KAPOLEI — The University of Hawaii system has a $235 million maintenance backlog and has absorbed the athletic department’s $10 million debt. Does it make financial sense to build a new campus?

The numbers say yes.

On Monday, construction crews broke ground on a new $150 million campus in Kapolei for the University of Hawaii-West Oahu.

UH officials say an ideal location in one of the fastest-growing regions on the island, along with strong student demand, make the campus a promising business venture for the university, one that has been a long time in the making.

“We’ve been looking forward to (this) for well over three decades,” said Chancellor Gene Awakuni.

And if student projections are on track, UH-West Oahu will be more financially self-sustaining than UH’s Hilo campus.

Since its founding as West Oahu College in 1976, the school has operated out of wooden portables next to the Leeward Community College campus in Pearl City. Plans for a permanent campus stalled for years because of scarce funding. And yet, the students keep coming.

Enrollment at UH-West Oahu has grown at a faster rate than at UH’s other two four-year campuses in recent years. In four years, enrollment at the West Oahu campus nearly doubled from 850 students in 2005 to more than 1,350 in 2009. It saw a 16.5 percent increase in students between 2008 and 2009, while UH’s flagship Manoa campus saw a 2 percent increase during the same period, and the UH Hilo campus reported a 5.5 percent gain.

UH-West Oahu expects fall 2010 enrollment to hit 1,620, and is projecting enrollment of 3,359 students in 2014. It currently has a student-to-faculty ratio of 11 to 1, and full-time resident tuition for the 2010-2011 school year is $2,328 per semester.

“Our budget and the growth of the campus is predicated on the continuing rise in enrollment,” said Awakuni, who joined UH-West Oahu in 2005 from Stanford University, where he was vice provost of student affairs. “The enrollment numbers from just five years ago tells you how dramatic the growth has been, and we expect once we move to Kapolei that growth will continue at a rate of 10 (percent) to 15 percent a year. As the number of students increases, the tuition generated increases our base funding to allow us to hire more faculty and staff.”

At present, he said, UH-West Oahu’s annual operating budget sits at $10 million, of which $6.5 million comes from the state’s general fund.

Awakuni said the campus is finalizing a financial plan detailing the next five years, but that it requires approval by the UH Board of Regents before it can be made public. He shared that the campus expects to rely mostly on revenue generated from tuition and fees as it moves forward.

Notably, about 38 percent of UH-West Oahu’s revenue will come from general funds by 2015, as opposed to about 66 percent now. The rest will be covered by tuition.

Tuition makes up a much smaller portion of revenues at both UH Manoa and UH Hilo.

For the 2008-2009 school year, the UH Manoa campus, with approximately 20,360 students, had $743.4 million in revenue. Of that amount, 36 percent ($267.4 million) came from the state and 17.5 percent ($130 million) came from tuition and fees. The remaining revenues came from federal research grants and contracts, revolving funds and endowment income.

At UH Hilo, for the same period, the Big Island campus had revenues of $54.7 million. Of that amount, 62 percent ($33.8 million) came from the state general fund, while 26 percent ($14.4 million) came from tuition and fees from the 3,675 students enrolled that year. The remainder came from federal and state grants.

71,000 Leeward and Central Oahu Students in Grades K-12

UH system president M.R.C. Greenwood has said the UH-West Oahu campus is part of the university’s strategic plan to increase college-going rates and graduation rates among local residents. The university launched a research project in 2007, called the Second Decade Project (http://www.hawaii.edu/offices/app/seconddecade/), to survey the 10 regions that its campuses serve with the goal of determining where resources should go first. West Oahu came out on top, according to the report.

The new campus hopes to take advantage of the rapid growth in Kapolei, a city that saw its population double to 84,000 from 1990 to 2009. UH officials see potential in the approximately 71,000 students in grades kindergarten through 12 in Oahu’s central and leeward communities.

Construction has begun amidst criticism from some, including professors at other campuses, that the new campus will take away resources from UH’s other existing nine campuses at a time when money continues to be scarce. They point to the UH system’s backlog of $235.4 million in deferred maintenance and repair projects across its 10 campuses.

But university officials had no choice but to start building now. Kapolei Property Development, an arm of the James Campbell Co., had donated the land to the university. But if construction didn’t start by the end of 2011, UH would either lose the land or have to buy it at market value.

The first phase will be built using $48 million in bond financing released by Gov. Linda Lingle in July 2010. Of the $48 million, $31.2 million will finance construction of the three buildings, while $16.7 million will be used for infrastructure, including grading, installing a waterline and sewer line, driveways and roads, a parking lot, utilities and landscaping.

The campus initially was supposed to be financed almost entirely by private funds from the sale of more than half of the 500-acre site for housing and retail projects. But the deal with Hunt Building Corp. of El Paso, Tex., which was supposed to generate $100.14 million, fell through in 2008 after the collapse of the credit markets.

The campus then came up with a plan to sell about 55 acres of state land to help generate an estimated $45 million for construction costs.

“The $48 million legislative appropriation will go a long way in providing the funding we need to begin construction, so now we’re looking at maybe selling 15 acres instead of the initial 55 [acres],” Awakuni said. “That sale is expected to generate an income stream to allow us to issue revenue bonds for future expenses. Beyond the first phase, we’re still looking at trying to build the community that will surround the campus with residential and commercial retail components. We want to try to master plan those various parcels to be able to complement the university that will be sitting in their midst.”

Buildout by Fall 2012

The West Oahu campus will be built on a 500-acre piece of land that was donated to UH by the former James Campbell Estate, developer of the city of Kapolei. The nondescript, undeveloped parcel is located at the intersection of Farrington Highway and the North-South Road.

Honolulu architecture firm John Hara Associates, which was selected in 2005 to design the campus, has designed the project to meet environmental sustainability goals and seek LEED certification through the U.S. Green Building Council. The plan also calls for the actual campus to be surrounded by a university village with commercial and residential space, including student and faculty housing.

The first phase of the project will be built on 41 acres of the site, and consist of three buildings — a two-story, 12,671-square-foot classroom building, a two-story 41-798-square-foot laboratory building and a mechanical and maintenance building, said Larry Sumida, director of educational and physical facilities for UH-West Oahu.

The campus will be able to accommodate 2,750 students once the first phase is complete, and eventually plans to accommodate 7,600 students and 1,000 faculty and staff at full buildout. The completed project has a price tag of $150 million, and when complete, would be similar in size to the UH Hilo campus.

The buildout, Sumida said, is expected to take about 20 months, which means the campus would be ready to hold classes in August 2012.

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