DASNY Approves $285 Million for Cornell Univ.; May Price in March

The Dormitory Authority of the State of New York approved up to $285 million of tax-exempt bonds on behalf of Cornell University at its monthly board meeting yesterday.

The Ithaca, N.Y., Ivy League university hasn’t determined yet when it plans to go to market with the bonds, but the state comptroller’s forward issuance calendar puts the deal in mid-March.

Bank of America Merrill Lynch and Citi will lead manage the fixed-rate bond deal, which will likely have serial and term maturities out to 30 years. 

Orrick, Herrington & Sutcliffe LLP is bond counsel and Prager, Sealy & Co. is financial adviser.

Though the DASNY board approved the deal for a range of capital projects, Cornell plans to use the bond proceeds to partially finance the construction of a medical research center at its Weill Cornell Medical College in New York City and to refinance outstanding commercial paper related to the project, university vice president and chief financial officer Joanne DeStefano said.

“We are investing in the future of medical research by expanding our research space at the medical college in [New York City],” DeStefano said in an e-mail.

The Ivy League school has no plans to sell more debt in the near term, she said, adding: “Cornell has significantly curtailed our capital construction plans, with the exception of this strategic investment in the medical college.”

The university’s fundraising efforts have generated $360 million for the project and the bond issuance, expected to be $275 million, will cover the rest, she said. In addition to new construction, the bond proceeds will be used to refinance up to $75 million of outstanding commercial paper related to the project.

Cornell has sold $802.5 million of new-money bonds and $309 million of refunding bonds through DASNY and the Tompkins County Industrial Development Agency since 2000, according to Thomson Reuters. The university has $1.7 billion of debt outstanding.

Moody’s Investors Service rates Cornell’s outstanding bonds Aa1 with a stable outlook. Standard & Poor’s rates it AA with a stable outlook.

Also yesterday, DASNY’s board gave preliminary approval for $41.3 million of bonds to refund pooled debt on behalf of members of the InterAgency Council. The council is a 120-member organization created in the 1970s by nonprofit institutions serving mentally and developmentally disabled persons.

The bonds would be issued on behalf of eight IAC members that receive funding from the New York State Office of Mental Retardation and Developmental Disabilities. The bonds will be backed by a pledge of state funding by individual members and sold in private placement.

The deal will be the first by DASNY on behalf of the IAC. The council’s previous bond deals were issued by industrial development agencies but the expiration of the state law allowing IDAs to issue bonds on behalf of nonprofits for civic facilities expired two years ago. Gov. David Paterson signed into law last year legislation that adds the IAC to entities eligible for DASNY financing.

For reprint and licensing requests for this article, click here.
Higher education bonds New York
MORE FROM BOND BUYER