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University of Connecticut Bond Issues

UCONN 2000: FINANCE 
Pursuant to Section10a-109x of the Connecticut General Statutes, the semi-annual report to the General Assembly is to provide, among other things, information on the number of projects and securities authorized, approved and issued; the payment of debt service requirements, and the payment of principal and interest on the UCONN 2000 securities; and the amount of investment earnings. This section provides that information.
Public Act 10-104 increased GO-DSC bond authorizations by $207 million for the construction of a new hospital tower (contingent upon the receipt of $100 million in contributions of federal, private or other non-state money), and provided for renovations to portions of the existing hospital and creation of the UConn Health Network (a landmark healthcare partnership of hospitals and community groups throughout the Hartford region), authorized additional UCONN 2000 projects for the Health Center, reallocated the FY10 bond authorization of $140.5 million over the remaining years of the UCONN 2000 program, and reallocated $25 million from UCHC projects for the design of a new hospital bed tower, and extended the UCONN 2000 financing program until FY18.
In July 2011, Governor  Dannel P. Malloy signed Public Act 11-75, “An Act Concerning the University of Connecticut Health Center”, the Bioscience Connecticut initiative, which increased the statutory authorizations for the UCONN 2000 bonds secured by the State’s debt service commitment by $262,900,000 for a total of $2,731,900,000; changed certain fiscal year bond authorizations;  eliminated the prior provision relating to the $100 million  contribution of federal, private or other non-state money; and provided for funding to renovate research laboratory space and create additional business incubator space. The initiative is expected to secure the State’s position as a national leader in bioscience research and help jumpstart the economy by creating construction  jobs immediately and generating long term sustainable economic growth based on bioscience research, innovation, entrepreneurship and commercialization .  The Connecticut Bioscience Initiative will allow the Health Center to increase its capabilities for bioscience research, expand its small business incubator facilities, add more scientists, and increase medical and dental school enrollment by 30 percent to meet future workforce needs.
Additionally on August 25, 2011, at a ceremony on the Storrs Campus, the Governor signed Public Act 11-57 calling for creation of a world-class Technology Park on the Storrs Campus to serve as a cornerstone for a new Connecticut research triangle. The Technology Park is expected to generate hundreds of new jobs in Connecticut, encourage new business growth, and leverage millions of dollars in federal and private research funding.  The Technology Park work will be linked to UConn’s Health Center in Farmington including the Connecticut Bioscience Initiative, and to the work being done in New Haven by Yale and others across the State. On August 26, 2011, the State Bond Commission authorized the release of $18 million in State General Obligation bonding to cover the project’s initial design and development costs. The extension of North Hillside Road to Route 44 in Storrs will allow the development of up to one million square feet of research, technology and academic space, on a 300-acre parcel in the North Campus consistent with the University’s long-range Master Plan. It is expected to be operational by 2015. The Technology Park will provide important incubation space for entrepreneurs with innovative ideas who would benefit from guidance by faculty experts in the field. A 2007 feasibility analysis for the park indicated that with new developments at the University occurring since UCONN 2000 began – such as significant growth in research, and a mature system for technology transfer and commercialization – UConn was in a strong position to support a successful technology park in Storrs.
Additionally, during the October 2011 special session the Connecticut General Assembly adopted Public Act 11-2 which established the Connecticut Bioscience Collaboration Program (the “Collaboration”) and authorized $290,685,000 of State general obligation bonds to be issued over a ten year period and to be deposited in the Connecticut Bioscience Collaboration Fund.  The Collaboration will support the establishment of a bioscience cluster anchored by the Jackson Laboratory for Genomic Medicine, a research laboratory, located on UCHC’s Farmington campus.   
General Obligation Bonds Secured by the State’s Debt Service Commitment
Section 10a-109 of the Connecticut General Statutes empowers the University to issue General Obligation Bonds secured by the State’s Debt Service Commitment (sometimes referred to as “General Obligation Debt Service Commitment Bonds” or “GO-DSC Bonds”). These Bonds are issued pursuant to the General Obligation Master Indenture of Trust, dated as of November 1, 1995, between the University of Connecticut, as Issuer, and Fleet National Bank of Connecticut as Trustee (now U.S. Bank N.A.). The University’s Board of Trustees on November 10, 1995, and the State Bond Commission on December 21, 1995 approved the Master Indenture of Trust. The Master Indenture was subsequently amended and approved by the University’s Board of Trustees on September 26, 2003 and the State Bond Commission on December 19, 2003. The Board of Trustees and the Governor approve the subsequent Supplemental Indentures for each bond issue. The University and the Office of the State Treasurer, working in conjunction, manage the Debt Service Commitment Bond sale process.
General Obligation Debt Service Commitment Bonds – Bond Issues Completed
There have been 20 bond issues for the UCONN 2000 program including 5 refunding bond issues under the State’s Debt Service Commitment.  Pursuant to Section 10a-109g of the Connecticut General Statutes, the UCONN 2000 General Obligation Debt Service Commitment Bonds authorized, approved and issued to date are listed below:

(1)    TIC is the true interest cost reflecting the interest rate for the time value of money across an entire bond issue.
(2)    The GO-DSC 2002 Series A Bonds provided $994,688.03 directly to the Office of the State
      Treasurer.
(3)    The GO-DSC 2003 Series A Bonds par amount of $96,210,000 plus $3,790,000 of the
      original issue premium, totaled $100,000,000 available for projects.
(4)    The GO-DSC 2004 Series A Bonds new money and GO-DSC Refunding 2004 Series A
Bonds were issued under a single Official Statement with a par amount of $216,950,000. The GO-DSC 2004 new money bonds totaled $100,000,000 for projects, funded by the $97,845,000 par amount plus $2,155,000 of the original issue premium, and the GO-DSC Refunding 2004 Series A Bonds provided $223,160,000 for a refunding escrow. Additional proceeds including premium funded the refunding escrow and the costs of issuance.
 (5) The GO-DSC 2005 Series A Bonds totaled $100,000,000 available for projects funded by the
       $98,110,000 par amount plus $1,890,000 of the original issue premium.  Phase II
      authorizations accounted for $50 million and Phase III for $50 million.
(6)   The GO-DSC 2006 Series A Bonds new money and GO-DSC Refunding 2006 Series A
      Bonds were issued under a single Official Statement with a par amount of $138,165,000. The
      GO-DSC 2006 Series A Bonds new money totaled $79,000,000 available for projects,
      funded by the $77,145,000 par amount plus $1,835,000 of the original issue premium, and
      the GO-DSC Refunding 2006 Series A Bonds provided $65,472,900 for a refunding escrow.
      Additional proceeds including premium funded the refunding escrow and the costs of
      issuance.
(7)   The GO-DSC 2007 Series A Bonds new money and GO-DSC Refunding 2007 Series A Bonds were issued under a single Official Statement with a par amount of $135,385,000. The GO-DSC 2007 Series A Bonds new money totaled $89,000,000 available for projects, and the GO-DSC Refunding 2007 Series A Bonds provided $49,505,476.89 for a refunding escrow. Additional proceeds including premium funded the refunding escrow and the costs of issuance.
(8)    The GO-DSC 2009 Series A Bonds par amount of $144,855,000 plus $5,145,000 of the
original issue premium, totaled $150,000,000 available for projects.
(9)   The GO-DSC 2010 Series A Bonds new money and GO-DSC Refunding 2010 Series A    
Bonds were issued under a single Official Statement with a combined par amount of $133,210,000.  The GO-DSC 2010 Series A Bonds new money par amount of $97,115,000 plus $7,885,000 of the original issue premium, totaled $105,000,000 available for projects; and the GO-DSC Refunding 2010 Series A Bonds par amount of $36,095,000 plus $2,609,428.69 of the original issue premium provided $38,704,428.69 for the refunding escrow. Additional proceeds including premium funded the costs of issuance.
(10) The GO-DSC 2011 Series A Bonds new money and GO-DSC Refunding 2011 Series A
Bonds were issued under a single Official Statement with a combined par amount of $211,635,000.  The GO-DSC 2011 Series A Bonds new money par amount of $179,730,000 plus  $20,700,000 of the original issue premium, totaled $200,000,000 available for projects; and the GO-DSC Refunding 2011 Series A Bonds par amount of $31,905,000 plus $4,936,565.62 of the original issue premium provided  $36,841,565.62  for the refunding escrow. Additional proceeds including premium funded the costs of issuance.

The fifteen series of UCONN 2000 General Obligation DSC bonds issued to fund projects total $1,598,792,146.50 in par value and provided $1,635,000,000.00 for UCONN 2000 project spending (excluding the UCONN 2000 General Obligation DSC Refunding 2004, 2006, 2007, 2010 and 2011 Series A Bonds). The remaining balance, together with accrued interest and net original issue premium, funded the costs of issuance and deposits to the State Treasurer.

General Obligation Debt Service Commitment Bonds – Projects
During Fiscal Year 2005 the University finished Phase I and Phase II and initiated Phase III of the UCONN 2000 project authorizations secured by the State’s Debt Service Commitment. The act provides for a total of $2,731,900,000 of UCONN 2000 bonds secured by the State’s Debt Service Commitment. To date, the following projects totaling $1,731,000,000 have been authorized to receive General Obligation Debt Service Commitment bond proceeds:

General Obligation Debt Service Commitment Bonds – Refunding
Pursuant to Section 10a-109m of the Connecticut General Statutes, the University may issue refunding securities. The University achieved a total of $24.6 million in gross debt services savings for Connecticut taxpayers by issuing several series of General Obligation DSC Refunding Bonds as follows.
On January 29, 2004, the University achieved $15.2 million in debt service savings for Connecticut taxpayers through the $216,950,000 of UCONN 2000 General Obligation DSC Refunding 2004 Series A Bonds. Proceeds pre-refunded $223,160,000 of the portions of the 1996, 1997, 1998, 2000, 2001 and 2002 UCONN 2000 General Obligation Debt Service Commitment Bonds. Debt service savings amounted to $15,215,582.84 on a gross cash debt service savings basis, or $10,117,718.77 on a net present value basis (4.53% savings over refunded bonds debt service) spread across fiscal years 2004 to 2020.
On March 15, 2006, the University achieved $4.0 million in debt service savings through the issuance of $61,020,000 of UCONN 2000 General Obligation DSC Refunding 2006 Series A Bonds. Proceeds pre-refunded $61,675,000 of the portions of the 1998, 1999, 2000, 2001 and
2002 UCONN 2000 General Obligation Debt Service Commitment Bonds. Debt service savings amounted to $4,003,734.09 on a gross cash debt service savings basis, or $2,495,916.47 on a net present value basis (3.94% savings over refunded bonds debt service) spread across fiscal years 2006 to 2020.
On April 12, 2007, the University achieved $1.7 million in debt service savings through the issuance of $46,030,000 of UCONN 2000 General Obligation DSC Refunding 2007 Series A Bonds. Proceeds pre-refunded $46,695,000 of the portions of the 2002 and 2003 UCONN 2000 General Obligation DSC Bonds.  Debt service savings amounted to $1,680,056.23 on a gross cash debt service savings basis or $1,387,269.87 on a net present value basis (2.97% savings over refunded bonds debt service) spread across fiscal years 2008 to 2022.
On May 25, 2010, the University achieved $1.8 million in debt service savings through the issuance of $36,095,000 of UCONN 2000 General Obligation DSC Refunding 2010 Series A Bonds. Proceeds pre-refunded $35,885,000 of portions of the 1999, 2001, 2003 and 2004 UCONN 2000 General Obligation DSC Bonds.  Debt service savings amounted to $1,791,739.17 on a gross cash debt service savings basis, or $1,470,720.91 on a net present value basis (4.1% savings over refunded bonds debt service) spread across fiscal years 2011 to 2021.
On December 12, 2011, the University achieved $1.9 million in debt service savings through the issuance of $31,905,000 of UCONN 2000 General Obligation DSC Refunding 2011 Series A Bonds. Proceeds pre-refunded $33,735,000 of portions of the 2003 and 2004 UCONN 2000 General Obligation DSC Bonds.  Debt service savings amounted to $1,918,938.89 on a gross cash debt service savings basis, or $1,680,287.49 on a net present value basis (5.0% savings over refunded bonds debt service) spread across fiscal years 2011 to 2021.
Special Obligation Student Fee Revenue Bonds Secured by Pledged Revenues
UCONN 2000 also authorizes the University to issue Special Obligation Revenue bonds. Unlike the UCONN 2000 General Obligation Debt Service Commitment Bonds that are paid from the State’s General Fund, debt on the Special Obligation Bonds are paid from certain pledged revenues of the University as defined in the particular bond series indenture.
A Special Capital Reserve Fund may be established for UCONN 2000 Special Obligation bond issues only if the Board of Trustees determines that the Special Obligation bond issue is self-sufficient as defined in the Act. The self-sufficiency finding by the University must be submitted to and confirmed as not unreasonable or arbitrary by the State Treasurer prior to issuance of the bonds. Once approved, the Special Capital Reserve Fund is funded at issuance by the University to meet the minimum capital reserve requirement.
Special Obligation Student Fee Revenue Bonds - Bond Issues Completed
Section 10a-109x of the Connecticut General Statutes requires that the University’s Semiannual Report to the General Assembly provide information on the number of projects and securities authorized, approved and issued; the payment of debt service requirements, and the payment of principal and interest on the UCONN 2000 securities; and the amount of investment earnings. The UCONN 2000 Special Obligation Student Fee Revenue Securities authorized, approved and issued to date are listed below.
Student Fee Revenue Bonds have been issued pursuant to the Special Obligation Indenture of Trust, dated as of January 1, 1997, between the University as Issuer and U.S. Bank N.A. as successor to State Street Bank & Trust as Trustee (“the Special Obligation Master Indenture”). The Board of Trustees approved the Master Indenture on November 8, 1996.  The University’s Board of Trustees and the Governor approve the subsequent Supplemental Indentures for each Special Obligation bond issue.

There have been five bond issues including two refunding under the Student Fee Revenue Bond Indenture that are not supported by the State’s Debt Service Commitment.  The University’s Office of Treasury Services and the Office of the State Treasurer, working in conjunction, manage the Special Obligation Bond sale process. UCONN 2000 Special Obligation Student Fee Revenue Bonds issued to date are summarized below:

UCONN 2000 SO-SFR Bonds

On February 4, 1998, the University issued $33,560,000 of UCONN 2000 Student Fee Revenue 1998 Series A Bonds with a final maturity of November 15, 2027. The Special Obligation First Supplemental Indenture was also dated January 1, 1997 and authorized the issuance of bonds up to a principal amount not to exceed $30,000,000 for construction of the South Campus Residence and Dining Hall, plus amounts necessary to fund a Special Capital Reserve Fund (“SCRF”) and provide for costs of issuance. The University managed the issuance and sale of these bonds and realized a favorable true interest cost over the term. Debt service for these bonds is paid from the student Infrastructure Maintenance Fee, instituted in 1997, and other pledged revenues as further defined in the Indenture of Trust. Such pledged revenues also help support future operation and maintenance costs for facilities built or renovated through UCONN 2000.

On June 1, 2000, the University issued $89,570,000 of the UCONN 2000 Student Fee Revenue 2000 Series A Bonds pursuant to the Special Obligation Master Indenture and the Special Obligation Student Fee Revenue Bonds Second Supplemental Indenture dated as of May 1, 2000. Bond proceeds funded $87,000,000 of construction for the Hilltop Dormitory, Hilltop Student Rental Apartments, and Parking Garage South. They also provided for capitalized interest and costs of issuance. The $89,570,000 Student Fee Revenue 2000 Series A Bonds were defeased in substance on February 27, 2002, as further described below, and are no longer reflected as outstanding debt on the University’s financial statements.
On February 14, 2002, the University issued $75,430,000 of the UCONN 2000 Student Fee Revenue 2002 Series A Bonds pursuant to the Special Obligation Master Indenture and the Special Obligation Student Fee Revenue Bonds Fourth Supplemental Indenture dated as of November 16, 2001. Bond proceeds funded $72,180,000 of construction for the Alumni Quadrant Renovations, Shippee/Buckley Renovations, East Campus North Renovations, Towers Renovations (including Greek Housing), and North Campus Renovations (including North Campus Student Suites and Apartments).

Special Obligation Student Fee Revenue Bonds - Projects
To date, nine projects have been authorized to receive $189,180,000 of the UCONN 2000 Special Obligation Student Fee Revenue bond proceeds (some of these projects were also supported by General Obligation bonds or other funding) as follows:

Special Obligation Student Fee Revenue Bonds - Refunding
Pursuant to Section 10a-109m of the Connecticut General Statutes, the University may issue refunding securities. The University achieved a total of $13.0 million in gross debt service savings for Connecticut taxpayers by issuing two series of Special Obligation Student Fee Revenue Refunding Bonds as follows.

On February 27, 2002, the University achieved debt service savings of $3,553,672 on a gross cash debt service savings basis or $2,383,106 on a net present value basis (3.036% savings over refunded bonds debt service) through its issuance of $96,130,000 of the UCONN 2000 Student Fee Revenue Refunding 2002 Series A Bonds. The bonds were issued pursuant to the Special Obligation Master Indenture and the Special Obligation Student Fee Revenue Bonds Third Supplemental Indenture, dated as of February 1, 2002. Proceeds were used to take advantage of favorable market conditions to advance refund and defease in substance all of the $89,570,000 of Student Fee Revenue 2000 Series A Bonds outstanding. Proceeds were deposited with the Trustee bank in an irrevocable escrow fund sufficient to satisfy future debt service and call premiums on the prior issue.
On June 16, 2010, the University achieved debt service savings of $9,479,927 on a gross cash debt service savings basis or $7,211,753 on a net present value basis (9.915% savings over refunded bonds debt service) through its issuance of $47,545,000 of the UCONN 2000 Student Fee Revenue Refunding 2010 Series A Bonds. The bonds were issued pursuant to the Special Obligation Master Indenture and the Special Obligation Student Fee Revenue Bonds Third Supplemental Indenture, dated as of February 1, 2002. Proceeds were used to take advantage of favorable market conditions to refund, advance refund and defease in substance $51,305,000 of prior bonds (including $25,140,000 of the Student Fee Revenue 1998 Series A Bonds and $26,165,000 of the Student Fee Revenue 2002 Series A Bonds outstanding). The par amount of $47,545,000 plus $4,267,926 of the original issue premium and $2,126,425 from the 1998 Special Capital Reserve Fund release were deposited with the Trustee bank in a $53,939,351.28 irrevocable escrow fund to satisfy future debt service and call premiums on the prior issues.
UCONN 2000 Tax-Exempt Governmental Lease Purchase Agreement
The Board of Trustees authorized $81,900,000 of UCONN 2000 debt in the form of a Tax-Exempt Governmental Lease Purchase Agreement secured by the University’s general obligation for the Cogeneration facility portion of the UCONN 2000 Heating Plant Upgrade project.
This $81,900,000 of UCONN 2000 debt was not issued under the UCONN 2000 General Obligation or Special Obligation Indentures of Trust, but was entered into under certain separately negotiated documents and agreements in two parts. On December 18, 2003, the University entered into a privately placed $75,000,000 Tax-Exempt Governmental LeasePurchase Agreement with a reported nominal interest rate of 4.42% compounded monthly to finance the design and construction of a combined heat and power plant.  On August 15, 2005, the University amended the agreement for an additional borrowing of up to $6,900,000 at a 5.09% interest rate compounded monthly (resulting in a combined interest rate of approximately 4.5%).
The Heating Plant Upgrade project is a named project under UCONN 2000. The cogeneration facility is a linchpin of the University’s commitment to energy efficiency and generates much of the needs for electrical power, heating and cooling on the Storrs campus. Cost avoidance achieved through the construction and operation of the facility is expected to provide funds to pay the debt service.  An earlier phase of the Heating Plant Upgrade project was funded with UCONN 2000 General Obligation DSC bonds as listed above.
The Tax-Exempt Governmental Lease Purchase Agreement is not rated by the credit rating agencies but, as UCONN 2000 debt, it is weighted in their credit rating analysis of the UCONN 2000 General Obligation and Special Obligation programs.