Illinois Finance Agency OKs $200M for University Housing

CHICAGO — The Illinois Finance Authority advanced plans this week for $200 million in borrowing to finance new, privately developed student residential facilities at two state universities.

The board gave final approval at its Tuesday meeting for the sale of up to $65 million of bonds on behalf of CHF-Normal LLC.

The proceeds will finance the development of an 896-bed residential facility that includes five four-story buildings with a community center, and parking lots.

“The project will provide an affordable, on-campus housing option for ISU’s students,” according to IFA documents. “And will have a positive impact on the surrounding community by enhancing the university’s ability to attract and retain students, which in turn provides economic activity in the area.”

The project would be developed by American Campus Communities under a ground lease from Illinois State University in Normal, with day-to-day operations managed by the university. ISU is not on the hook for repayment of the bonds.

RBC Capital Markets is the underwriter and John S. Vincent & Co. is financial adviser to the university. Chapman and Cutler LLP is bond counsel. The bonds are payable from fees collected by the university for student use of the facilities.

The finance team anticipates selling fixed-rate bonds with a final maturity of no more than 33 years.

Officials hope to obtain low investment-grade triple-B-minus ratings from Moody’s Investors Service and Standard & Poor’s.

The board also signed off on CHF-DeKalb LLC’s issue of up to $135 million to finance construction of two residential buildings with more than 1,000 beds, a community center, dining hall and related facilities on Northern Illinois University’s campus in DeKalb.

American Campus would develop the five-story buildings under a similar ground lease and the university would manage the facility.

Bond proceeds will also refund $18.8 million of outstanding student housing bonds from a 2006 issue.

Low investment-grade ratings on the fixed-rate issue are also expected.

As in the ISU deal, Northern won’t be on the hook for repayment. Debt service is payable from pledged revenue that will come from student fees and from some university charges under a dining facility lease.

RBC is the underwriter and Chapman is bond counsel. Both issues will be secured by a leasehold mortgage on the land and improvements.

Under the ground lease, rates and fees must be revised to meet the requirements of the loan agreement.

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