UofL trustees approve stadium bonding; Foundation audit's promis - wave3.com-Louisville News, Weather & Sports

UofL trustees approve stadium bonding; Foundation audit's promise stands down suit threat

(Source: WAVE 3 News) (Source: WAVE 3 News)

LOUISVILLE, KY (WAVE) - Heisman Trophy-hopeful quarterback Lamar Jackson isn't the only Cardinal to make football flush at the University of Louisville.

Successes since the building of Papa John's Cardinal Stadium have built a brand, UofL trustees believe. Reason enough to go all-in to borrow $91.5 million; refinancing $28 million of the bonds sold to build it and taking on $55 million in new debt to pay for 10,000 more seats and new suites in a project formally presented Oct. 5.

"The new debt service ($2.5-2.8 million yearly) will be covered by a combination of ticket revenues, seat donations and capital premium seat gifts," Chief Financial Officer Harland Sands told Board members in a special meeting Thursday.

Lower interest rates are expected to save $202,000 yearly on the refinanced debt, Sands added.

The Memorandum of Understanding calls for the Athletics Association, not the university, to make the payments. 

"We have complete confidence in their ability to support those bond payments," board chairman Dr. Larry Benz told reporters afterward.

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Benz sees the "clarity" of the arrangement as another sign of a "culture change" so profound that trustees have backed off of a threat to sue the UofL Foundation, now that foundation directors have agreed to submit to a forensic-level audit.

"We can't have these behind-the scenes, behind-the documents, unauthorized approval of various complex transactions and compensation ever again in the history of Louisville," Benz said.

He refers to revelations that the foundation paid millions of dollars in bonuses to former UofL President Dr. James Ramsey and other staffers, including Ramsey's former assistant, Kathleen Smith. 

Benz also has questioned transfers from the university's endowment into foundation coffers for investments or loans to buy property and buildings. 

Tuesday, the Kentucky Center for Investigative Reporting (KyCIR) revealed that the foundation's board approved a "paper loan" in 2014, to borrow almost $3.5 million to buy almost full interest in an empty factory in Oklahoma. The owner, heir and philanthropist, Henry Vogt Heuser Jr., is a major donor to the university. The deal called for one of Heuser's companies to lend the foundation the money, and then reap most of the profits if the factory sold for more
than what was borrowed.

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The property still hasn't sold, and foundation staffers "unwound" the deal in August, shortly after KyCIR questioned whether such an arrangement created a tax shelter for Heuser, which could put the foundation's tax-exempt status at risk.

"Apparently there were some legal transactions and other events that needed to happen that we probably weren't as sensitive to at the time," Benz told WAVE 3 News Tuesday. "I personally don't know whether it is, or isn't, (legitimate) and personally want to do some due diligence on that, as well as find out what triggered the unwind."

Ten accounting-audit firms have submitted proposals to perform the forensic review, foundation director Diane Medley told members of the Joint Audit Oversight Committee on Tuesday.

"One is a Big 4 firm, one is from Louisville," Medley said. "We're probably going to be going harder at those qualifications and making sure there's no question that whoever looks at this is above reproach, purely independent."

Committee members will be scoring the proposals next week to select three finalists. The three will make presentations between Oct. 24-28, Committee members will meet Oct. 31 to re-score those proposals, and select a "lead firm" between Nov. 2-7.

"At this point, I don't see any evidence of wrongdoing," Medley said. "But the purpose of this audit is to determine were best-practices followed. Were best-interests of all the constituents honored?"

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