Coastal Carolina

CCU picks tough time for stadium expansion as state tightens strings

Coastal Carolina’s Brooks Stadium.
Coastal Carolina’s Brooks Stadium. jlee@thesunnews.com

Coastal Carolina University plans to pitch a cost revision for its football stadium expansion project as it meets yet again with the South Carolina Commission on Higher Education this week in its latest attempt to gain phase two state approval.

The university hopes to learn Thursday if it can finally move forward with its plans to more than double the size of Brooks Stadium in preparation for the Chanticleers’ move to the Sun Belt Conference and the NCAA’s Football Bowl Subdivision, but in the meanwhile, school leaders have already learned that they are dealing with an entirely new vetting process for such projects.

If the unexpected delays in approval to this point didn’t make that clear, CHE chairman Tim Hofferth certainly did in a recent interview with The Sun News.

“These people who are on the commission who are asking the questions, they’re sharp and they know the trends in this [field]. They have a broader perspective. They don’t care about what the precedent has been in the past; they care about where we are right now,” Hofferth said. “We shot the CHE. It’s dead. This is the new CHE.”

Hofferth talked for more than an hour about how the CHE has restructured itself in the wake of South Carolina State University essentially declaring bankruptcy last year and the resulting pressure from state leaders.

He mostly spoke generally about the recalibrated role of the CHE and its approach rather than specifics about Coastal Carolina’s situation. He reiterated that the group feels empowered to look out for families across the state in providing accountability while keeping higher education costs from soaring and keeping other schools from spiraling out of control financially.

These people who are on the commission who are asking the questions, they’re sharp and they know the trends in this [field]. They have a broader perspective. They don’t care about what the precedent has been in the past; they care about where we are right now. We shot the CHE. It’s dead. This is the new CHE.

South Carolina CHE Chairman Tim Hofferth

As a result, Coastal Carolina has found itself trying to push through a significant stadium expansion budgeted at $38 million at a time when the vetting process for such capital projects has never been more exhaustive. It could be looked at as bad timing for the university, or the start of a new reality for schools across the state.

But, Hofferth emphasized, the CHE is not fundamentally opposed to what Coastal Carolina wants to do – the group simply wants to make sure the best decisions are being made by all parties.

“We want to figure out a way to be able to say yes to this project,” Hofferth said. “It’s not an adversarial type deal. They probably need to understand a little bit more about what I’m describing and see if there’s a way to get that done. That’s the spirit and intent to [how] we’re going at this.”

Hofferth declined to delve specifically into the Brooks Stadium expansion project and what has held it up other than to suggest he’d like to see more private money in the plans to repay the debt on the bonds that would fund the construction. The stadium expansion was discussed at the commission’s meetings in February and April, as well as during a specially called meeting in late February.

So Coastal Carolina will present some changes when it goes before the CHE’s Committee on Finance & Facilities again Thursday in Columbia while hoping it’s done enough this time to prove that it can finance this project.

“I can tell you, we’re finalizing our presentation and that will include a lower cost revision with some modifications,” said athletic director Matt Hogue, who declined to give details about the revision. “We will still be able to meet with that revision our obligations for the transition, but obviously in the spirit of cooperation and heeding the recommendations we are considering a revision.”

I can tell you, we’re finalizing our presentation and that will include a lower cost revision with some modifications. We will still be able to meet with that revision our obligations for the transition, but obviously in the spirit of cooperation and heeding the recommendations we are considering a revision.

CCU athletic director Matt Hogue

The Background

If the delays have alarmed Coastal Carolina fans and supporters, or frustrated those more intimately involved in the process, it’s because the university has not faced this kind of resistance before in seeking state approval for a facilities project.

Nor really had any other school in the state, according to Hofferth.

“Before October no project in the history of the CHE [had] ever been turned down,” Hofferth said. “So you would ask yourself as a lay person, ‘Maybe a lot of those should have been approved, but every one of them?’ We work for the families and the taxpayers of this state, those families that are hanging onto the last rung of the rail every time we have another tuition hike, fee hike.”

Before October no project in the history of the CHE [had] ever been turned down.

CHE chairman Tim Hofferth

Hofferth was appointed chairman of the CHE in September by Gov. Nikki Haley and brought with him a background as a former athletic director at Villanova before serving as president and COO of Nelligan Sports Marketing, Inc., a multimedia rights company that was acquired by Learfield Sports in 2014.

And he arrived at an interesting time as South Carolina State had declared financial exigency in June as talk circulated that the university might even shut down for a period of time due to such significant debt.

“When it happened at that particular point, the [state] House at that time voted to defund the CHE, basically stating, ‘What, did you guys fall asleep at the wheel over there? How come nobody gave us a heads up and now we have an institution that is in financial trouble?’” Hofferth said.

According to Hofferth, state Rep. Rita Allison, the chairwoman of the House Education and Public Works Committee, intervened and suggested putting an “ad-hoc governance committee” together to get to the root of the problem.

That launched a refocusing of the CHE for Hofferth and an influx of new commissioners.

“[It was like], ‘Welcome to the CHE, you guys are going through hearings,’ so that was fun. But it was important because it was the first time in a while we had a chance to get to the bottom of where the issues were,” Hofferth said. “We were all scratching our head. ... Basically the whole complexion of the board changed within the matter of a year, and a lot of these people were thinking like I was, ‘What’s the reference point?’ I’ve been on other boards in the private sector. When you come into the board, you learn quickly what the objectives and goals are.

“Here, we’re sitting in on meetings voting on tens of millions of dollars of capital projects like Coastal’s, and the new members are saying, ‘What’s our frame of reference? Are we voting on them because we like the architectural drawings or we think it fits into what?’ And there were a lot of people, a lot of commissioners asking a lot of questions, and it came at a good time because in the fall Rita Allison had put this group together and we were scheduled to go in front of them and most of the [university] presidents.”

Hofferth said experts from around the country were brought in to lend insight on the role of such commissions, and he then hired an outside attorney to vet the CHE’s statutes and budget provisos from 1967 to the present.

“The General Assembly speaks to us and all the agencies in statutes and budget provisos. For us that’s our bible,” Hofferth said. “And what we do, we take those and then we execute and we put together the strategic plan to meet those goals. The problem is they’ve never done [this] before then. There’s nobody that could tell me they ever vetted the statutes to know what they were in business to do.”

The attorneys he hired sorted through 160 action items the CHE was supposed to be responsible for and determined if they were achieved, partially achieved or not done at all and, according to Hofferth, there were “44 things that we did not do the way we were required to by law.”

He also determined, though, that the CHE’s budget was not substantial enough to effectively change that.

“I said, ‘Listen, here’s the problem. The CHE was broken. It lost its way,’” Hofferth said. “It took six weeks to have the team of attorneys go through [everything], this mountain. It was laborious and just brutal, but they did it and for the first time maybe ever we had an idea for what we were supposed to do. We said, ‘You’re not funding us. You’ve already defunded us. We didn’t have the tools to carry out some big, big statutory requirements, like the process that led to the approval of capital projects. ... If you look at the CHE, we have some great people here, but we’re missing a lot of skill sets.’ We had one guy when we took over in October, one person that had an accounting degree.

“We said this at the end of our hearing, ‘Listen, you either need to give us the funding to carry out your order or we’re giving it back to you. Because we know now the tools to do what you’ve asked us to do are not there.’ So we’ve been begging and going through the proper channels to educate the legislature that we need the proper tools.”

As for Brooks Stadium

And it’s right in the middle of all of this that Coastal Carolina finds itself now.

The Chants need to expand their 9,214-seat football stadium as part of their move to the Sun Belt and FBS level because the NCAA requires FBS programs to average 15,000 in attendance per game. They want to grow the stadium to around 21,000 seats.

The Chants need to expand their 9,214-seat football stadium as part of their move to the Sun Belt and FBS level, which they announced on Sept. 1, because the NCAA requires FBS programs to average 15,000 in attendance per game. They want to grow the stadium to around 21,000 seats.

After receiving initial state approval to hire an architect and create renderings of the proposed new stadium and a more precise cost estimate, the university’s board of trustees approved a budget not to exceed $38 million for the project.

That’s where the process has stalled as the school waits for phase two approval to bid out a contractor and secure the bonding that will fund the construction.

When Coastal Carolina came back for the CHE’s Committee on Finance & Facilities meeting in February, the group expressed confusion as to why the projected budget had increased from $19 million cited in the fall for phase one approval to the new $38 million figure.

The university explained that it did not have a true sense for all the expansion would need to entail until bringing in the architects. Needing more time to review all of the information on the university’s financial plan to repay the bonds, the committee put the matter on hold and called a special meeting later in the month.

But neither that meeting nor the regularly-scheduled April meeting provided the committee what it wanted to hear to give its approval.

“So Coastal Carolina, they were handed maybe the first ‘No’ in history, how did that happen?” Hofferth said. “Because we have CPAs on the board. We’re a lay board made of individuals who don’t get paid based on their time and talent and they [give] a lot to a cause bigger than themselves. ... This board knows industry trends in higher education. So wait a minute, you can’t just approve everything in this environment. We’re not doing that. We’re not putting our names on that. We have CPAs, we have attorneys on the board, we have business people saying, ‘What’s reasonable?’ We’re calling it the smell test – does this make sense?

“So that’s the threshold today until we either get funding or get out of the business completely and have a moratorium because we don’t have the tools to do it. We’ll see how this plays out over the next weeks and months.”

$38 millionProposed cost of CCU stadium expansion

While the money for a project like this comes from bonds – which is essentially like taking out a mortgage to buy a home – the state has liability if a school can’t repay its debt, and the recent sting of the South Carolina State debacle has made the prospect of worst-case scenarios all the more realistic.

So, as Hofferth has stated, that has caused the CHE to view everything through a different lens.

“This isn’t about Coastal, quite frankly. This is about, we have to change the trajectory of nobody at the helm of the ship saying how do we coordinate?” he added. “... One of the research institution presidents, and I won’t say [who], he said, ‘When the national trends in higher education become fully realized in the state of South Carolina we could lose a third of our institutions.’ Now, if that is true, that’s a scary proposition. Somebody better be in air traffic control making sure that they’re doing the vetting on these institutions and they’re making sure as they’re chasing a declining enrollment that they’re not in a facilities arms race only to have a greater, steeper fall in the market correction or something more systemic happening.

“If we don’t fix it while we still have a chance, it gets really ugly really fast and very, very expensive. If we have another institutional failure [like South Carolina State] ... it’s scary the size of the dollars you’re talking about.”

In the meanwhile, Coastal Carolina finds itself in the position of trying again Thursday to satisfy the committee while knowing that the longer this drags out the tougher it is going to be to reach its desired timetable for completion of the project.

After playing the 2016 season as an independent member of the Football Championship Subdivision, the Chants will debut as a Sun Belt member in 2017 and want to have their new stadium ready for that relaunch.

The school’s proposal to pay off the bonds includes a $2 million contribution from the Chanticleer Athletic Foundation as well as $500,000 a year from the CAF for the 25-year life of the bond,s in addition to a projected increase in athletics revenue by moving to the Sun Belt and existing funds set aside from student fees collected over the years.

University leaders are confident their plan is sound and have emphasized there will be no increase in tuition or student fees related to the stadium project.

Hogue also reiterated that the university is constantly seeking more private money – not only for this project, but for the university in general – and that to be able to fully cash in on potential naming rights opportunities, sponsors are going to want to see more specific designs and plans that will come as the process moves forward.

As for the revisions to the overall budget he suggested would be presented this week, he didn’t offer specifics but did say it would not cause much if any change to the seating plan for the new stadium.

“We really don’t know exactly how it’s all going to pan out because we’re trying to counsel with architects and [look at] all the different parameters to figure out where we land, because obviously we need to have a balance between fiscal concerns but also a function that we need,” Hogue said. “... In a revision we would hope anything we may remove, as private funds come in we would be able to add back down the line.”

The school is hoping those revisions satisfy the CHE, along with the answers they will provide Thursday to the lingering questions the committee carried out of the last meeting.

According to audio of the April meeting provided by the CHE, Hofferth voiced his concern that Coastal Carolina was underestimating the costs it would incur by moving up to the FBS and Hood Temple, the chair of the Committee on Finance & Facilities, questioned the application of the money set aside from that student fee and questioned whether the CAF could raise the money it is projecting.

“This is a toughy because I want to support it. Flat out, I want to be able to support it,” Hofferth said at the end of that April meeting, according to the audio provided. “I don’t want anyone to think there’s any other agenda other than us fulfilling our [responsibility], which is to represent the greater good in our state. ... But there are questions that I have. It’s all about the downside. It’s the what-if. What if a market correction [happens], what if donations go down beyond your control?

“The key is we get held accountable and I think this group is taking a higher level of accounting on the decisions we make.”

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