Repository: UIHistories Project: Board of Trustees Minutes - 1940 [PAGE 149]

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146

BOARD O F TRUSTEES

[November

29

tion of mortgage indebtedness on a 20 year basis. The enclosed budget, Schedule A, covering a period of four years, shows the items making up this total. Payments on the first mortgage are the amounts required by that document and provide for complete liquidation in 20 years. Payments on the second mortgages will make possible their redemption within the same period. While the latter payments are not required, it seems to me that a program of reduction of the second mortgage obligations should be included in the budget so that they will be disposed of along with the first mortgage obligations. In addition to the budget of requirements for debt service, etc., I am enclosing a budget of the operation of the buildings for the current year, Schedule B. This budget is based on leases as they now stand after adjustments in the Union Building made this fall, on the payment of rental as provided by the proposed agreement with the Union and operating expenses as best we can estimate them. It has been necessary to increase the budget for repairs over the amount that has been expended in the past. On the basis of these budgets the net operating cost of these buildings to the University is estimated to be $18,715 for the coming year. In a report of the special committee on the Union Building submitted to the Board on June 9, 1938, it was stated that the annual outlay on the Union Building alone would be not less than $15,000 and might run to $27,500 per year. This figure was based on minimum debt payments instead of a full program of debt payments as the enclosed budget contemplates. T h e budget now also includes the Arcade Building on which there is a net expense of $1,865 due entirely to debt payments. In the same report it was indicated that provision up to $15,000 is made in the Physical Plant budget for 1938-39. T h e expenditure of the department last year on this building was $12,235 and the statement just mentioned was made in view of your letter of April 14, 1938, to Director Havens indicating that he would be expected to absorb at least some of the increased expense of the Union Building out of his appropriation for the current year. It seems to me, however, that provision should be made for the amount in excess of $15,000, namely, $3,715T h e problem of rehabilitation of both of these buildings must also be considered. In the report above referred to it was indicated that rehabilitation of the old Union Building would amount to about $27,000. An appropriation of $7,900 has been made toward this item. T h e Physical Plant Department now finds that a considerable rehabilitation also will be essential in the Arcade Building, preliminary estimates of which total $14,000. Some appropriation toward carrying out this program doubtless will be necessary during the current year, and I am leaving it to Director Havens to submit a recommendation on this point. If the enclosed draft of an agreement and the enclosed budgets are satisfactory to you I suggest that this report and enclosures be submitted to Mr. K a r r a k e r , who was chairman of the special committee which acted on this matter. If the agreement and budget meet with his approval I suggest that they be reported to the Board at the first opportunity and that an appropriation of $3.7 T 5 to the Physical Plant operating budget be requested. W h e n this contract is concluded it will be possible for the University to take over the management and supervision of these buildings. At the same time it will be necessary to conclude a lease with the Illinois Union for the quarters occupied by it for the Book Exchange, the billiard and bowling rooms, and the dance hall. T h e enclosed budget includes provision for these items at the present rates except as to the dance hall. T h e Union has suffered considerable losses in this activity in recent years on the basis of a rental of $2,000 and for that reason it seems necessary to reduce the rental to $1,500 which they have indicated they are willing to pay for the coming year. Cordially yours,

LLOYD MOREY

Comptroller