Board of Regents

Board of Regents
Emergency Meeting of the Full Board
Wednesday, November 4, 1998; 2:00 p.m. - 3:00 p.m.

In Anchorage:  751-8040 
All Other Sites:  1-877-751-8040



I.    Call to Order

II.   Approval of Agenda


"The Board of Regents adopts the agenda as presented.

I. Call to Order

II. Adoption of Agenda

III. Authorization of Bond Sale for UAF's Coal-Water Fuel Project

IV. Discussion Regarding Future Bond Sales

V. Adjourn

This motion is effective November 4, 1998."

III.   Authorization of Bond Sale for UAF's Coal-Water Fuel Project 
(Reference Bound Separately)

The administration sought authorization from the Board of Regents on several occasions to finance the Coal-Water Fuel Project; however, due to uncertainties regarding the status and potential outcome of the project, we have not had the opportunity to sell revenue bonds or establish an interim financing alternative. The administration is now confident that the project has developed to a point that completion of the project and co-funding by its partners are reasonably assured. The project is now estimated to cost $52.214 million, $42.3 million of which will be expended by UAF. A more complete description of the project, contractual relationships, and funding associated with the project is provided in the separately bound materials on page 4 of the Preliminary Official Statement, entitled "THE USE OF BOND PROCEEDS."

The university is authorized to borrow money or enter into long-term obligations to complete this project; however, payments in any fiscal year cannot exceed $1.0 million dollars without specific approval of that debt and the project by the legislature. The proposed bond issues will not exceed the authorized limit, even if the annual payment to the Alaska Science and Technology Foundation of $150,000 required under the grant agreement is considered debt.

The bond market is now very attractive for "bank-qualified" tax-exempt bonds, offering potential interest rates ¼ of 1 percent lower than a normal non-bank-qualified issue. In order for the university's bonds to qualify, total tax-exempt debt issue for 1998 must be less than $10.0 million. The administration recommends that the university take advantage of this potential opportunity to lower the debt service on the coal-water project. Because the university has already entered into a tax-exempt equipment lease in the amount of $180,000, the regents are being asked to authorize a bond issue of $9.820 million (Series H).

While $9.820 million will be borrowed at attractive rates, it does not meet all of the cash needs of the project. A complete detail of the sources and uses of bond proceeds is provided in the separately bound materials. The regents are also being asked to authorize the sale of additional bonds shown in the reference tables as $2.705 million that will provide additional funds needed to cover cash requirements during the delays anticipated between the university's expenditures and reimbursement by the Department of Energy ("DOE"). These Series I bonds are sized to be attractive for the shorter term and contain call provisions for early repayment associated with the anticipated reimbursements from DOE but could be used to cover unexpected contingencies over an intermediate term. Any additional cash flow associated with delays in the reimbursement process will be covered with university working capital. The authorizing resolution for Series I will permit up to $3.255 million in bonds to be sold in the event that interest rates allow that amount of additional bond proceeds without exceeding the $1.0 million annual limit.

The administration expects to sell both Series H and Series I bonds on or about December 1. Series H will close before December 31. Series I will close in January in order to preserve the bank qualified status of Series H.

Appropriate resolutions for each series of bonds and related documents have been prepared by bond counsel and are presented in the separately bound reference. The reference includes tables showing "Estimated Debt Service" and "Sources and Uses of Bond Proceeds." An index to the reference is provided.

Interim Vice President for Finance Jim Lynch, Assistant Vice President John Dickinson, and Cindy Cartledge and Ken Vasser from the firm of Wohlforth, Argetsinger, Johnson and Brecht, bond counsel for the university will be available to discuss the bond resolution and answer any questions presented by the Board of Regents.

The President recommends that:


"The Board of Regents approves the UAF Coal-Water Fuel Project at a total project cost not to exceed $52.214 million, $42.3 million of which will be expended by UAF. This motion is effective November 4, 1998."


"The Board of Regents adopts the bond resolution for University of Alaska General Revenue Bond Series H as presented. This motion is effective November 4, 1998."


"The Board of Regents adopts the bond resolution for University of Alaska General Revenue Bond Series I as presented. This motion is effective November 4, 1998."

IV.   Discussion Regarding Future Bond Sales

Interim Vice President for Finance Lynch and Assistant Vice President Dickinson will discuss the advantages and timing of a potential refunding (refinancing) of some of the university's existing debt and providing new funds for capital projects such as the replacement for the GNOSIS library. This is an information item; no action will be requested at this time.

V.   Adjourn

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