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Oregon State University seeks Board approval to construct a new indoor practice facility. The new facility will provide indoor practice space for at least five intercollegiate athletics teams: football, men's and women's soccer, softball, and baseball. The proposed 85,000- square-foot facility will include a 120-yard playing field (synthetic surface) with adequate run-off areas; batting cages; netting to divide the field into several practice areas; and a portable floor to convert at least a portion of the space into a reception area during football games. The facility is estimated to cost $11 million, all of which will be funded from gifts. If approved by the Board's Executive Committee and the Legislative Emergency Board at their September meetings, construction will begin in the fall and will be completed in spring 2001.

Staff Report to the Executive Committee

The intercollegiate athletic program is an integral part of Oregon State University, offering student athletes the opportunity to play competitive sports in the Division 1A of the PAC-10 conference. Public awareness of OSU sports programs is greatly extended beyond the Northwest region, contributing to University recruitment efforts. Given the importance of the athletic program to the University, the new indoor practice facility is seen as a critical recruiting element for several sports programs of the Athletic Department. As mentioned previously, this facility will provide indoor practice space for at least five intercollegiate athletic teams. Inclement weather is one of the challenges to producing successful outdoor competitions in the intercollegiate sports in the Northwest. As a result, teams currently practice in campus facilities that are meant to provide space for student recreation and intramural activities. However, it is anticipated that the current facilities will not be able to accommodate both intercollegiate practices and the growing need for student activities brought on by an increasing student enrollment (enrollment is projected to grow by about 20 percent over the next three years). A site for the new indoor practice facility has been identified west of Gill Coliseum and north of Reser Stadium (see maps provided).

The proposed project has received approval by the City of Corvallis Planning Commission. The Commission placed two minor requirements on the project: 1) installation of a sidewalk along the north side of the site, and 2) the provision of an additional bicycle rack for ten bicycles. The Commission requested no adjustments to the design of the facility or the planned programs.

Major gifts: A few private donors have generously pledged $11.4 million, of which some $2.4 million is already in hand; the remainder is pledged to be provided by the year 2002-03. The University Foundation has confirmed that it will meet any funding needs resulting from any shortfall of gifting or delayed gifting required by the Indoor Practice Facility Project. Its provision of funding will be in the form of a gift made in advance of the collection of receipts. The gift by the Foundation is given without the requirement for repayment should the gift funds fail to arrive. The Foundation guarantees the availability of funding for the project. The Foundation will deliver funds to a University construction account on a "just in time/as needed" basis 10-15 days in advance of anticipated expenditure dates. In total, for all construction project needs, the University projects requirements for $11 million of gifts.

Operating and Maintenance (O&M) Costs: University officials estimate annual O&M costs for the new facility at $97,600 for utilities and custodial/maintenance at $35,800 for a total annual projected requirement of $133,400 (approximately $1.57 total cost per square foot). OSU plans to use revenues from its athletics program, in particular from increased football ticket sales, to meet these costs. In the 1999 season, the University sold 11,100 season tickets; so far this year, 14,000 season tickets have been sold.

Staff Recommendation to the Executive Committee

Staff recommended that the Board's Executive Committee approve, and refer to the full Board for its final approval, construction of a new indoor practice facility at Oregon State University. Staff further recommended the Board authorize the Vice Chancellor for Finance and Administration to seek authorization from the Legislative Emergency Board for a new project expenditure limitation of $11 million for use of Other Funds to finance the project.

Executive Committee Discussion and Action (September 15, 2000)

Lynda Swanson, OUS director of capital construction planning and budget, reviewed the proposed project. She noted that it would come back to the full Board for a final vote at its October 20 meeting.

Mr. Imeson moved and Mr. Lussier seconded the motion to approve the project proposal as submitted. The following voted in favor: Directors Imeson, Lussier, Willis, and VanLuvanee. Those voting no: none.

Chancellor Cox asked Ms. Swanson to describe the recent development at UO following Board approval of the 2001-2007 capital construction budget in July 2000. Explaining that UO raised $33 million for a new addition (tower) to the School of Business, as well as full renovation of two adjacent buildings and the Computing Center, Ms. Swanson said that the projects were included in the final capital project proposal recently submitted to the Department of Administrative Services. The Chancellor said that the adjustment would be presented for final consideration to the Board at its October meeting.

Executive Committee Recommendation to the Board

The Executive Committee recommends full Board approval of the proposal submitted by OSU for an indoor practice facility.




At the May 18, 2000, meeting of the Investment Committee, the Committee discussed the performance of the BGI Russell 2000 Index Fund. Investment Advisor to the Committee, Ms. Becky Gratsinger of R. V. Kuhns, felt that OUS could improve the performance of its small-cap allocation by moving from an index fund to an actively managed fund.

Based on this discussion, the Committee decided to begin a search for an investment firm with an actively managed small-/mid-cap fund to replace the BGI Russell 2000 Index Fund. With the assistance of R.V. Kuhns and staff, the Committee has completed its work, and the following summarizes the results.

Overall, the Investment Committee was seeking a well-established firm with organizational depth and consistent performance results. The search began with the examination of an Investment Manager Database. R.V. Kuhns conducted an evaluation of the pool of active investment managers. The criterion for evaluation included the quality of the firm's staff, organization of the firm, investment style, and historic performance. In addition, R. V. Kuhns had discussions with the Frank Russell Consulting Firm, investment consultants for the OIC, as well as with OUS and Oregon State Treasury Staff. Using this criteria and the discussion results, the search was narrowed to four possible active small-/mid-cap managers.At the September 26, 2000, meeting of the Investment Committee, the Committee interviewed the following firms:

1. Columbia Management Company
Management Style-Growth

2. Nicholas Applegate
Management Style-Growth

3. Batterymarch
Management Style-Core

4. Morgan Stanley Dean Witter
Management Style-Value

Investment Committee Discussion and Action (September 26, 2000)

Results of Committee discussion and manager interviews indicated that Batterymarch has shown strong consistent performance and provides a balance between growth and value stocks. Batterymarch offers stock selection criteria and a mix of both small- and mid-cap equity.

Ms. Lehmann moved and Ms. Wustenberg seconded the motion to approve, pending an affirmative response from Russell Consulting, recommending Batterymarch as the new small-/mid-cap fund investment manager.

Investment Committee Recommendation to the Board

The Investment Committee recommends that the Board approve, for recommendation to the Oregon Investment Council, that the Pooled Endowment Fund allocation to the BGI Russell 2000 Index Fund be sold and the proceeds be invested with an actively managed small-/mid-cap fund with the investment firm Batterymarch.