April 1, 2020. In November 2020, the Board reviewed the new residence hall construction proposal and project description. At that time, CRM’s Craig Turner fielded questions along with members of his team. In December 2020, the Board voted to accept the development contracts to construct a new residence hall.
In April 2021, KySU executive leadership received legislative approval to advance the project at the Capital Projects and Bond Oversight Committee. They approved the public private partnership delivery method for the Kentucky State University capital project, “Construction of New Residence Hall.” This action was taken pursuant to KRS §§ 45.763 and 45A.077. This included the Commonwealth of Kentucky’s Capital Projects and Bond Oversight Committee unanimous approval of the public-private partnership delivery method for the Kentucky State University capital project. Thus, the construction of the new residence hall was authorized in the 2020 Executive Branch Budget Bill, House Bill 352 and subsequently through HB 192 of the 2021 Regular Session of the Kentucky General Assembly.
The purpose of this Staff Note is to provide the background necessary for the Board of Regents to approve “The Resolution authorizing a facilities lease between Kentucky State University and KSU Campus Housing, LLC and related actions” which will authorize the facilities lease. The University endorsed the CRM proposal that permits CRM development to finance the project using an appropriate financing plan that would include certificates of participation in a facilities lease to be executed between the University and the developer for the project. The project will be conducted over an 18 month period.
The resolution enables the University to execute documents necessary for the development and financing of the project, known as the bond intercept. As was explained at the December 2020 Board meeting, the funding for the project is based on a financing model the developer negotiated using scheduled repayments at a lower interest rate than a conventional bond and one that provides credit enhancement to the lessee (Kentucky State University). The intercept serves as a debt service reserve fund and should the institution default on repayment, the state, as the bond holder, would make the payment through a reduction in Kentucky State University's state appropriation. The Board of Regents approved the action item resulting in adoption of the CRM financing plan and endorsing the bond intercept.
In order to move forward with the Public Private Partnership, the Board of Regents is requested to approve the document entitled, “A Resolution authorizing a facilities lease between Kentucky State University and KSU Campus Housing LLC and Related Actions.”