Chapman University, a private university in Orange County is seeking approval from the California Educational Facilities Authority to issue $100 million worth of bonds to construct new buildings and improve existing facilities.
If the authority votes at its monthly meeting on Thursday to approve the financing, the bond issue would be scheduled for either a public or private sale and a closing could take place within 30 days of the sale, said Joe DeAnda, spokesman at the state treasurer’s office.
CEFA’s staff recommended in their report that the board approve the bonds if they can be sold at investment-grade levels.
“Chapman’s balance sheet shows significant growth and its financial strength appears strong with a solid debt service coverage ratio,” according to the staff report.
Operating expenses totaled $237.8 million in fiscal 2010, increasing from $215.4 million, or 10.4%, compared to the year before. Chapman attributes the increase primarily to the continued growth of full-time enrollment — it serves 6,000 students — and the need for additional new faculty, programs, and a new residence hall.
CEFA was created for the purpose of issuing revenue bonds to assist private nonprofit institutions of higher learning in the expansion and construction of educational facilities.
Since CEFA is authorized to issue tax-exempt bonds, it can often obtain more favorable financing, DeAnda said.
Chapman plans to use the bond proceeds to provide financing for the acquisition, construction, expansion, equipping and improvement of educational facilities located on the main campus, according to a report produced by the authority’s staff.
Chapman also plans to refund bonds sold in 2000. The refunding is not being pursued for net present-value savings but will convert the debt from floating to fixed rate, allowing the school to shift to a more conservative capital structure, according to the report.
The brunt of the proceeds will be used to renovate buildings that are part of the Filmmakers’ Village. Chapman officials have been contemplating the project since 2006 when the 76,000-square-foot Marion Knott Studios building was completed, said Mary Platt, the university’s director of communications and media relations.
The $31 million Marion Knott Studios Building includes sound stages and professional work stations where students who study film, video games and animation can edit their projects.
“I think Chapman has envisioned creating a Filmmakers Village since it completed work on the Marion Knott Studios in 2006,” Platt said.
Currently, the closest residence hall to the Marion Knott Studios building is several blocks away. Officials wanted the students to have housing at a more convenient location, because the film and media arts students tend to be in the studios building working until late at night.
After renovations are completed, the residential hall will contain a 250-seat food service and restaurant, a grand living room, meeting rooms, and a gym. The bond proceeds will also be used to construct a swimming pool in the residential area.
The film and media studies residential hall will be fully wired so that students can work on their projects in their rooms, according to Platt. The campus was named one of the “most wired” campuses in the country several years ago, she said.