Proposal might pay for SLC

By Eric Krol

Although the methods used to come up with a new proposal for financing a Student Life Center are in question, NIU students would not pay a fee increase for the proposed building.

Eddie Williams, vice president of Finance and Planning, said NIU has come up with a method of refinancing its bond structure which will kick up about $15 million for construction projects, while only extending debt payments for three years.

“We could build the Student Life Center without an increase in student fees,” Williams said.

NIU President John La Tourette said the $15 million would be used for projects like the Student Life Center and replacing the overworked electrical system in the residence halls.

Williams and representatives from Chicago Capital Markets, Inc., introduced the plans at Wednesday’s Board of Regents Finance and Facilities Committee meeting.

However, there is some question as to whether NIU jumped the gun in talking with the firm.

Originally, NIU was prepared to ask the Regents Thursday for approval to conduct a feasibility study to determine whether it should consider bond refinancing. Regents approval is required before NIU can undertake such actions.

But Williams and NIU conducted talks with the Chicago bond firm before receiving Regents approval.

NIU Student Regent James Mertes asked Williams whether the bond firm was paid for its consulting.

Williams defended NIU actions. No formal action has been taken and the bond firm will not receive any money for its services so far, Williams said.

“We get inquiries from firms on a weekly basis to look at our (financial situation),” he said.

If the Regents give approval, NIU will then enter a contract with the bond firm, a subsidiary of First National Bank of Chicago. Williams said the company does not give details of its plan before entering into a contract. “They look at (the analysis) as an investment,” he said.

Should NIU decide to refinance, there will not be time for the full Board to make a decision. The Regents Executive Committee will vote on the matter. The Executive Committee consists of Chairman Brewster Parker, Vice Chairman Milton McClure and Regent Carol Burns.

NIU currently has $6 million in idle development funds from its 1986 refinancing. NIU will use $4.8 million of this money to pay off part of the existing debt and the remaining $1.2 million will be used for repair and replacement purposes, said Mark Gallagher, Chicago Capital Markets vice president.

The rate in 1986 was 10 percent and current rates hover around seven percent, Williams said.

Williams said the actual amount NIU pays on the debt each year— $3.7 million—will remain the same.

This is only fair because students attending NIU in those future years will be getting use out of the facilities the bond money will build, he added.

John Pembroke, Regents vice chancellor for Administrative Affairs, said he spoke with the bond firm and supports the move. “We think it’s a good idea,” Pembroke said. “It appears the time would be opportunistic.”

Regent David Murphy, who has extensive experience in bond matters, questioned the effect of the proposal on the future.

Pembroke said he did not think this would pose a problem. Williams later said it depends on the penalty for calling bonds early, but added that the only reason for refinancing is lower interest rates.