Higher Ed, Healthcare & High-Tech Top DASNY Agenda

Authority Board Modifies Security Guidelines for Highly Rated Institutions

New York City - - The Board of the Dormitory Authority of the State of New York (DASNY) met today and approved resolutions to sell bonds to build and renovate facilities at multiple colleges, universities and hospitals and to refinance debt to save money for some DASNY client institutions. The Board also approved a modified set of security guidelines for institutions of exceptional credit quality.

At its monthly meeting today at its offices at One Penn Plaza, the Dormitory Authority board approved the following financings:

The Rockefeller University. The board gave final approval for the negotiated sale of one or more series of 40-year tax-exempt fixed and/or variable rate bonds in an amount not to exceed $455 million. Proceeds from the sale of these bonds will be used to finance the renovation and modernization of several existing buildings on the University’s campus, including the renovation and modernization of laboratory facilities and improvements to related infrastructure; initial design and construction of a “bridging” building which will link two existing buildings; and renovation and expansion of the University’s animal care facility. Proceeds may also be used to refund certain outstanding debt of the University. Morgan Stanley is lead manager; bond counsel is Nixon Peabody LLP; and Hawkins Delafield & Wood LLP is underwriter’s counsel.

Personal Income Tax Bonds. The board gave approval to the negotiated or competitive sales of multiple series of tax-exempt and taxable fixed and/or variable rate 30-year bonds issued at one or more times in an amount not to exceed $75 million. Money from the sale of these bonds will be used to reimburse the state’s general fund for grants and to make future grants to healthcare facilities under the HEAL NY program. Bond counsel is Sidley, Austin LLP. Lead manager and underwriter’s counsel to be determined.

Fordham University. The board gave initial approval to the negotiated sale of one or more series of 31-year fixed and/or variable interest rate, tax-exempt Series 2008 bonds for an amount not to exceed $125 million. Some $85 million from the sale of these bonds will be used to construct a new multi-level residential facility at the Rose Hill Campus; and up to $40 million will be used for the renovation of facilities at various campus locations. Citigroup is lead manager.

Orange Regional Medical Center. The board gave initial approval to the negotiated sale of 30-year fixed and/or variable rate tax-exempt and/or taxable Series 2008 bonds in the amount of approximately $259.34 million. Proceeds from the sale of these bonds will be used to finance the construction of a new 374-bed hospital facility for the residents of Orange County and the surrounding area. This new hospital results from the closure of the existing Arden Hill Hospital and Horton Medical Center under the recommendation of the Commission on Health Care Facilities in the 21st Century and the consolidation of their operations in a new smaller facility located equidistant between them. Lead manager is Merrill Lynch.

The board also approved the following Tax-Exempt Equipment Leasing Program (TELP) resolution: State University of New York Stony Brook University Hospital. The board gave approval of a master lease and sub-lease financing for $21.25 million in TELP funding to be used by the hospital to acquire equipment for its emergency, technical services, neurology, cardiology, nursing, and operating rooms departments. Equipment acquired through the lease-sublease financing of the Authority’s TELP program will be owned by the hospital after all outstanding lease payments are repaid.

In a policy matter, the board approved a modified set of security guidelines for higher education and other non-healthcare 501(c)(3) institutions rated Aa3/AA or higher. The amended guidelines for these institutions bring DASNY’s policies and practices more in line with current standards in the national marketplace while continuing to provide ample protections for its investors.

In recognition of the exceptional credit quality of these highly-rated institutions, security provisions in the Authority’s financing documents will now consist solely of:

A general obligation of the institution; and,
A requirement that the institution hire a management consultant if its rating drops below A2/A. DASNY would have the discretion to require the institution to hire a management consultant should its rating drop below A1/A+.

With this action, the Authority is eliminating certain financial covenants that had been in use in connection with its un-enhanced transactions that required a constant measurement of assets to liabilities and restricted the issuance of additional debt and the encumbrance of borrower’s assets.

The DASNY board is next scheduled to meet on February 27 in Albany.