Repository: UIHistories Project: Board of Trustees Minutes - 1940 [PAGE 38]

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1938]

UNIVERSITY OF ILLINOIS

35

FINANCING OF NEW ILLINI U N I O N BUILDING (2) At the last meeting of the Board of Trustees a resolution was adopted by the Executive Committee accepting an offer of the Federal Administration of Public Works to make a grant of $450,000 toward the erection of the Mini Union Building to cost $1,000,000. F o r a considerable time officers of the University have been working on various plans for financing the remainder of the cost of this building. A tentative offer which appears satisfactory has just been made by representatives of the Connecticut Mutual Life Insurance Company through their representatives, Cooper, Kanaley & Co., of Chicago, subject to the approval of a committee of the former concern if the conditions are accepted by the University. This company proposes to make a loan of $550,000 on this building payable serially over a period of 20 years at 4^2% interest payable semi-annually and 2% commission. Payments of principal would be adjusted on a sliding scale so that the aggregate amount of interest and principal payable each year would be substantially a uniform sum. T h e principal conditions prescribed as a basis for conclusion of the loan are as follows: 1. T h e Board of Trustees will convey to the University of Illinois Foundation a tract of land about 300 feet by 300 feet constituting the site of the building as approved by the Executive Committee and the area between that site and Green Street, with the provision that the Foundation will erect thereon the new Illini Union Building and will lease it to the Board of Trustees. 2. The Foundation will execute in favor of the company supplying the loan a trust deed in substantially the customary form including the right of foreclosure. 3. The Board of Trustees will collect a compulsory special service charge from approximately 10,500 undergraduate students in the regular session, and possibly also from summer session students, graduate and professional students, and the faculty (by special agreement) on some reasonable basis, under an agreement to devote the same solely to the construction, maintenance, and operation of an Illini Union building on the campus. 4. T h e avails of the service charge will be held by the Board in trust for the purpose for which it was paid, namely, the erecting, maintaining, and operating of an Illini Union Building, but will be kept separate from trust and endowment funds now or hereafter held or administered by the Board of Trustees for purposes specified in such trusts. The lease of this building to the University by the Foundation would provide that the University would assume all expenses of operation and maintenance of the building and would pay the Foundation such a sum as would enable it to meet all charges for interest and principal on the proposed loan and all taxes, if any, whieh might be levied against the building. T h e following estimate has been prepared, based on preliminary studies of the size and scope of activities of the building, covering the necessary operating expenses: Management expense (manager, assistant, telephone service, office expense, etc.) $ 8 000 Operating expense (janitor service, steam, electricity, water, and building maintenance 23 000 Furniture maintenance and replacements 5 000 Insurance I 375 Average annual requirement for interests, commission, and repayment of principal of loan Grand total $37 375 43 600 $80 975

These figures include the estimated operating expense of the entire building but exclude expense (other than general building costs) of food service or other income-producing features. It is assumed that these will be at least selfsupporting, but no net income at this time is counted on from these sources.