October 1, 2009
In the absence of a sweetheart lender for private, off-campus projects, some developers are turning to on-campus properties that will be owned by the university and financed through tax-exempt revenue bonds. Valdosta, Ga.-based RISE, for instance, recently closed on four major development transactions, despite challenging financial markets. The projects include:
All three deals in Georgia were awarded in the first quarter of this year. The residential construction portion of each of RISE’s projects is slated for completion next fall.
“These projects have all become fast-tracked,”says Greg Blais, president of RISE. “The trend is for universities to solicit development teams in the summer or fall and expect housing for the next fall.”And that timeline puts a lot of stress on the development teams, he adds.
The first two projects— North Georgia College and South Georgia College— were funded through the conventional tax-exempt bond model, historically employed through the University System of Georgia and its board of regents. The bonds support host institutions and use their backing of the projects to further improve the credit of the bonds, explains Blais.
The Southern Polytechnic and University of South Dakota projects were pooled with other developments to be funded by a state higher-education authority authorized by their respective legislatures.
In Georgia, that body is called the Georgia Higher Education Facilities Authority (GHEFA), which issues bonds for various board of regents projects. GHEFA was signed into law in 2006, and in November 2008 issued its first bonds, totaling more than $99.8 million.
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