The Massachusetts State College Building Authority is seeking an underwriter to market $93 million of revenue bonds, which will largely finance a new housing facility at Bridgewater State College.
Interested underwriters must submit their proposals to the MSCBA by Nov. 2. While the authority has not set a sale date, it hopes to close on a fixed-rate borrowing by late January, capital finance manager Noah Schneiderman said. The bonds, which could extend out to 40 years, would likely include a typical 10-year call provision, he said.
We will look for firms that understand the way we think and that can provide us with the most innovative structure, Schneiderman said.
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo PC is the authoritys bond counsel. MSCBA officials are contemplating whether they should hire a financial adviser or handle those responsibilities in house. Although the authority has used financial advisers on its last four sales, the MSCBA in 2000 sold $22.2 million of debt without retaining an FA, according to data from Thomson Financial.
The MSCBA typically sells bonds annually. It has roughly $60 million of commonwealth-guaranteed debt, along with about $300 million of non-guaranteed outstanding debt, Schneiderman said. Moodys Investors Service gives the authoritys debt an A1 rating with a stable outlook. Neither Fitch Ratings nor Standard & Poors rate the credit. The bonds may be insured, and the authority expects to take bids in December, he said.
Besides the Bridgewater campus, the MSCBA finances capital projects at eight other state college campuses including schools in Worcester, Fitchburg, Framingham, Salem, and Westfield. It also serves the Massachusetts Maritime Academy, the Massachusetts College of Art, and the Massachusetts College of Liberal Arts.
About $81.6 million of the sale will be used toward the project, while the balance will go toward a debt service reserve fund, capitalized interest, and issuance costs, Schneiderman said.
Of the project funds, nearly half $38.3 million will fund construction of a 400-bed housing project at Bridgewater State. In addition, $15.8 million will go toward adding two floors to a housing facility at the Maritime Academy, and $10 million will be used for parking upgrades at Worcester State. There will also be student life facilities and residence hall repairs at several campuses, totaling $17.5 million.
The revenue bonds are repaid through student fees. At Bridgewater, each of the 7,597 undergraduate students pays about $4,520 in fees, which, for in-state commuters, amounts to 83% of their yearly tuition. The MSCBAs projects are financed through such revenue bonds, vendor contributions, and college operating and reserve funds, according to the authoritys Web site.
