President's Office

Emergency Suspension of CSU State-Funded Capital Projects

January 2, 2009

To all Faculty and Staff,

You have probably been following media reports of the state's current cash flow crisis and ever-worsening budget situation. At the time of this writing, Sacramento has yet been unable to arrive at a budget resolution.

Due to this situation, the state Department of Finance has ordered the CSU system and other state entities to temporarily halt all state-bond funded construction projects. This action was taken because the state has no current access to the bond market due to the yet unresolved requirement to adjust the 2008-09 state budget in accordance with mid-year revenue projections and the state's current fiscal crisis. Under normal circumstances state bonds are sold to provide long-term financing which, in turn, enables the state to borrow short-term funds to provide cash flow for these projects. Due to the state's inability to issue general obligation bonds, however, access to cash has been severely curtailed and all claims for state-funded construction projects have been frozen.

At California State University, Northridge, this emergency action directly affects continued construction of the Valley Performing Arts Center project, Chaparral Hall (previously called Science 5), and several minor capital improvement projects.

Although we do not know how long this suspension will last, we have been directed by the CSU System at this time to inform contractors to expect a 90-day suspension. Official steps were taken on December 29th to suspend further work on the Valley Performing Arts Center project. Since Chaparral Hall is very close to completion, we are exploring with the Chancellor's Office possible alternative sources of funding for continued work to ensure that the building can be properly sealed and protected from the elements. We also are exploring possible ways by which the building might be put into at least partial use in the near-term.

It should be clarified that this action on the part of the state does not affect non-state-funded projects, including our G3 parking structure and student-housing projects currently under construction. These projects are funded through CSU bonds backed by parking and housing fees. Therefore, these projects will continue as planned.

Certainly this emergency action has serious consequences for some of our campus projects and will result in substantially increased costs of construction once work is resumed. At this time, we do not know how much additional cost may be involved. And, of course, we are disappointed that the construction of much anticipated and badly needed improved space for our academic programs must be delayed. Our thoughts also are with the many workers, including construction contractors, subcontractors, and other building professionals and suppliers affected by this halt in work.

It is particularly painful to make this announcement at the beginning of a new year and a new semester. Indeed, our challenges have increased rather than diminished with this news. However, as during other times of crisis, I remain confident that we at California State University, Northridge will continue to provide quality academic programs and services to our students using resources currently in place. Even as we acknowledge this difficult situation, let us continue our work and remain focused on and committed to our educational mission.

Best wishes for an enjoyable and productive Spring 2009 semester.

Jolene Koester
President

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