Washington Higher Education Facilities Authority. Who are we? What do we do?

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1 WHEFA

2 Washington Higher Education Facilities Authority Who are we? What do we do? 2

3 Purpose Supporting the financing needs of Washington's nonprofit, independent colleges and universities through tax-exempt bonds. 3

4 Agency Staff Kim Herman Paul Edwards Carol Johnson Bob Cook Debra Stephenson Cody Field Maureen Smith Executive Director Deputy Director Manager Senior Finance Director Senior Controller Program Assistant Web Manager 4

5 Board Members Christine Gregoire, Chair Governor of Washington Brad Owen Lieutenant Governor Dr. Roy Heynderickx* President, Saint Martin s University Manford Simcock, Secretary Public Member, Walla Walla University (Retired) Secretary Ellen Taussig, Treasurer Public Member, Head of School - Northwest School Treasurer Tom Johnson Public Member, VP of Administration Spokane Teachers Credit Union *The Authority is required to have a current president from one of its member schools on the Board. 5

6 Legal and Financial Consultants Legal Services Pacifica Law Group, bond and general counsel Faith Pettis, Esq. Foster Pepper PLLC, bond counsel (back-up) Marc Greenough Attorney General Patricia Nightingale, Assistant Attorney General, Senior Counsel Financial Advisor Springsted, Inc. Barry Fick, CPA, JD 6

7 Additional Finance Team Members The College or University selects for each public sale transaction: Bond Underwriters, from a roster of investment banking firms approved by the Authority Trustee or Fiscal Agent Rating agency, based on the borrower, credit enhancement, or structure 7

8 QUESTIONS? 8

9 Program Hierarchy Federal Tax Law State Law WHEFA Policy and Program Implementation 9

10 Eligibility Requirements A higher education institution is eligible for financing by the Authority if: It is private and nonprofit The main campus is situated in the state It is open to all residents of the state no restriction on racial or religious grounds It provides programs of education beyond high school leading at least to the baccalaureate degree It is accredited by the Northwest Association of Schools and Colleges or by an accrediting association recognized by the higher education coordinating board or successor agency. (per RCW 28B ) 10

11 Eligible Colleges & Universities Total of 14 Colleges and Universities 11

12 Examples of Projects Classroom buildings Science laboratories University Healthcare facilities Student residential facilities Technological improvements Performing Arts buildings Athletic facilities and fields Parking facilities 12

13 Bond Program Activity As of October 15, Financings Completed Since 1983 $1,694,685,958 Financed $686,224,788 Outstanding 13

14 At no cost to the taxpayer WHEFA is self-supporting through fee revenue from colleges and universities for issuing bonds No taxpayer money pays for WHEFA s programs WHEFA s bonds are not backed by the good faith or credit of the State of Washington Bonds are backed by the assets and revenues of the borrowing college or university and may be credit enhanced. 14

15 QUESTIONS? 15

16 Bastyr University Student Housing Amount Financed: $14 Million Completed June 2010 Part of $24 Million refunded in 2012 Generated $1,046,000 in present value savings 16

17 Cornish College of the Arts Main Campus Center Amount Financed: $17 Million December 2003 $20 Million refunded in 2010 Generated $4,407,000 in present value savings 17

18 Gonzaga University McCarthy Athletic Center Amount Financed: $23 Million October 2003 Part of $53 Million refunded in 2009 Generated $8.1 Million in present value savings 18

19 Pacific Lutheran University South Hall Student Housing Part of a $13 Million Financing September of

20 Saint Martin s University Spangler Hall Amount Financed: $4.5 Million February 2005 Main Campus Renovation Part of a $7.5 Million financing June

21 Seattle Pacific University Otto Miller Hall Improvements Also Part of the $66.3 Million Financing in September of 2000 Science Building Part of a $66.3 million financing September 2000 Both part of an $83 Million refunding completed in

22 University of Puget Sound Science Center Part of a $30 Million Financing June 2006 $35 Million refunded this month Generated $3.7 million in present value savings 22

23 Walla Walla University Mountain View Apartments Amount Financed: $3.9 Million March 2005 Administration Building Improvements Also part of $3.9 Million Financing March

24 Whitman College Reid Campus Center Part of a $25.7 Million Financing October 1999 Fouts Center for Visual Arts Part of a $30 Million Financing June

25 Whitworth University East Hall Residence Part of a $63.7 Million Financing November 2009 Robinson Science Hall Also part of a $63.7 Million Financing November 2009 Generated $8.4 Million in present value savings 25

26 QUESTIONS? 26

27 Tax-Exempt Bond Financing Basics Presented by Barry Fick, Senior Vice President Springsted Inc. Financial Advisor to the Authority (651)

28 What is a Tax- Exempt Bond? Tax-Exempt bonds are the financing vehicle to achieve below-market interest rates Bond buyer lends money to the college or university for a project The College or university pays principal and interest Interest is tax-exempt for the bond buyer 28

29 Program Considerations Meeting IRS Guidelines Tax-exempt status of the bonds College and university eligibility and uses of bond proceeds Bondholder protection Federal and state laws Public benefits Reputation in the bond market Identity of the financial risk-taker Lender Investor/bondholder Credit enhancement provider 29

30 Common IRS Requirements Issue bonds on behalf of 501(c)(3) nonprofit organizations The Internal Revenue Service determines 501(c)(3) status. According to the IRS a nonprofit must be organized and operated for religious, charitable, scientific, testing for public safety, literary, or educational purposes, or for the prevention of cruelty to children or animals 30

31 QUESTIONS? 31

32 Bond Structures Two general structures Private Placement Bond is placed with a single investor Typically a bank Public Sale Bonds are placed with many investors 32

33 Private Placement 33

34 Public Sale CREDIT ENHANCED STRUCTURE LETTER OF CREDIT ISSUER LOAN AGREEMENT INVESTOR $ INDENTURE $ $ UNDERWRITER TRUSTEE BORROWER BONDS BONDS COMMERCIAL BANK LETTER OF CREDIT, GUARANTEEING TIMELY PAYMENT OF DEBT MORTGAGE NOTE AND REIMBURSEMENT AGREEMENT 34

35 QUESTIONS? 35

36 Case Study Seattle University The largest independent university in the Pacific Northwest Nearly 7,900 students enrolled in undergraduate, graduate, and professional programs. Founded in 1891 One of 28 Jesuit universities in the United States and more than 100 around the world The 50-acre campus is located nearby in downtown Seattle 36

37 Seattle University Bond Issuance History Invested more than $200 million to build and renovate facilities in the last 15 years Issued 14 series of bonds through the Authority with a total par value of $288,336,402 Refunded some of its outstanding debt through WHEFA to realize lower overall interest cost, which reduces the tuition students pay for their education 37

38 Seattle University Lemieux Library & McGoldrick Learning Commons Part of a $41.7 Million Financing September 2009 $41.7 Million financing generated $7.9 Million in present value savings 38

39 Seattle University Seattle University School of Law (Sullivan Hall) Amount Financed: $30.6 Million March 1998 Admissions & Alumni Building Part of a $41.7 Million Financing September

40 Seattle University Debt Structure The University has structured its debt in various ways Variable Rate debt (interest rates change weekly or monthly) Fixed Rate debt (interest rates are set at time of issue and do not change) Interest rate swaps are used to reduce risk of interest rate changes External firms (commercial banks) to provide credit support for variable rate debt 40

41 QUESTIONS? 41

42 For More Information Take a look at our website Contact our staff Carol Johnson, Manager carol.johnson@wshfc.org Cody Field, Program Assistant cody.field@wshfc.org

43 Thank You

Mr. Kim Herman, Executive Director; Mr. Paul Edwards, Deputy. Manager; and Mr. Cody Field, Program Assistant. Also present was Ms.

Mr. Kim Herman, Executive Director; Mr. Paul Edwards, Deputy. Manager; and Mr. Cody Field, Program Assistant. Also present was Ms. Washington Higher Education Facilities Authority MINUTES September 1, 2015 Mr. Tom Johnson, Board Secretary, called the meeting of the Authority to order at 9:00 A.M. Board member, Mr. Jerome Cohen, was