Big 12 Expansion rumors

I'm not sure it would make much difference, if the tax valuation was 65 mil and you paid 450 mil.....I mean even if we assume the market value is more than that, is it nearly 7 times the tax valuation? How often is the tax valuation off by that much? If the tax valuation is 65 mil and they paid 100 mil, I don't think anyone would bat an eye, but 450? There's just no way that's right.

 

The purchase price was actually less than half of that. $215M per the Chron report below.

http://www.houstonchronicle.com/new...uietly-unites-a-fractured-acreage-7386954.php

Still a far cry from the value you posted but I guess that's what where gonna find out soon. I can say from personal experience that $3-$5 dollars per square foot seems awfully cheap for the location.

 

I am just here trying to prevent spread of misinformation. A few people think PUF is straight-up taxpayer money. It is not. It is an endowment that happens to have the state's stamp on it because it was originally approved by the state 120+ years ago for UT and A&M. So it's essentially UT's money.

Whether the state denies this or approves this unprecedented land grab is outside of our control, so there is no point arguing about it. But I hope that the state sees that the city deserves another higher education institution.

 

Market valuation by experts based on the locations and number of acres.


It is 300 acres of land, it was appraised at between $3 and $5 per square foot, by independent appraisers familiar with the area. It is in an area they bought has needed revitalization for many years.

 

I believe, it is $430,000,000 because it is being paid off over 30 years... without interest and inflation, it would be 215 million....

Also, it isn't really in the Medical Center, it is about 4 miles away, in an area that has really stalled since Astroworld left. The area has remained vacant for many years, with multiple investors backing out. So I don't think that $3-$5 a square foot is especially cheap.

I will give McRaven this; there is no way that they compel UT to sell the land, based on the current market value as compared the cost paid. I do believe that there will be some sort of facility associated with UT that will be built there just for practical reasons.

 

I suspect the state approves it...... but it could hurt funding for UT financially long term because a number of lawmakers appear to be surprised by the amount of money UT could put down.

 

That's a weird way to measure it. If you buy a $300,000 house, no one states the price of the house as the total amount paid over the life of the loan. By that standard, every house purchase would be overvalued.

I'm not too familiar with the PUF rules, but UT and UTIMCO manage the money and make investments all the time without going through the legislature, no? Are there different legal requirements about investing in real estate as opposed to stocks or other categories?

 

It's an endowment created by the State of Texas, and they allow UT and A&M to have access to it. It's not UT money. It's State of Texas money. If the state legislature decides to open it up to other schools tomorrow then they can.

I just wanna be sure we aren't spreading misinformation to make it seem like UT has a fund that they can spend in whatever manner they like. It's not their money. It's their money based on the state allowing them to have it. Very important distinction when it comes to a land purchase made without state approval. When it comes to spending those type of funds what UT did is as wrong as wrong can be. The purchase will be approved because UT has that type of power, but it was still wrong. But Debo is Debo because he can be.

 

Based on what, exactly? What are the rules on how UT can spend the money? Could they buy a small piece of land without approval? Are there specific rules on spending? By asset class? By amount? Since you're making sure to not spread misinformation and know that is it as wrong as wrong can be, I assume you can tell us all the specifics of what can and can't be done?

 

Based on the Texas Constitution. Article 7, Section 11a of the Texas Constitution:

Section 18 of Article VII is exclusive of real estate.

 

I wouldn't take that at face value. There's some interesting talk in the comments on that tweet.

 

Yes except that it is not the accurate to measure it. As far as the market value itself, I won't pretend to know the price per square foot for that area. However, it's a completely different ball game when you're talking about 300 acres within the city limits. A good comparison would be how much Exxon paid for the land in Spring, and even then you are talking about 40 something miles from downtown versus 10-12.

 

No, when it comes to University expenditures it usually measured in dollars per year, which is where the four hundred million dollar amount came from. If you want to use the two hundred plus million dollar number; go ahead because neither is innacurate.

The land was already being assembled long before UT had any interest. Efforts were made to sell the land prior to UT being interested and the buyers backed out consistently over the past decade and a half. So the idea that "it is a completely different ball game" isn't accurate, and assessors are more than capable of figuring in the cost of purchasing the land piece meal versus all at once.

UT payed 3 to 5 times as much as the fair market value. If you are fine with that, then so be it. I suppose when you are trying to purchase a large track of land without anyone knowing and without the legislature being in session in violation of the Texas Constitution you have to pay a excessive premium.

Regardless, McRaven isn't a fool; he knows that ultimately it will be approved because UT is locked in 15 million dollar a year payments until roughly 2045. The only substantive fall out I can see if legislators questioning the size of their budget needs. The city of Houston will likely see real growth in an area that has been dead since Astroworld left many years ago.

 

Correct. The original intention was to fund higher education in Texas. If legislators back then could have looked into a crystal ball and seen a hundred years forward I think they would have protected their intentions from the systematic greed and delusions of granduer we've suffered.

 

Lol that is absolutely inaccurate. You can't compare the purchase price including interest to the FMV and say they paid 3 to 5 times more. If you want to use the 400M, that is fine, but then you need adjust the FMV to account for the interest they would have paid on that amount as well.

 

Is this a matter of Fund Accounting versus Financial Accounting? I'm not familiar Fund Accounting as much but you both could be correct.

 

Doesn't really matter. If you are trying to determine how much you paid in relation to FMV, you can't include interest into the purchase price without adding it to the FMV as well. Otherwise, anyone who has ever bought a house, car, or anything requiring interest overpaid for it.

There are a lot of other considerations to use the 400M+ figure. But using this amount in relation to the FMV is not an accurate way to determine how much they overpaid for it.

 

Section 11b expands the breadth of investments the PUF can make.


Sec. 11b. PERMANENT UNIVERSITY FUND; AUTHORIZED INVESTMENTS. Notwithstanding any other provision of this constitution, in managing the assets of the permanent university fund, the Board of Regents of The University of Texas System may acquire, exchange, sell, supervise, manage, or retain, through procedures and subject to restrictions it establishes and in amounts it considers appropriate, any kind of investment, including investments in the Texas growth fund created by Article XVI, Section 70, of this constitution, that prudent investors, exercising reasonable care, skill, and caution, would acquire or retain in light of the purposes, terms, distribution requirements, and other circumstances of the fund then prevailing, taking into consideration the investment of all the assets of the fund rather than a single investment.

 

Even the lawyers arguing against this don't claim the land purchase itself was illegal. They focus on the fact that UT needs authorization to expand into the Houston area - but since UT hasn't actually expanded yet, they haven't done anything wrong. If they were to build a campus on their new land and start accepting students without legislative consent, that would be a problem.