SUBJECT: Authority to Bond LLC Project
The LLC project calls for the issuance of $16,205,000 in Revenue Bonds in a combination of 20 and 30 year series. The bonds will be paid from a combination of revenues from the housing and union operations and funds available in the Debt Retirement and Construction Fund (3 Mill Fund). Current estimates of bond costs are based upon an average interest rate of 5.5%, however, the exact interest rate will be set on the day the bonds are sold.
Volatility in the market calls for precise timing on the sale of the bonds. A negotiated sale of the bonds allows for the timing of the sale to coincide with favorable market conditions and avoid dramatic but short-lived upward spikes in interest rates caused by unfavorable current events. A negotiated sale of the bonds is favored over bidding of the bonds precisely to plan the sale around negative events in the market.
In order to time the sale of the bonds, the Board should vest authority in a committee who can, in concert with John McArthur of Fahnestock and Co., and Don Jensen, Bond Counsel at Cosgrove, Web and Oman, judge the market and act swiftly and effectively. That committee should include the Board Chair, Vice Chair, President and Treasurer. That committee should have the authority of the Board to select the most opportune date on which to sell the bonds. The committee will return a recommendation to the Board at a regular or special meeting for passage of the resolution authorizing and directing the issuance and sale of the building revenue bonds.
Included as part of this action is the approval of the Board for:
1. Authorize publication of the intent of the Board to issue revenue bonds and the Resolution approving cost estimates of the proposed improvements
2. The creation and authorization of the committee to negotiate the sale the bonds
As outlined in the project financial schedules.
President Farley recommends that the Board of Regents approve the action listed above.
(date) Jerry B. Farley, President