Universities and institutions around the cities loosened the drawstrings on their money bags yesterday, eagerly accepting hundreds of millions of tax-exempt bonds from MassDevelopment to fund renovation projects.
The MassDevelopment Board of Directors allotted more than $260 million worth of tax-exempt bonds, including a $66 million loan to Wentworth and $25 million to the WGBH Educational Foundation. The organization works with businesses and local officials to address issues that affect local economic development, offering bonds only to nonprofit entities, such as colleges and affordable-housing developers.
“Institutions of higher education are a critical driver of our economy,” MassDevelopment President and CEO Robert Culver said in a press release. “Colleges and universities employ thousands statewide, invest millions in local economies through purchasing and capital expenditures and educate and train our future business leaders. Providing lower-cost financing to help them meet their developmental goals makes fiscal sense.”
MassDevelopment spokesman Adam Bickelman said colleges and other nonprofit organizations to accept tax-exempt loans from MassDevelopment instead of borrowing from banks because the organization offers low-interest rates for those seeking developments.
“We invest in businesses, which helps expand and develop Massachusetts’s economy and bring in jobs,” Bickelman said.
Boston University used $150 million worth of tax-exempt bonds to fund the 2003 construction of Agganis Arena, Bickelman said. BU borrowed an additional $167 million in tax-exempt bonds to pay for various renovation and expansion projects in the 2005 fiscal year, he added.
Massachusetts College of Pharmacy and Health Sciences President Charles Monahan praised MassDevelopment in a press release yesterday announcing the loans the school received.
“By partnering with MassDevelopment on tax-exempt financing, we were able to save substantially on borrowing costs, which will help us provide a new, cutting-edge resource for our students without breaking the bank,” Monahan said.
The bonds are also repaid at a lowered interest rate, usually between 1.5 and 2 percent, Bickelman said. The use of tax-exempt bonds is one of the most lucrative forms of borrowing because it can save institutions hundreds of thousands of dollars in interest payments, he said.
The organization loaned more than $610 million in tax-exempt bonds to colleges in Massachusetts to finance projects last year, according to statistics provided by the organization.
Harvard College borrowed the most, with more than $255 million, while Emerson College borrowed $80 million to finance the construction of a new performing-arts center and renovations in most of the school’s older buildings.