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Ohio University Trustees: Vote On $250M Century Bonds A ‘Historic Moment’
By: Atish Baidya
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The Ohio University Board of Trustees approved a plan described as an “innovative and creative financial step” that includes creation of a central bank to handle the proceeds from the sale of $250 million in century bonds which will be used to pay for deferred maintenance and other projects.
Board of Trustees Chairman David Brightbill described plan approval as a “historic moment” for the university.
The new central bank would internally loan money from those investments to university divisions to pay for deferred maintenance and other projects. For example, the bank would internally loan $90 million to Facilities to pay for an energy infrastructure project with a set term. As the loan is paid back to the central bank those funds then can be loaned out to another division for its projects.
The university has an estimated deferred maintenance backlog of $446 million beginning in fiscal year 2015, according to OU’s “Capital Improvement Plan FY2015-FY2020.”
Trustees also approved guiding principles and policies for the investment of the proceeds of the bonds. It calls for $100 million to be set aside for immediate needs over the next three to four years. Those funds will would be invested in “highly liquid and safe investments.” The remaining $150 million will be invested in a way similar to the university’s endowment fund with an initial investment strategy for the first six years that is low risk and flexible.
The university will also set aside $7 million that will be invested to pay back the $250 million bond debt in 2114.