Chapel Hill May Tap Market

The University of North Carolina Chapel Hill has $645 million in deferred maintenance needs and may tap the bond market for the renovations, said a board of trustees report published last week.

The university has expanded in the last 10 years, building new facilities with bond-financed proceeds. School officials may decide to ask the state legislature to approve another bond issue for maintenance needs only, the report said.

In 2000, North Carolina voters approved a referendum that allowed the state to issue up to $3.1 billion over time for renovation and construction projects at state colleges and universities. About $500 million of the bonds were earmarked for UNC Chapel Hill as part of its 10-year expansion project.

The university last issued bonds in November, competitively selling $97.7 million of tax-exempt and $112.8 million of Build America Bonds to Bank of America Merrill Lynch.

UNC Chapel Hill is rated Aa1 by Moody’s Investors Service and AA-plus by Standard & Poor’s and Fitch Ratings.

State deficits have forced lawmakers to cut universities’ budgets by 12% over two fiscal years. Chapel Hill relies on state appropriations for 24% of its revenue.

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