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News Releases
July 16, 2009
Contact: Jennifer Hollingshead
Office: (573) 882-0601
E-mail: hollingsheadj@umsystem.edu
University of Missouri System issues $332 million in bonds to finance facilities on four campuses
University leverages strong credit rating, low interest rates, curator support to make priority investments
University of Missouri System officials today announced that the university has issued $332 million in bonds to finance more than a dozen facility projects on its campuses in Columbia, Kansas City, Rolla and St. Louis.
The projects, which include new construction ranging from residence halls to health care facilities, also involve upgrades to critical safety components at several facilities, including sprinkler systems and elevators, and enhancements for energy efficiency.
"I can't think of a better time for the university to explore new and creative funding mechanisms than now, and the Build America Bonds are an ideal fit for the university," said University of Missouri System President Gary Forsee. "Through the federal stimulus package, the university is able to use debt financing for revenue-generating facilities such as student housing and a new patient care tower. This affords the university the opportunity to reduce the debt service and represents a win-win for the university and those it serves."
The fixed-rate bonds will comprise $256.3 million in Build America Bonds and $75.76 million in tax-exempt bonds. Build America Bonds are taxable and provide a federal subsidy of 35 percent of the interest paid on the bonds created through the recent federal stimulus package. These bonds will provide the university with an opportunity to gain access to global investors looking to diversify their portfolios longer-term. The overall true interest cost of the bond issue is 3.843 percent.
"The university's backlog of facility needs continues to grow at an alarming rate," said UM system Vice President of Finance and Administration Nikki Krawitz. "But the good news is that the university is in a position to leverage its strong credit rating to take advantage of historically low interest rates."
Rating agencies Moody's and Standard & Poor's recently gave the university highly favorable credit ratings of AA2 with a stable outlook, and AA with a positive outlook, respectively.
The board of curators approved the projects during their June meeting. System officials explained that adding these amounts is within projected debt capacity presented at the April 2009 Board meeting.
The university currently has $836 million in outstanding system facilities debt and pays approximately $65 million in annual debt service. The new bonds will increase system facilities debt to $1.2 billion and annual debt service to $85 million.
Projects the bond initiative will support include:
- Renovation of power plan and other energy management improvements and additions, Columbia: Includes power plant heat and power upgrades and replacement of cooling towers and steam lines. $62.1 million*
- Hudson/Gillett residence hall renovation, Columbia: Upgrades and improves this 420-bed residence hall complex. Hudson Hall completion date scheduled for May 2010; Gillett Hall completion date scheduled for May 2011. $33.1 million
- Construction of mid-campus residence hall, Columbia: Includes construction of a new 526-bed residence hall, renovates Defoe/Graham residence halls, and builds a new link between the north ends of Defoe/Graham. $4.3 million
- Construction of Missouri Orthopedic Institute, new patient care tower and relocation and construction of Children's Hospital, Health System: The four-story Orthopedics Institute will provide surgery, diagnostic and treatment spaces, while the eight-floor patient tower will provide space for a new cancer center and new operating and patient rooms. Children's Hospital will be moved to Columbia Regional Hospital and will include changes and upgrades for pediatrics and adolescent patients. $120.0 million**
- Construction of soccer/track facility, Kansas City: The Stanley H. Durwood Soccer Stadium and Recreational Field will include a synthetic turf playing field, recreational track, grandstand and team support facilities. $ 8.0 million
- Construction of new student union, Kansas City: The four-story student union will include a new campus center, food service, bookstore, meeting rooms and student organizational space. It will open for the fall 2011 semester. $ 36.8 million
- Construction of Interactive Learning Center Phase I South, Kansas City: Provides accommodations for an automated storage and retrieval system that allows storage for 80 percent of the current collection, an interim lobby/plaza and renovations within the existing library. $10.0 million
- Construction of Oak Street West Phase II housing facility, Kansas City: The four-story, suite-style residence hall will provide 328 beds beginning in fall 2009. $17.1 million
- Renovation of Thomas Jefferson South residence hall, Missouri S&T: The project will renovate and upgrade the 325-bed residence hall by August 2010. $13.0 million
- Renovation of Flushing Meadows, St. Louis: This project creates a continuing education facility in the West County of St. Louis. $3.4 million
- Critical repairs, renovations and adaptations, Systemwide: Renovation and repair projects that may be funded include several buildings throughout the four-campus system, as well as critical fire safety, elevator and roof replacement projects. $35.0 million
* will require an additional $40 million in debt financing in the future
** will require an additional $20 million in debt financing in the future
