Revenue bonds to finance the renovation of State Farm Center could go on sale next month under a plan unveiled Monday by the University of Illinois.
URBANA — Revenue bonds to finance the renovation of State Farm Center could go on sale next month under a plan unveiled Monday by the University of Illinois.
If trustees approve the plan, the UI will borrow $160 million to fund the project, repaying the debt over 30 years at estimated interest rates of 5.39 percent to 6 percent.
The renovation is being funded mostly by donations, but also from student fees and ticket surcharges.
The debt service on the $160 million loan is expected to total about $8 million a year for the fixed-rate bonds, or $240 million over 30 years, plus another $37 million for variable-interest bonds that will be repaid over 10 years.
Those annual payments will come from about $4.8 million of seat licensing; $2.1 million from student fees (students approved a $50 annual fee to help pay for the project last spring); $2 million from State Farm for the naming rights to the building; $700,000 in ticket surcharges; and $500,000 in Big Ten Network revenue. The variable-interest bonds will be paid off by $35 million in additional naming rights for other areas of the building expected over the next 10 years.
"As those monies come in, we'll pay off the bonds," said Robert Plankenhorn, director of capital financing for the UI.
A Board of Trustees committee Monday reviewed a proposed $240 million bond sale to pay for the State Farm Center project as well as a new $76.7 million residence hall for the Ikenberry Commons development, the third new hall to be built in that complex.
That project would also include the demolition of the old Taft-Van Doren Residence Halls at 1213-1215 S. Fourth St., C. The full board will vote on the bond issue next week in Chicago.
For the State Farm Center project, the UI has already signed contracts totaling $10 million for utility and earth work to prepare the site for air conditioning and other upgrades.
Last month, the UI hired a concrete contractor for just over $12 million, work that is expected to begin next month.
Major construction contracts for the project will be up for board review in early March, Plankenhorn said.
The bonds to pay for the project will be a combination of taxable and tax-exempt bonds, to accommodate private business use of the State Farm Center under IRS regulations, Plankenhorn said.
That includes the naming rights sold to State Farm and the lease of private suites.
Administrators are hopeful that the bond issue will receive the same rating from Moody's and Standard and Poor's that the UI's current bonds carry, which will determine the interest rates. The UI's current bond rating is four notches higher than that of the state of Illinois.
The bonds are backed by revenue for the UI's Auxiliary Facilities System, which includes the State Farm Center, residence halls and the Illini Union, among other units; as well as student tuition and fees.