Regents Approve Bond Issue for Campus Upgrades
CAPE GIRARDEAU, Mo., Dec. 8, 2010 – The Southeast Missouri State University Board of Regents today approved a resolution to issue bonds providing $58.3 million in construction proceeds for campus facility renovations and repair projects and a phased-in $5 per credit hour maintenance and repair general fee increase to fund debt service payments on the bonds.
The bond issue will fund construction dollars for campus improvements, including $22.8 million for renovations to Academic Hall, $17.9 million for renovations and an addition to Magill Hall and the University science laboratories, $10.6 million for deferred maintenance projects over the next five years, including renovation of Memorial Hall for transition space, and $6.9 million for conversion of the campus power plant to natural gas installation.
The increase in the maintenance and repair general fee charged to students calls for a $2 per credit hour general fee increase in fiscal 2012 with an additional $2 per credit hour increase in fiscal 2013 and an additional $1 per credit hour increase in fiscal 2014. Thereafter, this $5 per credit hour fee will be dedicated to preventive maintenance and renovation of academic facilities and infrastructure. Kathy Mangels, vice president for finance and administration, said the Student Government Association approved a resolution Nov. 22 endorsing this plan.
In June, the Board of Regents considered the University’s capital needs and authorized resolutions intending to issue bonds to finance projects. In August, the University issued a request for proposal for underwriter services in conjunction with the project. Three proposals were received and evaluated based on cost, experience, reliability and their proposed method of performance. According to Mangels, Edward Jones was determined to have provided the best and lowest proposal, considering not only the underwriter’s fee but interest expense and marketing fees of the proposed structure.
On Oct. 6, the Missouri Health and Educational Facilities Authority (MOHEFA) preliminarily approved issuing Educational Facilities Revenue Bonds on behalf of Southeast. On Dec. 1, MOHEFA gave its final approval to issue the Educational Facilities Revenue Bonds, Mangels said.
The bonds were priced today, Dec. 8. The Taxable Educational Facilities Revenue Bonds Series 2010B qualify for a federal rebate of 35 percent of the annual interest expense through the Build America Bond program. This amounts to about $24 million over the 30-year life of the bonds, Mangels said.
Annual principal and interest expense on the Series 2010A and B bonds, net of the federal interest subsidy, is about $3.5 million, she said. Revenue sources for annual debt service payments include savings on utility and maintenance budgets from the power plant conversion, contributions from auxiliary enterprises which use the campus electrical and steam distribution systems, and proceeds from the maintenance and repair general fee.