Curators approve new form of funding for system projects
The resolution seeks the acquisition of $150 million in new money.
Oct. 23, 2013
The UM System will use revenue bonds to finance projects on all four member campuses.
A resolution to authorize this action was passed by the Board of Curators at its Oct. 23 teleconference. Projects approved between June 2011 and September 2013 will be financed in this way.
These projects include the renovation of MU residence halls – Wolpers, Johnston, Laws, Lathrop and Jones – construction of Virginia Avenue South Housing, as well as additions to Faurot Field and other athletic facilities, the University Hospital Orthopedic Institute and chilled water plant.
The issuance of no more than $150 million was approved to finance the multiple projects, which have total cost estimated to be over $300 million.
“We arrived at that amount by looking at each of the individual projects and their construction cash flow need through the end of this fiscal year,” said Tom Richards, UM System’s interim vice president of finance. “The plan is to issue the $150 million in debt, and at some point next year, come back and get the remainder.”
Richards said the limited amount of debt will help the UM System avoid paying extra costs.
“In the past, we would have issued all $332 million up front with a fixed rate issue and spent that down over a period of over three years,” Richards said. “The downside to that is that you’re paying a lot of interest on debt that you’re not necessarily using.
The system will be able to find better rates this way, UM System spokesman John Fougere said.
“The University of Missouri’s strong credit rating gives us the flexibility to be more opportunistic in choosing when to issue debt, ideally to take advantage of lower rates and opportunities in the market,” he said.
Terms of the resolution add the possibility for potential bond refunding of no more than $175 million and delegate the authority to decide the issuance date to the executive committee.
The resolution was approved unanimously.