Facilities Planning Committee

Bond Financing, a new funding approach

Willamette has historically taken the funding approach to project improvements of raising the money through our fundraising efforts before we do the project.  Although this approach has helped to keep our long term debt to a minimum, it was not keeping up with our facility needs and our growing list of deferred maintenance projects was getting larger and larger.  We are now supplementing our fundraising efforts with low fixed rate tax exempt municipal bond financing.

In 2004 we issued $15 million in tax exempt municipal bonds.  Approximately half of this amount was used to refund our only outstanding issue of 1994 at a much lower interest rate which saved the University approximately $500,000 in interest expense.   The other half of this issue helped pay for the Art Building renovation and addition, the Eaton 4th floor remodel, the synthetic turf for the football field, technology equipment, and the YWCA purchase.  Of course we utilized fundraising to help pay for portions of these project costs as well.   In 2005 we issued another $13 million in tax exempt bonds which helped fund the projects listed in the second table below.

In 2007 Willamette issued approximately $32 million in Oregon Facilities Authority Bonds to undertake projects with a total of approximately $15.8 million (total estimated costs of $29.9 supported by $14.1 million in gifts), pay off $7,632,602 the taxable line of credit which provided interim financing, and to advance refund the 1994 portion of its outstanding Series 2004 Bonds.  The anticipated principal amount of bonds to be refunded was $8.5 million.  Refunding the 1994 portion of the Series 2004 issue and back-loading the principal payments of the new money 2007 Bonds smoothes the University's overall debt profile and eases the cash-flow strain on its operating budget.

We have been able to accomplish over $65 million in much needed facility improvements including major projects ($48 million), deferred maintenance ($4 million), strategic land acquisitions ($9 million), and technology infrastructure and equipment ($4 million) in the past several years. These projects are listed in the tables below (additional details are available here). We have adopted a conservative debt management policy and have incorporated that policy into a facility debt capacity funding model.  We will continue to fundraise first for facility improvements and supplement those fundraising efforts with low interest tax exempt municipal bond financing as the need arises in the years ahead. This approach will allow us to continue to address our facility needs while maintaining consistency in our current operating budget.   We will manage that process in compliance with the debt management policy which has established key debt to operations ratios.

Summary of Willamette's Bond Activity 2004-2008

2004 Bond Issue

Description of Project

Estimated Cost

Cash Gifts & pledges

Service or purchase date

Total funds needed

Art Building Addition and Renovation 

$3,500,000

$2,000,000

June-03

$1,500,000

Eaton Hall 4th Floor Renovation

$2,400,000

$500,000

June-03

$1,900,000

Sparks Center Athletic Fields/Facilities

$1,000,000

$500,000

June-03

$500,000

Technology Infrastructure and Equipment

$1,000,000

 

Fall 04-Spring05

$1,000,000

Waller Hall

$1,000,000

 

Fall 04-Spring05

$500,000

YWCA purchase

$1,350,000

 

 

$1,350,000

Refunding 1994 Bonds

$7,968,447

 

 

$7,968,447

Issuance

$216,955

 

 

$216,955

Insurance

$215,119

 

 

$215,119

Underwriter's Discount

$85,172

 

 

$85,172

Total 04 Bond issue  $15,075,000

$18,735,692

$3,000,000

 

$15,235,692

2005 Bond Issue

Description of Project

Estimated Cost

Cash Gifts & pledges

Service or purchase date

Total funds needed

Kaneko Commons $14m construction with addition to  TIUA building

$14,000,000

$5,000,000

Aug-06

$9,000,000

AGSM reroof

$120,000

 

Summer 2005

$120,000

Soccer field, install Field turf and lights

$1,000,000

 

Summer 2005

$1,000,000

Collins Science modernize elevator

$110,000

 

Summer 2005

$110,000

Collins Legal Classroom renovation

$500,000

 

Summer 2005

$500,000

Doney add fire sprinklers to rooms

$120,000

 

Summer 2005

$120,000

Doney reroof and repair valleys

$120,000

 

Summer 2005

$120,000

Lausanne seal brick

$50,000

 

Summer 2005

$50,000

Stadium reroof

$165,000

 

Summer 2005

$165,000

Waller exterior renovation/ 4th floor HVAC

$900,000

 

Summer 2005

$900,000

WISH Admission addition

$165,000

 

Summer 2005

$165,000

Legal Arts Building

$297,940

 

3/23/2004

$297,940

Ferry Street Parking Lot

$50,980

 

3/23/2004

$50,980

Church St. Parking Lot

$63,460

 

3/23/2004

$63,460

 Issuance

$168,000

 

 

$168,000

 Underwriters Disc

$78,000

 

 

$78,000

 Insurance 

$227,411

 

 

$227,411

Total 05 Bond issue $13,000,000

$18,135,791

$5,000,000

 

$13,135,791

2007 Bond Issue

Description of Project

Estimated Cost

Cash Gifts & pledges

Service purchase or borrow date

Total funds needed

Repay current US Bank Line of Credit

$7,632,602

 

 

$7,632,602

Theatre renovation

$4,000,000

$2,000,000

Summer 09

$2,000,000

Technology Phase II

$1,500,000

 

Summer  08

$1,500,000

Carnegie Law renovation

$3,400,000

$2,100,000

Fall  08

$1,300,000

Academic Building

$16,000,000

$10,000,000

Summer 09/ 10

$6,000,000

Pending Property purchase

$5,000,000

 

August 2007

$5,000,000

Major projects to be bond financed

$29,900,000

$14,100,000

 

$15,800,000

Refunding 1994 portion of 2004 issue

$8,404,500

 

 

$8,404,500

Issuance

$222,400

 

 

$222,400

Underwriters Discount

$175,010

 

 

$175,010

Total of 2007  Bond Issue

$46,334,512

$14,100,000

 

$32,234,512