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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

2005 Bond Issue

2007 Bond Issue