Capital Projects approved for RFS financing by the Board of Regents are funded through the ILP. During construction, the institution will make draws from the ILP as a part of the normal monthly capital requisition process. At each quarterly payment date, the project will be charged the Short-Term Rate based on the total drawn amounts. At least one quarter after a project reaches substantial completion, the rate on the outstanding loan will convert from the Short-Term Rate to the Long-Term Rate, and principal repayment will commence. Substantial completion dates will be reviewed quarterly in connection with the CIP update (i.e. February, May, August, November).
For example, a project that reaches substantial completion in March will be reflected as being substantially complete during the May quarterly review; after one full quarter, the loan rate will be converted to the Long-Term Rate effective August 1, with the first payment at the Long-Term Rate due November 1.
The first principal payment on long-term loans will generally occur on the first Long-Term Rate payment date but can be moved to a later date (but typically within a year of substantial completion) with approval by the Office of Finance. The amortization schedule of the loan should not extend beyond the useful life of the project and is limited to be between ten and thirty years starting from the long-term conversion date. The final debt service schedule and a Promissory Note will be sent by the Office of Finance to memorialize the terms of the loan and will need to be executed by the Chief Business Officer of the borrowing institution. Any unspent proceeds at the time of long-term conversion will be available for expenditure afterwards but in an effort to encourage spending of loan proceeds as quickly as possible, institutions will not be credited with interest on unspent funds.
Since the loans are typically funded with proceeds from tax-exempt bond issuances, the projects will continue to be subject to file retention requirements as dictated by UTS Policy 181 (available at the BOR Policy Library HERE) as well as private use restrictions as dictated by IRS regulations (available HERE). A “Taxable Premium” can be added to the Long-Term Rate if the institution would prefer to not have the project subject to these requirements.
Approval Process
The approval process for Capital Projects is outlined in detail in the Capital Expenditure Policy, which was approved by the Board of Regents May 14, 2008 and became effective July 1, 2008.
As mandated by the Capital Expenditure Policy, all projects going before the BOR must submit a Project Planning Form (PPF). PPFs are completed and submitted online HERE.
If you wish to gain access to the PPF System, please contact Allen Hah in the Office of Finance at ahah@utsystem.edu or 512-579-5081, or Lori Kneisly in OFPC at lkneisly@utsystem.edu or 512-499-4418.
