45,249 $46,437 $(1,188) (3)% $47,783 $44,522 $42,863

Transfer from USF - Marshall Center debt 1,459 1,459 0 0 % 1,496 1,523 944

Transfer from USF - Athletics debt payment 1,794 1,787 7 0 % 1,960 1,985 1,992

Transfer from USF - Arena debt payment 821 813 8 1 % 876 883 952

Transfer from UMSA - debt payment 4,138 4,392 (254) (6)% 4,262 4,085 4,612

Transfer from HPCC - debt payment 1,453 1,455 (2) (0)% 1,750 1,851 1,853

Total Revenues $54,914 $56,343 $(1,429) (3)% $58,127 $54,849 $53,216

EXPENSESTransfer to USF - Housing operating expense $26,112 $26,906 $(794) (3)% $27,664 $25,994 $22,019

Transfer to USF - management fee 706 706 0 0 % 691 672 665

Interest expense on debt 11,411 11,829 (418) (4)% 12,147 12,330 13,076

Depreciation expense 8,001 8,005 (4) (0)% 7,825 7,811 7,811

General and administrative expenses 526 560 (34) (6)% 574 541 523

Total Expenses $46,756 $48,006 $(1,250) (3)% $48,901 $47,348 $44,094

OTHER REVENUES (EXPENSES)Transfers to USF/UMSA/HPCC $(8,342) $(8,457) $115 1 % $(9,432) $(7,502) $(9,140)

Loss on debt extinguishment (171) (28) (143) (511)% (71) (54) 0

Interest income 454 221 233 105 % 332 71 18

Total Other Revenues (Expenses) $(8,059) $(8,264) $205 2 % $(9,171) $(7,485) $(9,122)

OPERATING PROFIT BEFORE NON-CASH CHANGES $99 $73 $26 36 % $55 $16 $0

Gain in INTO USF equity investment 500 600 (100) (17)% 333 1,835 2,224

Change in fair value of swaps 265 0 265 % 3,953 6,945 (3,344)

Transfers (to) from USF/UMSA to offset swaps (265) 0 (265) % (3,953) (6,945) 3,344

Total Non-Cash Changes $500 $600 $(100) (17)% $333 $1,835 $2,224

NET OPERATING PROFIT $599 $673 $(74) (11)% $388 $1,851 $2,224

Operating Profit Margin 0.2% 0.1% 0 % 0.1% 0.0% 0.0%

Variance


INCOME STATEMENT

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Net Operating Profit $599 $673 $(74) (11)% $388 $1,851 $2,224


Amortization of debt issuance costs 94 91 3 3 % 89 89 89

Loss on debt extinguishment 171 28 143 511 % 71 54 0

Depreciation expense 8,001 8,005 (4) (0)% 7,825 7,811 7,811

Amortization of premiums on debt (1,580) (1,580) 0 0 % (1,723) (1,840) (2,234)

Change in fair value of swaps (265) 0 (265) % (3,953) (6,945) 3,344

Change in INTO USF equity investment (500) (600) 100 17 % (333) (1,835) (2,224)

Cash dividend received from INTO USF 0 0 0 % 0 6,000 0


Operating Assets and Liabilities 22,570 21,253 1,317 6 % 23,697 21,936 22,454

Total Cash From Operating Activities $29,090 $27,870 $1,220 4 % $26,061 $27,121 $31,464


Capital Expenditures $(5,117) $(800) $(4,317) (540)% $(4,177) $0 $0

Proceeds from maturity of CD 6,096 6,024 72 1 % 6,000 0 0

Purchase of CD (5,596) (6,096) 500 8 % (6,024) (6,000) 0

Net (Purchases) Sales of Investments (28,083) (2,242) (25,841) (1,153)% (1,644) (3,155) (4,100)

Total Cash From Investing Activities $(32,700) $(3,114) $(29,586) (950)% $(5,845) $(9,155) $(4,100)


Cash Paid for Debt Issuance Costs $(463) $(53) $(410) (774)% $(58) $(53) $0

Proceeds of Long-Term Debt 30,140 0 30,140 % 0 0 0

Proceeds of Long-Term Debt - Refunding 33,065 17,925 15,140 84 % 33,708 37,920 0

Principal Payments - Refunding (33,065) (17,925) (15,140) (84)% (33,708) (37,920) 0

Principal Payments (12,198) (12,198) 0 0 % (11,733) (11,076) (7,040)

Interest Payments (13,369) (13,505) 136 1 % (13,815) (12,337) (15,074)

Return of Cash Pledged to Counterparty 0 1,000 (1,000) (100)% 5,390 5,500 (5,250)

Total Cash From Financing Activities $4,110 $(24,756) $28,866 117 % $(20,216) $(17,966) $(27,364)

CHANGE IN CASH 500 0 500 % 0 0 0

Cash, Beginning of Year 3 3 0 0 % 3 3 3

Cash, End of Year $503 $3 $500 16,667 % $3 $3 $3

Total Cash & Investments $68,474 $42,080 $26,394 63 % $40,067 $38,400 $29,245

Days Cash on Hand 396 370 26 7 % 342 339 278

Variance



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ASSETSCash & Investments $29,245 $38,400 $40,067 $68,474 $43,962 $43,706Fixed Assets & Construction in Progress 249,465 241,654 239,680 237,447 254,329 246,324Due from USF & Other Assets 98,898 83,567 68,872 61,661 56,548 48,312Total Assets $377,608 $363,621 $348,619 $367,582 $354,839 $338,342

LIABILITIESPayables - Interest and Construction $3,964 $5,708 $7,348 $7,484 $8,279 $5,779Long-Term Debt 347,802 334,976 321,621 340,937 328,173 314,840Interest Rate Swap & Other Liabilities 22,260 17,504 13,829 12,741 11,352 10,058Total Liabilities $374,026 $358,188 $342,798 $361,162 $347,804 $330,677

NET ASSETS $3,582 $5,433 $5,821 $6,420 $7,035 $7,665

Days Cash on Hand* 278 339 342 396 392 351

REVENUESTransfer from USF - Housing Debt Payment $42,863 $44,522 $47,783 $45,249 $46,197 $51,799Transfer from UMSA - Debt Payment 4,612 4,085 4,262 4,138 4,128 4,130Transfer from HPCC - Debt Payment 1,853 1,851 1,750 1,453 1,479 1,506Transfers from USF - Other Debt Payments 3,888 4,391 4,332 4,074 4,091 4,004Total Revenues $53,216 $54,849 $58,127 $54,914 $55,895 $61,439

EXPENSESTransfer to USF - Housing Operating Expense $22,019 $25,994 $27,664 $26,112 $26,895 $28,772Interest Expense on Debt 13,076 12,330 12,147 11,411 11,485 12,136Depreciation Expense 7,811 7,811 7,825 8,001 8,005 8,755Other Expenses 1,188 1,267 1,336 1,403 1,050 2,302Total Expenses $44,094 $47,402 $48,972 $46,927 $47,435 $51,965

OTHER REVENUES / EXPENSESTransfers to USF/UMSA/HPCC $(9,140) $(7,502) $(9,432) $(8,342) $(8,845) $(9,894)Other Revenues - Interest Income 18 71 332 454 500 550Total Other Revenues (Expenses) $(9,122) $(7,431) $(9,100) $(7,888) $(8,345) $(9,344)

Operating Profit Before Non-Cash Changes $0 $16 $55 $99 $115 $130Total Non-Cash Changes $2,224 $1,835 $333 $500 $500 $500NET OPERATING PROFIT $2,224 $1,851 $388 $599 $615 $630

Operating Profit Margin 0.0% 0.0% 0.1% 0.2% 0.2% 0.2%

* Not adjusted for funds restricted for debt service and capital expenditures.


3-YEAR FORECAST

ACTUAL FORECAST

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Agenda Item: IV f


Issue: Business structure under the USF Research Foundation to hold general partnership interest in SEED Florida Early Stage Investment Fund Proposed action: Informational ________________________________________________________________ Executive Summary: The goal of SEED Florida is to create a seed stage fund to invest in science and technology based Florida start-ups utilizing a hybrid of a venture capital funds and a crowd-funding. The fund is being created through a collaboration between the University of South Florida and Florida Funders under a grant awarded by the federal U. S. Economic Development Association. The University of South Florida Research Foundation is looking to create a single member disregarded entity LLC to hold a general partnership interest in the fund to enable receipt of future revenue from the fund. Financial Impact: The project will not require university funds for investment. Investment funds for SEED Florida will be raised from outside qualified investors in partnership with Florida Funders. Structure of the fund includes required safeguards and disclosures for investors. ________________________________________________________________ Strategic Goal(s) Item Supports: Goal 2: High-impact research and innovation,

Goal 3: partnerships and collaborations, and Goal 4: sound financial management

Committee Review Date: February 12, 2019 Supporting Documentation Online (please circle): Yes No USF System or Institution specific: USF Research Foundation Prepared by: Valerie Landrio McDevitt Associate Vice President Research & Innovation 813-974-2466


130

For-Profit seed stage fund to invest in early stage science and technology based Florida start-ups utilizing a hybrid of a venture capital fund and a crowd-funding platform.

What Thrives Here, Stays Here


131

• Being created through a collaboration of the University of South Florida and Florida Funders with funding provided by a federal U. S. Economic Development Association grant.

• Florida Funders is an experienced investment group using a hybrid venture fund and crowd funding model. Seed Florida will adopt the same hybrid model.

• Florida Funders will act as managers of SEED Florida and manage the diligence, selection process, and management of investments.


132

• USF startups, Tampa Bay Technology Incubator Clients, and Research Park Tenants are science and technology based (50% of companies in the Life Sciences)

• Existing Florida angel and early stage investment funds are small and not experienced in investing in science and technology based start-ups

• Lack of informed diligence makes investment and syndication for science and technology based start-ups challenging in Florida


133

• Florida Funders’ multichannel approach brings additional resources to support SEED Florida and increases scalability and sustainability.

• Won competitive statewide RFP process to manage Florida Institute

• Nexis joined Florida Funders this fall providing pitch and education events

• FIBA entered into relationship with Florida Funders

• Funds will be raised from outside qualified investors in partnership with Florida Funders


134

WAVE

FIBA

Proposed Structure

USF SEED Funding Founders, LLCDisregarded Entity

2

1. USF Direct Support Organization 501(c)(3) pursuant to section 1004.28 Florida Statutes (USFRF)

2.Non-profit LLC disregarded entity with USFRF as a single member is not recognized for

tax purposes.

3. The SEED Florida Early Stage Investment Fund is a For-Profit entity that would invest directly in

the Special Purpose Vehicles that hold units in the startups for the crowd and fund investment.

USF Research Foundation, Inc. 501(c)(3)

1

SEED Florida Early Stage Investment Fund, LLC

For-Profit

3


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