36. Discuss the alternatives that were considered before deciding that the capital lease structure was the best option.
N/A
37. Who is the Lessor (full name and address)? Who is the Lessee (full name and address)?
N/A
38. Who will manage the facility during and after construction?
N/A
39. Who will be issuing bonds or otherwise financing the project? Will it be tax-exempt debt?
N/A
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Definitions of Terms
Educational and General (E&G) Capital Fees (W. Va. Code §18B-10): Fees collected by the institutions to support existing and future system-wide debt and institutional debt, capital projects funded on a cash basis, campus and building renewal, and repairs and alterations of E&G Facilities. Existing E&G Capital Fees, formerly Registration and Tuition Fees, are pledged to retirement of existing system-wide and institutional debt.
Auxiliary and Auxiliary Capital Fee Bonds (W. Va. Code §18B-10): Fees collected by the institutions to support on-going operations of Auxiliary Facilities, existing and future institutional debt, capital projects funded on a cash basis, campus and building renewal, and repairs and alterations of Auxiliary Facilities; i.e., Student Union and Recreation Facilities, Residence Halls, Dining Halls, Athletic Facilities, Bookstores, Faculty and Staff Housing and other facilities not considered E&G Facilities.
Other: Debt secured by another revenue stream than those identified above. Please identify source and provide Code citation that authorizes the pledge of this revenue stream for issuance of revenue bonds or to incur debt.
Capital Lease: In accordance with the Financial Accounting Standards Board (FASB), capital leases are defined as leases which meet any one (or more) of the following criteria:
1) Transfer of ownership of the property to the lessee at the end of the lease term;
2) Bargain purchase option at the end of the lease term;
3) Lease term equal to 75% or more of the estimated economic life of the leased property; and
4) Present value of the net minimum lease payments equal to or exceeding 90% of the fair market value of the property.
Capital leases are considered long-term obligations for accounting purposes.
Capitalized Interest: Interest to be paid on the bonds during the period of construction that is financed as part of the bond issue (i.e., paid with bond proceeds). Capitalizing interest increases the overall cost of borrowing, but may be necessary in cases where project revenues are to be used to pay debt service. Conversely, where revenues are already being collected (i.e., a fee or fee increase has already been implemented), the use of capitalized interest may not be appropriate.
Incremental Annual Operating Expenses: The increase in operating costs attributable to the project. For example, a new dormitory added to a dormitory system would presumably increase system operating costs (e.g., supplies & material, utilities, personnel (janitorial, maintenance), equipment, etc.)
Non-recurring costs: One-time project costs (e.g., land acquisition, special utility fees, etc.) required for project completion.
Private Use: Private use means any use (directly or indirectly) by a trade or business that is carried on by persons or entities other than state or local governmental entities. Such use could involve ownership, management, service or incentive payment contracts, research agreements, leases, subleases, loans, or any other arrangement that conveys special legal entitlements or economic benefit to the non-governmental entity from the beneficial use of the project.
Reserve Fund: An amount set aside, usually from project revenues or bond proceeds, to mitigate the impact of interruptions in the ability of the project to generate sufficient net revenues to pay debt service (e.g., debt service reserve, repair and replacement reserve). In certain circumstances, the presence of a reserve can enhance the credit. For the purposes of the feasibility study, reserve funds are generally for debt service and are funded from project or institutional revenues. 9(c) projects are expected to generate sufficient revenues to fund a reserve at an amount equal to approximately 10% of the amount financed.
Financial Feasibility Study - Part II Spreadsheet 1 - Cost Components Glenville State College Heflin Student Union Renovation Non ReserveReserveTotalRecurring DebtFundFundDebtAnnualInitialTotal ServicePrincipalInterestPaymentBalanceServiceExpensesOutlaysCost --------------------------------- 20060 12007113,32448,82464,50011,33211,332124,6573,120,0003,244,657 22008113,32450,92462,40111,33222,665124,6573,120,0003,244,657 32009113,32453,11460,21111,33233,997124,6573,120,0003,244,657 42010113,32455,39857,92711,33245,330124,6573,120,0003,244,657 52011113,32457,78055,54511,33256,662124,6573,120,0003,244,657 62012113,32460,26453,06011,33267,995124,6573,120,0003,244,657 72013113,32462,85650,46911,33279,327124,6573,120,0003,244,657 82014113,32465,55847,76611,33290,660124,6573,120,0003,244,657 92015113,32468,37744,94711,332101,992124,6573,120,0003,244,657 102016113,32471,31842,00711,332113,324124,6573,120,0003,244,657 112017113,32474,38438,94011,332124,657124,6573,120,0003,244,657 122018113,32477,58335,74211,332135,989124,6573,120,0003,244,657 132019113,32480,91932,40611,332147,322124,6573,120,0003,244,657 142020113,32484,39828,9262,678150,000116,0033,120,0003,236,003 152021113,32488,02725,2970150,000113,3243,120,0003,233,324 162022113,32491,81321,5120150,000113,3243,120,0003,233,324 172023113,32495,76117,5640150,000113,3243,120,0003,233,324 182024113,32499,87813,4460150,000113,3243,120,0003,233,324 192025113,324104,1739,1510150,000113,3243,120,0003,233,324 202026113,324108,6524,6720150,000113,3243,120,0003,233,324 21202700000000 22202800000000 23202900000000 24203000000000 25203100000000 26203200000000 27203300000000 28203400000000 29203500000000 30203600000000 -------------------------- 2,266,4891,500,000766,489150,0002,416,48962,400,000064,816,489 ------------------ PV @4.30%1,500,000112,5701,612,57041,297,348042,909,918 (1) DEBT INFORMATION(2) ANNUAL OPERATING EXPENSES Borrowing Year2006Personal Services800,000 Amount Borrowed1,500,000Contractual Services1,200,000 Borrowing Rate4.300%Supplies and Materials295,000 Term (Years)20Indirect Cost0 Reinvestment Rate0.00%Utilities275,000 Reserve Fund Target150,000Equipment50,000 Other500,000 --- Total Annual Expenses3,120,000
Financial Feasibility Study - Part II Spreadsheet 2 - Revenue Components Glenville State College Heflin Student Union Renovation Part TimeOtherIndirect RevenueRetirement UserUserStudentCost FromInstitutionalof ExistingTotal FeesFeesFeesRecoveriesOperationsReservesDebtOtherRevenues ------------------------------ 2006 2007244,80011,730002,968,5000003,225,030 2008250,92012,023003,042,7130003,305,656 2009257,19312,324003,118,7800003,388,297 2010263,62312,632003,196,7500003,473,005 2011270,21312,948003,276,6690003,559,830 2012276,96913,271003,358,5850003,648,825 2013283,89313,603003,442,5500003,740,046 2014290,99013,943003,528,6140003,833,547 2015298,26514,292003,616,8290003,929,386 2016305,72214,649003,707,2500004,027,621 2017313,36515,015003,799,9310004,128,311 2018321,19915,391003,894,9290004,231,519 2019329,22915,776003,992,3020004,337,307 2020337,46016,170004,092,1100004,445,739 2021345,89616,574004,194,4130004,556,883 2022354,54316,989004,299,2730004,670,805 2023363,40717,413004,406,7550004,787,575 2024372,49217,849004,516,9240004,907,265 2025381,80418,295004,629,8470005,029,946 2026391,35018,752004,745,5930005,155,695 202700000000 202800000000 202900000000 203000000000 203100000000 203200000000 203300000000 203400000000 203500000000 203600000000 ------------------------------ 6,253,332299,6390075,829,31600082,382,287 ------------------------------ PV @4.30%3,998,700191,6040048,489,13600052,679,440 USER FEE INFONET REVENUES FROM OPERATIONS # of Units2,400Net Sales3,180,000 Session Fee102Cost Rate increase years 1-42.500%Profit3,180,000 Rate increase years 5+2.500%Operating Expenses SUMMER/PARTIME USER FEES Selling # of Units115 General Administrative211,500 Session Fee102 Lease Payment Rate increase years 1-42.500%Gross Operating Income2,968,500 Rate increase years 5+2.500%Rate increase years 1-42.500% Rate increase years 5+2.500%
Financial Feasibility Study - Part II Spreadsheet 3 - Net Revenues/Coverage Glenville State College Heflin Student Union Renovation ReserveAdjusted TotalFundTotalTotalNetCoverage CostPaymentCostRevenuesRevenuesPercent --------------------- 20060 20073,244,65711,3323,233,3243,225,030(8,294)99.74% 20083,244,65711,3323,233,3243,305,65672,331102.24% 20093,244,65711,3323,233,3243,388,297154,973104.79% 20103,244,65711,3323,233,3243,473,005239,680107.41% 20113,244,65711,3323,233,3243,559,830326,505110.10% 20123,244,65711,3323,233,3243,648,825415,501112.85% 20133,244,65711,3323,233,3243,740,046506,722115.67% 20143,244,65711,3323,233,3243,833,547600,223118.56% 20153,244,65711,3323,233,3243,929,386696,061121.53% 20163,244,65711,3323,233,3244,027,621794,296124.57% 20173,244,65711,3323,233,3244,128,311894,987127.68% 20183,244,65711,3323,233,3244,231,519998,194130.87% 20193,244,65711,3323,233,3244,337,3071,103,982134.14% 20203,236,0032,6783,233,3244,445,7391,212,415137.50% 20213,233,32403,233,3244,556,8831,323,558140.93% 20223,233,32403,233,3244,670,8051,437,481144.46% 20233,233,32403,233,3244,787,5751,554,251148.07% 20243,233,32403,233,3244,907,2651,673,940151.77% 20253,233,32403,233,3245,029,9461,796,622155.57% 20263,233,32403,233,3245,155,6951,922,370159.45% 2027000000.00% 2028000000.00% 2029000000.00% 2030000000.00% 2031000000.00% 2032000000.00% 2033000000.00% 2034000000.00% 2035000000.00% 2036000000.00% --------------- 64,816,489150,00064,666,48982,382,28717,715,798
BB&T
BB&T Governmental FinanceBranch Banking and Trust Company (“BB&T”) is pleased to offer this proposal for the financing requested by Glenville State College Board of Governors (the “Board”).
(1) Project: Student Center Improvement Revenue Bonds, Series 2006 Reimbursement
(2) Amount To Be Financed: $1,500,000.00
(3) Interest Rates, Financing Terms and Corresponding Payments:
Term Rate
15 years 4.27% Bank-Qualified 20 years/ 10 year Reset 4.30% Bank-Qualified
Payments shall be semi-annual in arrears, as requested. If the Board desires a different payment frequency, BB&T will seek to structure the repayment as needed.
The interest rates stated above are valid for a closing not later than 45 days after today. Closing of the financing is contingent upon completing documentation acceptable to BB&T.
Remuneration for our legal expenses and for providing escrow services for this financing transaction shall be 1/5 of 1% of the total loan proceeds. All applicable taxes, surveys, permits, costs of environmental studies, title insurance premiums, costs of lawyers for the Board and any other costs shall be the Board’s responsibility and separately payable by the Board. The financing documents shall allow prepayment of the principal balance in whole on any regular payment date with a 1% prepayment premium.
The stated interest rates assume that the Board will comply with tax-exempt financing requirements under the Internal Revenue Code, including but not limited to 141, 148 and 149. BB&T reserves the right to terminate its interest in this bid or to negotiate a mutually acceptable rate if the financing is not qualified tax-exempt financing.
(4) Security:
This financing shall be secured by a pledge of Student Center and Auxiliary fees.
(5) Financing Documents:
It shall be the responsibility of the Board to retain and compensate counsel to appropriately structure the revenue bonds according to West Virginia laws. BB&T shall also require the Board’s bond counsel to provide an unqualified legal opinion. BB&T reserves the right to review the documents and requires that the documents be mutually acceptable to BB&T and the Board.
BB&T appreciates the opportunity to make this financing proposal and requests to be notified within fifteen days of this proposal should BB&T be the successful proposer.
BB&T shall have the right to cancel this offer by notifying the Board of its election to do so (whether or not this offer has previously been accepted by the Board) if at any time prior to the closing there is a material adverse change in the Board’s financial condition, if we discover adverse circumstances of which we are currently unaware, if we are unable to agree on acceptable documentation with the Board or if there is a change in law (or proposed change in law) that changes the economic effect of this financing to BB&T. We reserve the right to negotiate and/or terminate our interest in this transaction should we be the successful proposer.
Please call me at (304) 353-1635 with your questions and comments. We look forward to hearing from you.
Sincerely,