A bond issue with a principal of up to $113 million will finance various University of Arkansas, Fayetteville campus projects.
The UA System board of trustees in recent months approved the projects separately, including a plan to build two new residence halls at an estimated cost of about $77 million.
UA Chancellor Joe Steinmetz in November said that if an approximately $70 million bond issue was approved in 2017, construction could be complete by fall 2019.
A resolution authorizing the bond issue states that about $3 million in university funds will also help pay for the new dorms.
The resolution lists eight projects by name, including the expansion of the campus health center, described by UA in March as a $15 million project expected to be completed by fall 2018. The health center project and some of the others listed have been partially financed by a 2016 bond issue.
The board authorized a bond in an amount not to exceed $113 million, with an aggregate true interest cost not greater than 5.5 percent, and with a maturity date not later than Dec. 1, 2047.
The total cost for a $113 million bond issue would depend in part on whether the university chooses to make equal payments annually in debt service, said Justin Marlowe, a professor of public finance and civic engagement at the University of Washington. Entities sometimes decide to pay more in later years when financing projects that will generate revenue upon completion, Marlowe said.
He estimated a total cost of $167 million if debt service payments are made equally, in what is known as "level debt service," over a period of 30 years. The annual debt payment would be roughly $5.6 million, Marlowe said.
Marlowe said it's common for entities like a university to roll up several projects in a bond issue, with some bond costs like underwriting fees reduced by such an approach. A larger bond issue can also attract more investors, he said.
UA-Fayetteville, in its annual financial report for the year that ended June 30, listed anticipated long-term principal and interest payments of $57.1 million to be paid in the 2017 financial year. Late last year, about $115 million in bonds were issued to finance a campus stadium expansion project.
The resolution lists underwriters for the sale: Crews & Associates, Inc.; J. P. Morgan Securities LLC; Raymond James & Associates, Inc.; and Stephens, Inc.
Bond counsel will be Eldredge & Clark, LLP, according to the resolution.
Metro on 05/26/2017