Thursday, October 31, 1996
ASUCLA:
Ackerman renovation, loss of revenue sends students’ association
back for more loansBy Frances Lee
Daily Bruin Contributor
Four years and several million dollars ago, the Associated
Students of UCLA (ASUCLA) could not have predicted that their
renovation of Ackerman Union would bear so heavily on their
successors.
Confident that they had built up enough cash reserves to afford
the project, ASUCLA assumed an estimated $2.8 million cost to
remodel the interior of the new Ackerman Union in 1992.
Today, remodeling construction figures have ballooned to $5.3
million, along with the $13.6 million for the expansion, pushing
the total cost of the project to $18.9 million.
But the problem is twofold. In addition to the increased price
tag, "we have no cash to pay for it," said ASUCLA Executive
Director Patricia Eastman.
The solution? Borrow it.
The figures are mind-numbing. Of the $5.3 million the
association will need to borrow, $4.2 million is for the interior
remodeling of Ackerman Union and another $1.1 million is for costs
involved in accelerating the completion of the building.
An additional $1.5 million is being requested by ASUCLA to cover
operating losses due to the delayed opening of the new student
store, according to association Finance Director Rich Delia, and
would come in the form of a line of credit which the association
hopes to secure from the university.
Funds for the expansion have already been approved and disbursed
by the UC Board of Regents through bond issues in 1991. The
association is still negotiating the terms of the additional loans
and credit with the university.
ASUCLA remains optimistic about its prospects for quick relief
from this financial burden. "The organization should be proud. In
the second year (of the five-year financial master plan), we will
actually be in a positive cash flow," said Eastman.
Projected revenues for the third year of the plan should be
positive enough that ASUCLA plans to pay off the $1.5 million line
of credit, she added.
"The $3.3 million dollar loss this year (in the budget) is in
significant part made up of the new debt of the new building and
the increased operating cost of the new space," Eastman said. Also
factored into the budget was a $676,000 payment ASUCLA will make to
the university in March 1997 Â the first payment made on the
original $13.6 million loan.
Construction costs have skyrocketed due, in large part, to the
unanticipated expenditures of "discovered conditions." As the
renovation continued, older parts of the building had to be brought
up to current building codes, something the association had not
planned for and which delayed completion even further.
"We asked the contractor to work extra shifts to get the job
done," Eastman said. "We felt it was important to get the store
(opened by January)."
ASUCLA is pushing to open the store in January because revenues
from Towell are starting to ebb off. "The first two periods of the
fiscal year, we’ve done well, (even in Towell). Now, we’re starting
to hurt because Towell is off the beaten path, and we’re feeling
the effects of people not knowing where Towell is," Delia said.
"We’re cautiously optimistic" about revenues from the new store,
he continued. "(The success of the store) is contingent upon
getting out of Towell and into Ackerman by the first week of
January, and that everything is working."
Board members agree that the store’s opening is a crucial
indicator of how well ASUCLA will perform financially.
"The store is going to ‘make’ us. Our hope is that with this
capital investment, we’ll get a huge return," said Finance
Committee Chair Levin Sy.