Capital projects are funded by means of State Appropriations, State Bonds, Privatization Funding and Lease Funding.
|State Appropriations||State Appropriations can be General Fund (GF) or Non-general Funds (NGF) appropriations. GF appropriations typically are restricted to facilities supporting Educational and General Programs. NGF appropriations are provided for Sponsored Research, Auxiliary Enterprise or Hospital facilities. GF appropriations are supported by State tax dollars while NGF appropriations are derived from institutional funds.|
|State Bonds||Three types of bonds are
issued by the state to finance capital projects. They are
authorized in accordance with the requirements of Article
X, Sections 9(b), 9(c), and 9(d) of the Virginia
|Privatization Funding||Privatization funding refers to contractual arrangements between public and private entities in which public facilities are owned, operated or provided by the private entity. It is likely that debt issued through Privatization Funding will be at taxable rates of interest, up to 2.5% higher than equivalent tax exempt rates of interest under conventional public State funding. The advantages of Privatization Funding include faster design and construction and less demand on institutional debt capacity.|
|Lease Funding||Lease funding is a method of acquiring and financing capital projects through another entity that will own and lease the project to the institution. Virginia Commonwealth University makes use of Lease Funding trough its real estate foundation. The VCU Real Estate Foundation acquires and renovates property and then leases this property to the the University. Lease rates are based on the costs incurred by the Foundation for acquiring the property and typically reflect the market rate appropriate for the type and class of space being provided. All leases with the Foundation must be approved by the State.|
Virginia Commonwealth University's capital budget is dynamic. Projects financed through State Appropriations and State Bonds must follow the conventional biennial State budgeting cycle and are authorized in the Appropriation Act. The majority of VCU's capital budget is developed based on this process. Privatization Funding and Lease Funding, however, offer financing alternatives outside the biennial State capital budget process, and thus can be undertaker anytime.