September 23-24, 2004
ITEM 124-2009-R0904 Authorization to Proceed, Series H 2004 Facilities Improvement Revenue Bonds; Montana State University-Bozeman
THAT: The Board of Regents of the Montana University System adopts the Bond Resolution for the Series H 2004 Facilities Improvement Revenue Bonds for Montana State University and authorizes Montana State University and the Commissioner of Higher Education of the Montana University System to proceed with the issuance of these bonds.
Montana State University-Bozeman
Facilities Improvement Revenue Bonds $24,500,000
EXPLANATION: 1. This authorizes the Chair of the Board of Regents, the Vice Chair of the Board of Regents, the Commissioner of Higher Education, the President of Montana State University, and the Vice President for Administration and Finance of Montana State University-Bozeman to execute such documents as may be required to consummate the issuance of the Series H 2004 Facilities Improvement Revenue Bonds.
2. This authorization to proceed is subject to final action, to initiate the offering of bonds, by the University and the Commissioner of Higher Education of the Montana University System.
3. All proceeds from the issuance of these bonds will be utilized for the construction of a new Chemistry/Biochemistry Research Laboratory Facility on the campus of Montana State University-Bozeman.
4. At its April 14, 2004 meeting the Board of Regents authorized the construction of this facility, but not the actual issuance of bonds. In accordance with State statute, the Governor of the State of Montana subsequently consented to the construction of this facility.
5. The maximum total amount of this Traditional Fixed Rate issue will be $24,500,000; and, the Total, All-In interest rate will be no more than 5.50%.
6. The estimated average annual debt service for this bond issue is $1,571,456, which will be fully funded from a pledge of research Facilities & Administration (e.g. IDCs, Indirect Costs) overhead funds from Federal grants & contracts.
7. The Chemistry/Biochemistry Research Building is currently in its design stage. It is anticipated that the final facility will be slightly more than 70,000 GSF. Construction is scheduled to begin in late-spring of 2005.
8. In accordance with the Sixth Supplemental Indenture for this issue, the University’s Grants & Contracts Office will pre-fund the annual debt service requirement, by July 1, 2006, with a transfer to the Trustee an amount equal to the FY2007 payment, and then transfer first F&A revenues received during FY2007 and each subsequent year, for the coming year’s debt service requirement.
9. The preliminary data for the Series H 2004 bond issue is as follows:
a. Face Value: $24,310,000.
b. Capitalized interest fund for approximately 18 months from the date of issuance (intended to be the period of construction: $1,684,440.
c. Delivery date: 10/25/2004.
d. Final maturity: 11/15/2034.
e. All-In True Interest Cost: 4.81%.
f. Cost of Issuance: $170,000.
g. Underwriter’s discount: $127,627.
h. Bond insurance cost: $150,018.
i. AAA Insured Credit Rating, with expected underlying ratings of A from Standard & Poor’s and A2 from Moody’s Investor Services.
10. Copies of this issue’s nearly final draft of the Preliminary Official Statement and Sixth Supplemental Indenture of Trust are on file with the Commissioner of Higher Education, and are available at the Board of Regents’ September meeting.
ATTACHMENTS: 1. An overview of MSU-Bozeman Grants & Contracts, and F&A revenue trends.
2. For reference, Governor Judy Martz’s April 21, 2004 letter of authorization for the construction of this facility.
3. For reference, the Board of Regents March 25-26, 2004 Item authorizing the construction of this facility.
4. The Series H 2004 Facility Improvement Revenue Bond Resolution.