Bonds sell rapidly for high-rise restoration project

Ed Marlowe
Staff writer

Murray State administration authorized the release of three tax-exempt municipal bonds to be sold to the general public in July.

Two months later, none remain to be sold.

Tom Denton, vice president of finance and administration services, shed light on why the University has the bonds.

“There are two reasons why these bonds were issued,” Denton said. “The main reason was to help fund the renovation of Elizabeth College. The other reason for the issuing was to refund outstanding bonds with better interest rates and to allow more advantageous bond ventures to happen.”

Denton said 99 percent of the time bonds are the funding mechanism for residential building finances since there are few instances the University has cash on demand.

“Housing and dining facilities operate using housing and dining funds,” he said. “Structures like the science complex and other administrative buildings require state revenues that do not account for our cash balance.”

Denton said during the 2008-10 biennium, the Kentucky state budget authorized Murray State $8.9 million to renovate high-rises on campus.

“We’ve determined that renovating over replacing (Elizabeth College) impacts more students with the same amount of dollars,” he said.

Kim Oatman, chief facilities officer, confirmed those sentiments in previous statements released in The Murray State News on Jan. 28.

“To build one new building was going to cost us around $15 million,” Oatman said. “One high-rise renovation is half of that cost.”

In order for bonds to be issued, Denton said the University must go through a rigorous state process.

A project must be submitted to state legislature, and then the project is either approved or rejected during a biennium (two-year increment). Once the General Assembly gives authorization on a University project, bonds can be sold, purchased and traded, Denton said.

Christina Tolson, financial adviser for Ross, Sinclaire & Associates, LLC, of Owensboro, Ky., said all new issue bonds from Murray State have been purchased and none remain for sale through their firm.

An official statement released by Murray State in conjunction with the issuing of University bonds said the University originally received authorization for $15 million for the renovation of Franklin College, but chose to focus on high-rise renovation before any other dormitory issues were addressed.

Also mentioned were the specific renovations Elizabeth College will receive. Upgrades to the building include HVAC, electrical, lighting, plumbing and asbestos removal.

College Courts will also receive the same upgrades in the coming years; however, bond authorization will not be utilized. Cash operational funds should pay for those apartment renovations, Denton said.

Both Denton and Tolson confirmed that bonds were sold in $5,000 increments at taxable yield rates between 2 and 7 percent.

According to emma.msrb.org, these new issue bonds are set to mature between 2011 and 2031 depending on the purchase date and amount purchased.

Denton said McCracken County has also issued bonds to help facilitate cost expenses for the new higher education facility for Murray State in the greater Paducah area. The new facility will be located near Interstate 24.

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