For immediate release: February 27, 2008
For further information:
Marc Violette: 518-257-3382
HIGHER ED & HEATHCARE TOP DASNY AGENDA
Board Acts to Navigate Clients to Safe Harbors in Auction Rate Market Storm
Albany - - 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 higher education facilities and hospitals and to refinance debt to save money for some DASNY client institutions.
The Dormitory Authority board of directors and Authority staff are acting quickly to address issues that have recently emerged in the market for auction rate securities. The uncharacteristic recent disruption in this market has resulted in a number of Dormitory Authority clients being faced with higher financing costs on their bonds.
Dormitory Authority executive director David Brown has formed a task force of key Authority staffers and a consultant to work closely with the Authority’s clients and develop a custom response for each of them to these market developments. Brown also hosted conference calls on February 26 with investors and members of the media to describe the Authority’s pro-active response to this market moment.
At its meeting today, the Dormitory Authority board took action at the request of Memorial Sloan-Kettering Cancer Center (details below) to ease the hospital out of its auction rate securities. Other of the Dormitory Authority’s private, not-for-profit clients may seek similar action in the coming months. Clients are contemplating a range of actions that include conversions and refundings.
“We are committed to do all we can to help our clients navigate out of these rough market waters and into safe harbors while decreasing their interest rate exposure and limiting their cost of capital,” said Dormitory Authority Executive Director David D. Brown, IV. “Our clients are major not-for-profit institutions with strong underlying credit worthiness. We are working very closely with them, ever mindful that each has unique needs, to find the best course through this market moment.”
At its monthly meeting today at its offices in Albany, the Dormitory Authority board approved the following financings:
Memorial Sloan-Kettering Cancer Center. The board gave one-step approval to convert $450 million in auction rate securities to fixed rate bonds, eliminate the policy of municipal bond insurance and have the converted bonds re-issued under the existing documents. Lead manager is Goldman Sachs & Co.; Bond Counsel is Nixon Peabody LLP; Underwriter’s Counsel is Orrick Herrington & Sutcliffe LLP.
Cornell University. The board gave final approval for the negotiated sale of one or more series of 30-year fixed and/or variable rate tax exempt bonds in an amount not to exceed $150 million. Proceeds from sale of these bonds will be used to refund outstanding tax-exempt commercial paper. Goldman, Sachs & Co. and J.P. Morgan Securities are lead managers; Bond Counsel is Orrick, Herrington & Sutcliffe LLP; Underwriter’s Counsel is Harris Beach LLP.
New York State Rehabilitation Association (NYSRA). The board gave initial approval to proceed with the negotiated sale of one or more series of tax-exempt and/or taxable, fixed-rate bonds of a term not to exceed 26 years and of an amount not to exceed $19 million. Proceeds from the sale of these bonds will be used to refinance non-DASNY debt (including bank loans and NY City IDA bonds) for the Staten Island Aid for Retarded Children, Inc., which does business as Community Resources.
Community Resources is a not-for-profit corporation that provides residential, day-treatment, educational and supportive employment as well as early intervention and preschool services for individuals with mental health and developmental disabilities at over 30 locations on Staten Island.
The board also approved the following Tax-Exempt Equipment Leasing Program (TELP) resolution:
State University of New York University Hospital Medical Center at Brooklyn. The board approved a lease to finance $20 million in TELP funding to be used by the hospital to acquire equipment for its cardiology, radiology, nursing and management information systems departments. Equipment acquired by the hospital through the Authority’s TELP program will be owned by the hospital after all outstanding lease payments are paid. Repayment of the lease will be provided through the hospital’s patient revenues.
The DASNY board is next scheduled to meet on March 26 in Albany.