The University of Kentucky plans to issue $171 million in bonds to continue outfitting its newest hospital tower and pay for a total renovation of the UK College of Law.
The vast majority of that money, $150 million, will pay to finish out the last three floors of Pavilion A, the 12-story tower next to the original Chandler Hospital. UK HealthCare officials are still working out exactly what will go on each floor. Currently, most of the floors house patients, along with emergency departments, a pediatric emergency room, surgery services, and cardiovascular and neuroscience services. The entire project is estimated to cost about $1 billion.
The other $21 million will be spent on the $56 million law school renovation. State bonds will pay the remaining $35 million for the project.
The $171 million in agency bonds will be repaid by UK. UK HealthCare revenue will pay back the $150 million, while UK general fund money and private donations will pay back the remaining $21 million.
In UK’s last debt report earlier this year, the university had a debt capacity of between $350 million and $450 million, and a credit rating of AA from Standard and Poors.
“We are well within our debt capacity,” UK Treasurer Susan Krauss said. “We’re not concerned this would have any adverse effect on our financial position.”
If approved, the bond issue would go up for sale in July, Krauss said.
The plan to replace the 1965 law school building on South Limestone has been in place for at least a decade. The General Assembly approved its portion of the funding in 2014 (with the proviso that the project could not cause tuition to go up).
The original $65 million price tag has been trimmed back, as have the expansion plans, according to UK officials. Initially, the expansion plans called for the demolition of two houses next to the school, known as the Mathews and Ligon Houses, and a native plant garden, but officials said the current plan will leave those structures and the garden in place.
Construction is expected to start this summer. Law school faculty and students will move across the street to the former Lexington Theological Seminary until the new building is ready in 2019.
The bond issue was brought before the health care committee of the UK Board of Trustees on Monday. The finance committee and the full board are expected to approve the measure Tuesday.