Comptroller's Office
 Policies and Procedures Manual

Effective: 02/01/03
Revised: 07/01/2013 

CMP 131: Use of Bond Proceeds


To establish policies, procedures and general guidelines for proper use of bond and other long term debt proceeds.


University Policy, ABOR, ARS Section 1681


As NAU issues additional bonds for capital improvement, the question has been raised about what expenditures are allowable with the proceeds outside of the renovation of buildings listed in the official bond statement and the Arizona Board of Regents (ABOR) approved Capital Development Plan (CDP). For example, some of the items that have been requested are; purchases of electronic equipment such as computers; furniture and fixtures; and moving and storage expenses. The Official Statement for the issuance of the bonds states that, “The Board is issuing the 2002 bonds to provide funds (i) to acquire, construct, equip and improve the 2002 Projects (as defined herein), and (ii) to pay costs relating to the issuance of the 2002 Bonds.“

 ABOR has outlined guidelines in policy regarding Capital Development.

 In addition, Arizona Law requires that the projects to be acquired with the proceeds of the bonds be reviewed by the Legislature’s Joint Committee on Capital Review (JCCR). JCCR reviews the capital project budgets as submitted by the Universities on a case-by-case basis.  Based on both ABOR policy and past practice of JCCR in the review of capital project budgets, the University has developed the following guidelines to govern the use of bond funds.

The underlying principal is that the bond funds were provided primarily to renovate the buildings on the mountain campus, not to furnish the buildings or pay for other intangible expenses that do not have a life span commensurate with the bond term (30 years). However, certain types of expenditures for FFE have been included in capital project budgets and approved by JCCR, especially when outlined in the various phase of the project.


Moving Costs

The general practice at NAU has been for departments or their parent department to pay for moving costs. Appeals are made to the appropriate administrative (executive) office.

Occasionally, moving costs have been allowed in some state agencies by the JCCR, but have been denied in certain circumstances. Moving costs would have to be justified as part of the original capital project budget.

Storage Costs

Storage costs will not be included for the use of NAU bond funds and will need to be absorbed as operating expenses.


Furniture, fixtures and equipment have been included in a capital projects budget in past practice on a case-by-case basis. The items generally need to be considered “permanent” fixtures. A general guideline being that the lifecycle of such items may not correspond with the term of the bond repayment (30 years).  FFE should be identified in the original project request and properly disclosed in the debt financing offering statement.

Electronic Equipment

The purchase of electronic equipment, predominantly computers, is of primary concern to the JCCR due to the life span issue. These items have been consistently denied by JCCR as part of a capital project budget.

Art Work

ABOR policy on Public Art for Major Capital Projects says that funds to provide public art may be budgeted for any major building to be constructed or renovated.  Major buildings are those with total project costs of $1 million or greater. Funds will be for the purpose of placing, maintaining, repairing, removing or physically counting works of art (murals, frescoes, sculptures, fountains, mosaics, etc.) in or around university facilities. The funded amount for public art shall not exceed one-half of one percent (0.5%) of the construction cost for any major building. However, Arizona State University was recently denied a request by the JCCR to include the purchase of artwork in a project. The amount included in the capital project budget was $264,000 on a $69,000,000 building.


Cost for demolition and other site preparation cost are allowed and have been approved as part of the capital projects budgets if the cost are in the original project plan.

Temporary (Swing) Space

Amounts for temporary space can be included for payment with bond proceeds and have been approved by the Board for this bond issue.


The University has issued bonds for the purpose of renovating buildings on the mountain campus. The funds should be used for the direct expenses related to those renovations and amortized over the life of the buildings and bond term (30 years).

There are four distinct projects approved in the 2002 series bond issuance. Any other uses of the funds as outlined in the Official Bond Statement are limited to the following: facilities renovations, major building repairs, and infrastructure improvements subject to receiving all necessary required approvals. As a general rule, the University bond proceeds cannot be expended for storage costs, or other FF&E items that are not considered permanent such as computers, as they are either intangible (in the case of storage costs) or have a short useful life cycle for amortization purposes (computers). Moving cost must be justified as part of the capital project budget and are handled on a case-by-case basis.

Cross Reference

Arizona Board of Regents - Policy Manual

CMP 430-24 Capital Equipment Object Codes

CMP 430-25 Physical Count of Capital Equipment

CMP 430-27 Other Capital

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