photo by: Peter Hancock

Wichita State University President John Bardo, right, and University of Kansas Chancellor Bernadette Gray-Little address the Kansas Board of Regents during a retreat Wednesday in Wichita that included a wide-ranging discussion about security issues on college campuses in Kansas.

The Kansas Board of Regents may consider changing some of its policies to give the board more oversight and control over new building projects on university campuses, specifically the type that landed the University of Kansas in hot water with the Kansas Legislature earlier this year.

At issue are projects called “public-private partnerships,” sometimes referred to as P3 financing, in which a private, outside entity puts up the money to erect a building, and then leases the building back to the university until it’s paid off.

That’s what KU used to finance the $350 million Central District project now under construction on the Lawrence campus. Wichita State University also used a similar mechanism to develop its new Innovation Campus.

Despite the controversy, however, KU Chancellor Bernadette Gray-Little and WSU President John Bardo are both urging the Regents not to go too far in regulating P3 arrangements.

“Most states seem to be moving heaven and earth to make P3’s easier. We seem to be moving in the other direction,” Bardo told the Regents on Wednesday.

Most of the controversy at the Legislature this spring focused on KU, which formed its own private, nonprofit entity, the KU Campus Development Corporation, which then issued $320 million in bonds through a Wisconsin public financing agency rather than through the state of Kansas.

Several lawmakers were upset at that deal, accusing KU of using that process to bypass the Legislature, which would have had to approve the project first if KU had used the state’s own bonding agency.

KU said it plans to use student fees and other revenues to make the lease payments, but lawmakers said that if anything goes wrong with the project, Kansas taxpayers will ultimately be on the hook for the project because the buildings sit on state property.

At Wichita State, the process was substantially different. There, existing for-profit businesses were allowed to put up buildings on the WSU campus, which the university then leases back. But the corporations themselves also use the buildings, and students earn credit while working on real-world projects for those businesses.

In KU’s case, however, the Legislature retaliated by attaching a proviso to KU’s budget for 2016, limiting how much money the university can spend out of previously unrestricted fee funds.

Even some Board of Regents members said Wednesday that they sympathized with the Legislature’s point of view.

“The Legislature’s concern was that ultimately the university is on the hook if the deal goes bad,” Regent Shane Bangerter of Dodge City said.

During the retreat, Gregory Hoffman, director of facilities for the Board of Regents, outlined three possible ways the board could change its policies to exert more control over P3 development projects.

The first would change the current definition of capital improvement projects to include P3’s and similar projects, and require that they be included as part of each institution’s capital improvement plan, which must be approved by the Regents.

Second, since that would probably cause delays in some projects, move up the deadline for submitting capital improvement requests to March 1 of each year, instead of April 1, enabling the Regents to vote on approval of those projects in May instead of June.

And finally, change the board’s policy on lease agreements. Currently, universities must get board approval when they lease out their property to outside entities. The proposed change would mean they also would need approval when the university leases property from an outside entity.

Gray-Little said she was concerned those proposals were too broad, and that they could interfere with the universities’ relationships with entities like their endowment associations, which are affiliated with, but not controlled by, the universities.

But Bardo was more direct in expressing his concerns. He said that in cases like WSU’s project, where no state or university money was involved in the project, both the state and the Board of Regents should take a hands-off approach.

“We are taking flexibility away, on the basis that in 30 years or so, something might need to be done,” he said. “If the situation is that the university is not investing in the property or it’s not being maintained, then in 30 years the university has option of taking a really big bulldozer and removing it from the campus.”