DASNY Moving Clients Out of Auction Rate Securities

Authority Helps Colleges, Hospitals, State Programs Find Shelter in Stormy Market

Albany - - At its monthly meeting here today, the Board of the Dormitory Authority of the State of New York (DASNY) took action on a range of issues and financings, including initiatives to assist many of its private not-for-profit higher education and healthcare clients and state institutions to move out of their auction rate bonds and into lower cost and less volatile securities.

The recent disruption in the market for auction rate securities has negatively impacted both private not-for-profit institutions and public state-supported clients in the Dormitory Authority’s portfolio. The result in many cases has been significantly higher interest rates - - in some cases a doubling or more - - on bonds which do not receive sufficient bids to clear auction.

Dormitory Authority Executive Director David D. Brown IV said: “We have worked very closely with our public and private not-for-profit clients to identify and design strategies that take them out of auction rate securities and put them into lower cost and more stable finance programs. We are pleased to be able to provide each of our clients with unmatched service in this difficult market moment.”

At today’s meeting, the Board approved single-step resolutions that cleared the way for the following Authority clients to restructure their auction rate and variable rate bonds:

Teachers College. The Board gave one-step approval to convert $45.5 million of MBIA-insured auction rate bonds to MBIA-insured fixed rate bonds. The bonds were initially issued in February 2007 to refinance taxable debt that had financed the construction of a dormitory and other improvements and renovations to existing facilities. Lead Manager is Morgan Stanley; Bond Counsel is Nixon Peabody LLP; Underwriter’s Counsel is Arent Fox LLP.

Memorial Sloan-Kettering Cancer Center. The Board gave one-step approval to refund $475 million of Ambac-insured auction rate bonds with un-insured fixed rate bonds. The bonds were initially issued in several series in 2002 to finance various capital projects at the Center’s campus and at a freestanding ambulatory care site in Commack, Long Island. Lead Manager is Goldman, Sachs &Co.; Bond Counsel is Nixon Peabody LLP; Underwriter’s Counsel is Orrick Herrington & Sutcliffe LLP.

St. John’s University. The Board gave one-step approval to convert and/or refund $200 million of Ambac and/or MBIA-insured auction rate bonds with enhanced fixed and/or variable rate bonds with liquidity facility. The bonds were initially issued in five series in 2001, 2005 and 2007. Lead Manager is Morgan Stanley; Bond Counsel is Nixon Peabody LLP; Underwriter’s Counsel is Clifford Chance US LLP.

City University of New York. The Board gave one-step approval to the conversion and/or refunding of $1.040 billion of insured auction rate bonds with insured and/or un-insured fixed and/or variable rate bonds to be issued at one or more times. The bonds were initially sold in multiple series in 2003 and 2005. Bond Counsel is Nixon Peabody LLP; Lead Manager and Underwriter’s Counsel to be determined.

Culinary Institute of America. The Board gave one-step approval to convert $56.8 million of XLCA-insured auction rate bonds to variable rate bonds with “infused” direct pay letters of credit. The bonds were initially sold in 2004 and 2006 to finance the construction of various projects, including student townhouses and a multi-level parking structure. Lead Manager is RBC Capital Markets; Bond Counsel is Hiscock & Barclay LLP; Underwriter’s Counsel is Orrick, Herrington & Sutcliffe LLP.

New York City Health and Hospitals Corp. The Board gave one-step approval to convert or refund $520 million of fixed rate and MBIA-insured auction rate bonds with insured or un-insured fixed rate bonds. The bonds were initially sold in 1998 and 2001 to finance various capital projects for HHC. Lead Manager is Morgan Stanley/Lehman Brothers; Bond Counsel is Orrick, Herrington & Sutcliffe LLP; Underwriter’s Counsel is Clifford Chance US LLP.

State/Voluntary Agency Mental Health Hygiene Projects. The Board gave one-step approval to convert and/or refund $513.5 million in auction rate and variable rate demand bonds with un-enhanced fixed and/or variable rate bonds with a liquidity facility. The bonds were initially sold in multiple series in 2003. Bond Counsel is Hawkins Delafield & Wood LLP; Lead Manager and Underwriter’s Counsel to be determined.

NY State Personal Income Tax Revenue Bond Program. The Board gave one-step approval to convert and/or refund $125 million in various insured variable rate demand bonds with enhanced and/or un-enhanced fixed and/or variable rate bonds with a liquidity facility. The bonds were initially sold in multiple series in 2005 to support various State of New York economic development and education programs. Bond Counsel is Sidley, Austin LLP; Lead Manager and Underwriter’s Counsel to be determined.

Upstate Community Colleges. The Board gave one-step approval to refund $58 million of CIFG-insured variable rate demand bonds with enhanced and/or un-enhanced fixed and/or variable rate bonds. The bonds were initially sold in 2005. Bond Counsel is Squire, Sanders & Dempsey, LLP; Lead Manager and Underwriter’s Counsel to be determined.

Barnard College. The Board gave one-step approval to refund $29.5 million in FGIC-insured variable rate demand bonds with direct pay letter of credit-backed variable rate demand bonds. The bonds were initially sold in two series in 2007 to partially refund bonds from 1996 and finance the construction of a new multi-purpose facility and various campus-wide renovation and maintenance projects. Lead Manager is RBC Capital Markets; Bond Counsel is Squire Sanders & Dempsey LLP; Underwriter’s Counsel is Hiscock & Barclay LLP.

Brooklyn Law School. The Board gave one-step approval to refunding $20 million of XLCA-insured auction rate bonds to fixed or variable rate demand bonds with bonds insurance and, if variable rate, a liquidity facility. The bonds were initially sold in 2003 to finance the construction of a 21-story residence hall. Lead Manager is JP Morgan; Bond Counsel is Squire Sanders & Dempsey LLP; Underwriter’s Counsel is Orrick, Herrington & Sutcliffe LLP.

Fordham University. The Board gave one-step approval to refund $105 million of XLCA-insured auction rate bonds with enhanced variable rate demand bonds with a liquidity facility and/or enhanced or un-enhanced fixed-rate bonds. The bonds were initially issued in 2005. Lead Manager is Merrill Lynch; Bond Counsel is Squires Sanders & Dempsey LLP; Underwriter’s Counsel is Hawkins Delafield & Wood LLP.

The Board gave final approval to the following new financings:

Residential Institutions for Children. The Board gave final approval for the negotiated sale of one or more series of tax-exempt fixed rate bonds with maturities not to exceed 30 years in an amount not to exceed $75 million. Proceeds from the sale of the bonds will be used for the renovation and /or new construction of eight residential facilities for children throughout the state. Lead Manager is Depfa First Albany Securities LLC; Bond Counsel is Hiscock &Barclay, LLP; Underwriter’s Counsel is Winston & Strawn, LLP.

Orange Regional Medical Center. The Board gave final approval for the negotiated sale of one or more series of 30-year fixed and/or variable rate tax-exempt and/or taxable bonds in an amount not to exceed $272 million. Proceeds from the sale of the bonds will be used to finance the construction of a new 374-bed hospital facility to serve the residents of Orange County and the surrounding area. This new hospital will replace Arden Hill Hospital and Horton Medical Center which will close under the recommendations of the state Commission on Health Care Facilities in the 21st Century. Lead Manager is Merrill Lynch & Co.; Bond Counsel is Harris Beach PLLC; Underwriter’s Counsel is Hawkins Delafield & Wood LLP.

Columbia University. The Board gave final approval to the negotiated sale of a maximum of two series of fixed and/or variable rate 35-year bonds in an amount not to exceed $290 million. Proceeds from the sale of the bonds will be used to support various construction and renovation projects located primarily on the Morningside Campus, including construction of the University’s Geochemistry Building and residential real estate renovations. Lead Manager is Morgan Stanley; Bond Counsel is Nixon Peabody LLP; Underwriter’s Counsel is Clifford Chance US LLP.

The Board also gave initial approval to the following new financings:

Fordham University. The Board gave initial approval for the negotiated sale of approximately $119 million of one or more series of fixed and/or variable interest rate, tax exempt bonds with a term not to exceed 31 years. Proceeds from the sale of the bonds will be used to build a new multi-level residential facility on the Rose Hill Campus and to fund renovations at various campus locations.

Ithaca College. The Board gave initial approval for the negotiated sale of approximately $41 million of one of more series of fixed and/or variable rate tax-exempt bonds with a term not to exceed 30 years. Proceeds from sale of the bonds will be used to refund Series 1998 Bonds and to fund renovation and deferred maintenance projects on campus.

Dormitory Authority Fee Reduction

In a policy matter, the Board approved a resolution to amend the Authority’s fee structure. Beginning April 1, 2008, the annual administrative fee for new money bond issues will be based on the declining value of the outstanding principal rather than the current flat annual fee. This action reflects discussions about the Authority’s fee structure with its client institutions.